MoneyFlex

By Alicia Tyler on April 30, 2025
Estimated reading time: 7 minutes

By Alicia Tyler on April 30, 2025
Estimated reading time: 7 minutes

The volatility in the stock market, an insecure economy and job loss are all on the minds of young Canadians. But here’s how to make sense of Trump’s tariffs and the trade war.

Few topics have made more noise than tariffs lately, after U.S. President Donald Trump’s move to slap a 25% duty on most Canadian exports and 10% on energy exports like oil, gas and electricity.

These extreme measures have rattled Canada’s economy, with so much uncertainty about the future, it’s lead to job losses in the auto industry and a downturn in the housing market. In response, Canada implemented retaliatory tariffs and is working on building better trade relationships with other countries to lessen our reliance on the U.S. with Prime Minister Mark Carney stating that the Canada-US trade relationship, as we knew it, “is over.”

Think of tariffs like a cover charge at an event. Countries basically charge an entry fee for stuff coming in from other countries. So, if the U.S. imports cars from Canada, and a tariff is in place, the U.S. charges an additional fee at the border before letting the goods in. That increase in cost is often passed along to consumers.

Tariffs are meant to “protect domestic businesses”—in other words, governments want you to buy goods made in your country, but when governments hike tariffs, like Trump’s recently done, the cost of goods must go up too in order to protect profit margins, making foreign products more expensive. It’s the people buying the products that pay the tariffs, and those suppliers feel the impact of lack of competitive pricing.

Obviously some things are just nice to have, but the real trouble arises when tariffs are hiked on everyday necessities, like cars, food and materials like aluminum and metal (think cars, laptops, phones, construction, tools and medical gear). That’s when trade wars start, and the consequences are felt both immediately and for years to come. The kind of stuff future generations will learn about in history class.

Speaking of history, when was the last time something like this happened between the U.S. and Canada? Donald Drummond, former chief economist at TD Bank and Fellow and........

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