Canada should welcome cheap food and furniture imports, not tariff them

The Canadian Government is being asked to consider imposing tariffs on cheap imports of furniture and food. According to reporting from Bloomberg, the consideration is being driven by the Canadian Association of Vegetable Growers and Processors and the Canadian Wood Products Alliance. The latter wants a temporary 100-125% tariff for four years (excepting Mexico and the U.S), while the former says “temporary, rules-based safeguard measures will restore fair competition and allow Canadian growers and processors to compete on equal terms.”

This would be a mistake. While it obviously benefits the specific industries in question in the short-term, cheap (AKA ‘affordable’) imports are exactly what many Canadians need right now amid profound cost-of-living challenges, challenges which could get much worse due to the closure of the Strait of Hormuz. Imposing further tariffs or trade restrictions would further drive up costs at a time when the government should be doing what it can to make life more affordable.

Further, given that these would not be tariffs on the U.S. – and thus would not be restrictions/tariffs imposed as a retaliatory measure- the construction of new trade barriers would run counter to the pro-trade message that has been a staple of the Carney-led federal government. The Canada-China deal involved a mutual reduction of specific tariffs. Canada and the South American Mercosur trade bloc have free trade talks planned for later this month, and the Prime Minister warned in his Davos speech about the deeper cost of nations trying to go it alone, saying “A world of fortresses will be poorer, more fragile, and less sustainable.”

Imposing new tariffs on non-U.S. products would go against both the interests of Canadian consumers and the pro-trade shift of the government.

Trade is good

We also must consider the contrast Canada has justifiably sought with the U.S. The U.S. is led by a President who has a zero-sum worldview, who believes that for someone to win economically, someone else must lose. He views trade through that lens and views Canada’s trade surplus with the U.S. as an example of Canada taking advantage of the U.S. rather than as a statistical look at the accumulated results of market participants in each country freely choosing to buy each other’s products. That hostility to trade has been paired with rampant dishonesty. A ‘deal’ with the U.S. means nothing right now, as it can be violated at any time. For example, Trump is threatening to withhold weapons that Europe already purchased from the U.S. for Ukraine since he’s angry that NATO countries don’t want to clean up the mess in the Strait of Hormuz. For Trump, there is no transaction to be honoured if he feels it shouldn’t be honoured.

In the face of Trump’s dishonest anti-trade stance, the Canadian government has cast this country as a partner that is pro-trade and reliable. The government has sought to open up trade between provinces, and – as I noted above – is pursuing tariff reduction deals and broader free trade deals with a range of countries and trading blocs. There is an underlying recognition in Canada that trade is good. And that recognition is based on a rational assessment of reality. More trade leads to more specialization, more comparative advantage, more productivity, more wealth generation, and more innovation. It doesn’t mean trade is perfect, and there are legitimate areas – like weapon production supply chains – where trade restrictions have their place, but more trade is ultimately better than less trade.

Further, the reflex to reach for tariffs whenever a Canadian industry faces a challenge incentivizes a lack of competitiveness, and a lack of competitiveness is a key reason we have fallen behind many of our peers when it comes to productivity. Instead, we must push Canadian businesses to become more efficient and competitive, and that is how the government should focus on ‘helping’ Canadian firms to the extent the government intervenes at all. Lower business taxes, pro-energy policies that drive up energy supplies to drive down the cost of energy for businesses and consumers, investments in infrastructure like roads, railways, and ports, and a push to adopt AI will do far more for the long-term competitiveness of Canadian companies than new tariffs.

Canada has the talent and resources to be the wealthiest country in the world. To get there, we need to cultivate a more competitive mindset rather than pushing for tariffs at every opportunity.

Spencer Fernando