Hub Podcasts How will Europe's trade deal impact Trump's negotiations with Canada?
Jul 28, 2025
Joseph Steinberg, a professor of economics at the University of Toronto, dives into the potential fallout if Canada doesn't strike a trade deal with the U.S. by the looming August deadline. He examines the fiscal crisis that could arise from the One Big Beautiful Bill Act and discusses the complexities of tariffs and their implications for U.S.-Canada relations. Steinberg also unpacks how consumer sentiment and political perceptions intertwine with tariffs, and he offers insights into the delayed effects on inflation caused by Trump's trade policies.
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Trade Deal Trends and Canada Exemption
- Trump's trade negotiations suggest a trend towards flat tariffs of 15-20% like with Japan and Europe.
- However, Canada may still be exempt from high tariffs due to existing USMCA compliance.
Tariffs as Revenue and Legal Challenges
- U.S. tariffs are partly aimed at increasing government revenue, acting as a source of tax.
- Legal challenges exist on tariffs, and Congress involvement is crucial for renegotiating trade deals with Canada.
Fiscal Crisis and Tariff Revenue Trade-Off
- The U.S. faces fiscal challenges post large tax cuts and spending increases, potentially relying on tariff revenue.
- Tariffs may not boost reshoring; they mainly bring government revenue, conflicting with manufacturing growth goals.