Protectionism and Retaliation

January 1, 2017

Canada, along with Mexico, is particularly heavily exposed to trade with the United States, and there is considerable speculation about how Canada should react if the United States moves unilaterally to implement protectionist policies. The authors estimate the damage that would be done by a 10 percent tariff surcharge unilaterally imposed by the United States on its trade partners – and the effects if Canada retaliated with a 10 percent tariff of its own.