Trump's tariff war with Canada has 'lots of parallels' with the Great Depression, expert warns
An expert has warned of 'lots of parallels' between Trump's ongoing spat with Canada and the triggers of the Great Depression as he laid out two potential ways that the trade tensions could affect ordinary people.
Relations between Donald Trump's administration and Canada have become increasingly strained after Trump threatened to impose a 50 percent tariff on Canadian goods worth $20 billion.
Canada has responded by threatening to impose matching tariffs of its own on certain US goods being imported into the country.
Canadian Prime Minster Mark Carney told Canadians: "You're at war when you're attacked, and we got attacked. We're going to hit back."
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Meanwhile Trump has taken to his account on Truth Social, accusing Canada of 'ripping off the United States for years' and being 'entitled', and writing: "WE DON'T NEED CANADA, THEY NEED US!"
Ontario's premier Doug Ford had a blunt message for Trump, telling the US president to 'kiss my a**', and warning that that Canada could shut off the electricity supply to some 1.5 million homes and businesses in the US, saying that Trump 'better have a pack of batteries'.
But how could this situation affect ordinary people?
Dr Eric Golson is an economic warfare specialist and Associate Professor of Economics at the University of Surrey, and shared two theories of how the situation could play out.
"There are two ways of looking at this mess," Dr Golson told UNILAD. "The first - we are entering a trade spiral, where hard-nosed adversaries (who were once very good friends) will keep adding tariffs to each others' products, with trade volumes ultimately significantly reduced."
Effectively, this means that they will continue to escalate.
"They will keep retaliating upon each other in a cycle, raising the cost of consumer goods," said Dr Golson, who went on to warn of the potentially catastrophic economic impact this may have.
"One of the triggers of the Great Depression was a high American tariff with close trading partners which set off a trade war; there are lots of parallels here with a global economy which already feels very shaky," he said.
There is also another option, which is that things do not spiral out of control in this way.
"I think everyone is expecting Trump will back down," he said, pointing out that there is a very good reason why Trump may not want prices rising at this particular moment - the midterms.
"Faced with midterms, a lot of bad press and a view by most Americans that the trade war is only raising their prices, Trump will likely choose to back down with the Canadians and claim it as a win to lower consumer prices," said Dr Golson.
"American businesses with integrated production lines with Canada are already lobbying heavily. The problem with Trump backing down is this precisely that everyone is expecting - and so that might actually weaken the possibility it will occur because Trump will not want to be labelled as TACOing out in the election cycle."
'TACO' is an acronym used by some to describe Trump making strong and bold statements, before backing out, meaning 'Trump Always Chickens Out'.
"So, it could be very difficult to backdown," said Dr Golson. "Only time will tell whether they will backdown."
Topics: US News, Canada, Donald Trump, Mark Carney
Kit Roberts