Canada Fires Back. But We’re Buying Some of the Ammunition.

By Christopher M. Michaud | The Canadianist

At 12:01 this morning, Canada fired back.

After weeks of escalating trade hostility from Washington, the federal government imposed retaliatory tariffs on billions of dollars worth of American goods, matching the latest U.S. action dollar for dollar.

There will be a certain satisfaction in that for a lot of Canadians.

We’ve spent months listening to the insults, the threats, the economic bullying and the increasingly ridiculous rhetoric coming from the United States. At some point, people naturally want to see Canada hit back.

Fine.

Hit back.

But we should understand what we’re doing while we do it.

Tariffs remind me a little of somebody getting into a furious argument, storming out of the house, jumping into the car and flooring it down the street.

The tires squeal. The engine screams. Maybe you feel better for ten seconds.

The person you’re angry at doesn’t have to buy you new tires.

You do.

That’s the problem with tariffs.

They can hurt the other side. They can put pressure on American exporters. They can make businesses south of the border complain loudly enough that Washington starts feeling political heat. They can encourage Canadian companies to find suppliers elsewhere.

But they also cost us money.

A tariff is a tax on an imported product. The Canadian importer pays it. Sometimes the business absorbs some of that cost. Sometimes the supplier takes a hit. Sometimes buyers switch to another product.

And sometimes the Canadian consumer pays more.

We’ve spent months correctly pointing out to Americans that their tariffs on Canadian goods are paid by Americans importing those goods.

The same rule applies when we do it.

And some of the products on the list are not obscure industrial components Canadians will never see.

They’re household goods.

They’re appliances.

They’re food.

They’re paper products.

Yes, that includes toilet paper.

Canada has reached the point in the trade war where it may now cost us a little more to wipe our ass.

There’s an absurdity to that, but there’s also a serious affordability problem sitting underneath it.

Canada didn’t enter this fight from a position where households were swimming in disposable income and wondering what to do with all the extra cash.

People have been struggling with groceries, rent, mortgages, utilities, insurance and household bills for years.

Ottawa knows it.

The opposition knows it.

Canadians certainly know it.

For weeks, people were calling it a technical recession. The opposition hammered the government over it. The government pushed back. Economists argued over the definition.

It was an issue because Canadians heard the word recession anyway.

Then came a better report.

Growth.

Maybe that was the beginning of something.

Maybe Canada was finally starting to climb out.

Or maybe it was just a bump on the way down.

We don’t know yet.

And now, before anyone really knows the answer, Canada has dropped another major economic shock into the system.

That creates a much bigger question than whether Canada was justified in retaliating.

What happens to the long game?

Ottawa has repeatedly told Canadians that it’s working on affordability, productivity, investment and economic growth.

Maybe it is.

Maybe some of those policies will work.

Most Canadians haven’t felt much of the benefit yet.

Now the government is introducing measures that can move prices in the opposite direction.

If businesses pay more for American inputs, some will raise prices.

Others will absorb the costs for a while.

Some will postpone investment.

Some will stop hiring.

Some will cut employees.

Some may not survive.

Canadian exporters are being hit from the other side at the same time.

This is what trade wars actually look like.

Both sides spend money trying to make the other side hurt more.

Sometimes that strategy works.

Sometimes the pressure becomes strong enough that businesses, workers and voters on the other side start demanding a settlement.

That may be exactly what Canada is trying to accomplish.

But the longer this lasts, the more damage accumulates here as well.

And the damage doesn’t necessarily disappear the morning somebody signs a trade agreement.

Businesses that close don’t automatically reopen.

Workers who lose jobs don’t automatically get them back.

Investment that went somewhere else doesn’t necessarily return.

Supply chains that were rebuilt somewhere else may stay there.

Families that spent six months or a year paying higher prices don’t get that money refunded when the tariffs disappear.

Prices are only one part of the economic damage.

Jobs, businesses and investment take longer to repair.

That’s why the duration of this fight matters so much.

So yes, there is something satisfying about Canada finally returning fire.

After everything Washington has thrown at this country, Canadians are entitled to feel that.

But retaliation isn’t free.

We are taxing American products in order to hurt American economic interests.

We are also making some things more expensive here while trying to solve an affordability crisis.

If Ottawa has been playing a long economic game, today’s tariffs may have just moved the starting gate backward.

Maybe the pressure works.

Maybe Washington comes back to the table.

Maybe this ends quickly.

It had better.

Because when you’re angry and you peel away from the house with the tires smoking, you can tell yourself you showed them.

Eventually, somebody still has to pay for the tires.