Trump threatens higher tariffs on Canadian vehicles

President Donald Trump threatened to impose fresh 50% tariffs on Canadian goods after talks for a new trade deal broke down on Friday. The new tariff threats, set to take effect on January 1, could impact cars, car parts, and steel. Paul Krugman, Nobel-winning economist, likened the situation to the US's war in Iran, calling Trump a bully.

He argued that a trade war could still hurt the US, despite Canada being far smaller in comparison. David Whiston, an auto industry analyst at Morningstar, warned that the tariffs would be immensely disruptive for the auto and auto-parts trade between the two countries, disrupting supply chains. Michael Froman, president of the Council on Foreign Relations, said the tariffs are not economically meaningful, but the bigger risk lies in the USMCA negotiations.

Peter Schiff, chief economist at Euro Pacific Asset Management, predicted that the tariffs would make the cost of living a bigger problem for American consumers. Kelly Ann Shaw, a former deputy assistant to the president for international economics, expressed frustration with Canada's vowed retaliation, stating that there may not be an off-ramp anytime soon.