On November 25, 2024 President-Elect Donald Trump threatened tariffs of 25% on our exports to the United States.

Let's look at the effect these tariffs would have. We'll use the example of a fictional town anywhere in Canada.

How Tariffs Affect Communities

This town is equally divided into 5 sections of 20%.

In this town 20% of the people live here and work elsewhere. 20% live here and also work here. 20% export products to the United States. 20% just sell their products locally and 20% sell their products nationally.

Let's have a look at how these tariffs would affect the businesses that export to the United States. On the left side you'll see that right now they can compete fairly with American products. However, on the right side you'll see that after a tariff of 25% has been added, they will need to increase their prices by 25% just to keep up with the tariffs. For example, if they used to sell shoes for $100.00, they'll now have to sell them for $125.00. This means their products will be priced higher than similar American products. When price-conscious consumers have to make a decision, they are likely to choose the less expensive products. It could mean that these products will simply not sell at all.

So this once thriving section of the community has just taken a hit.

Little by little, these exporting companies find that they simply can not compete and slowly start to go out of business.

This means that everyone in town who worked at those exporting companies just lost their job. All the people who worked at these exporting companies who used to have money to spend no longer have as much money to spend.

It may seem that this tariff situation only affected the companies that exported to the United States. However, soon the situation also starts to affect the 20% of businesses that sell their products locally.

Why? Well, all those people who lost their jobs have no money to spend at those businesses so those businesses also start to suffer. Now 40% of businesses in this town are struggling.

People who live in this town and work here are struggling. Businesses that export to the US are struggling. Businesses that sell locally are also struggling.

The thing that should have only affected the companies in that town that export is having a domino effect on other people who live in the town.

As the employment situation in the town worsens, the people who used to live here and work here have to look elsewhere for work, and slowly people start to move away.

As people begin to move away, it affects the property value of the existing homes in the town. It begins to affect the real estate market in the town, and this makes it harder for the town to rebuild and attract the talent needed to start over.

How Tariffs Could Trigger Other Societal Problems

With 60% of the town now in a state of distress, cue the ensuing problems that arise from poverty. These include

·        housing,

·        health,

·        food insecurity

·        and crime.

So if you haven't been taking these tariffs seriously or haven't been paying attention to this story, this is what could happen when one town is hit by tariffs

However, that was just a fictional town. Here's the real data.

Percentage of Canada’s GDP That Comes From Exports to the United States

According to Global Affairs Canada, this is how much Canada exported in 2023. That number you see on the right is 712 billion dollars.

Out of that previous 712 billion export total, 77% of that went to the United States. It makes sense. They are nearby. Why send stuff half way around the world?

So let's multiply 712 billion by 77%. That comes to 548 billion dollars out of 712 billion dollars in exports that is at risk due to the tariffs.

Now let's look at these exports as a total of Canada's total GDP. According to the world bank, Canada's GDP in 2023 was 2.14 trillion dollars. 712 billion of that came from exports. 548 billion of that came from exports to the united states. So the total amount of Canada's GDP that came from exports to the United States in 2023 was 25%.

Let's change that fictional town that depends on the United States for 20% of its income to the very real country called Canada that depends on the United States for 25% of its GDP.

Do I have your attention yet?

Let's start taking these tariffs seriously. Let's unite to fight these tariffs.

Find out here how to take action if the tariffs are implemented on January 20th, 2025.