The Trudeau government may soon be issuing pandemic-style payouts to businesses harmed by U.S. President Donald Trump’s proposed 25% trade tariffs on Canadian products.
Multiple sources within the government told media outlets this week that it’s preparing a financial relief package for businesses that will be contingent on how severe the U.S. tariffs are, with additional programs to be potentially implemented later on.
Trump announced that the tariffs may be in effect as early as Feb. 1.
The Canadian Chamber of Commerce estimates that a 25% tariff would cost the average Canadian household $1,900 per year and decrease Canada’s GDP by 2.6%.
Economists have projected that the tariffs will result in mass layoffs in addition to hitting Canadian consumers with a massive spike in the cost of goods.
Ontario Premier Doug Ford said that as many as 500,000 jobs could be lost across the province as a result. He suggested the need for similar government spending to stimulate the economy earlier this month, calling it “no different than the pandemic.”
Government sources also indicated that its proposed stimulus package wouldn’t be implemented in tandem with the U.S. tariffs but after the overall economic impacts can be assessed.
Additionally, the Liberals’ financial assistance package would first require approval from opposition parties which wouldn’t be able to take place until at least March 24 due to Trudeau’s prorogation of Parliament.
However, the Conservatives, NDP and Bloc Québécois have all vowed to topple the minority Liberal government at the earliest opportunity.
“There will be costs for Canadians if we move forward on tariffs to the United States, and that’s why we will be there to support and compensate Canadians and Canadian businesses, depending on the response we have,” Prime Minister Justin Trudeau told reporters last week.
The Trudeau government paid out $82 billion in emergency funding during the COVID-19 pandemic, beginning in 2020 with an initial installment of $55 billion for businesses via wage subsidies and tax deferrals.
Another $27 billion was given out in direct financial relief.
However, Bank of Canada governor Tiff Macklem later told the House of Commons finance committee in 2022 that the economy would likely be faring better if the Liberal government had clamped down on Covid-19 pandemic stimulus earlier.
Former Liberal finance minister Bill Morneau would echo Macklem’s comments that the Liberals’ pandemic spending went on for too long and contributed to Canada’s current inflationary woes in 2023.
A study conducted by the Fraser Institute also concluded that despite spending vast amounts of taxpayer money, Canada achieved some of the worst results when compared with other developed nations.
Ottawa has pledged to implement retaliatory tariffs on many Canadian exports, particularly energy.
Foreign Affairs Minister Melanie Joly will travel to Washington this week to meet with U.S. Secretary of State Marco Rubio on Wednesday.
Joly said that preventing the tariffs was the government’s “number one priority.”
“We believe that diplomacy can work, and that’s why we’re having private conversations, and we won’t negotiate in front of the public,” she told reporters in Ottawa on Monday.
