BMO Equity Research IN Tune Markets Plus: The Trump Tariff Threat
Dec 10, 2024
Join former Chief Trade Negotiator Steve Verheul, now at GTN Co., alongside Doug Porter, BMO's Chief Economist, and Yung-Yu Ma, Chief Investment Officer at BMO Wealth Management. They dive into Trump's potential 25% tariffs on Canada and Mexico, dissecting the repercussions for North American supply chains and economies. Key discussions cover inflation impacts, monetary policy responses, and investment market volatility. Also, explore Canada's strategies for retaliation and what signals could indicate future negotiations.
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Tariffs As A Multi-Tool For Policy
- President-elect Trump views tariffs as tools to bring production home, shrink trade deficits, and raise revenue.
- A 25% tariff on Canadian and Mexican imports would deeply disrupt integrated North American supply chains.
Prepare A Dual Political And Market Response
- Canada must address the stated U.S. rationales and build relationships with the incoming team to reduce risk.
- Mobilize U.S. private-sector opposition and prepare immediate retaliatory tools like targeted tariffs or export measures.
Asymmetric Economic Hits
- Broad tariffs would be stagflationary for the U.S., pushing up inflation and hurting growth marginally.
- Canada and Mexico would take much larger GDP hits due to their export exposure to the U.S.