Why Trump’s ‘Liberation Day’ Tariffs Could End Up Benefiting Canada

Donald Trump’s upcoming “liberation day” on April 2 — when he plans to slap reciprocal tariffs on all of America’s trading partners — has rattled the global trade community. Yet, according to CIBC Capital Markets’ chief economist Avery Shenfeld, this escalation of protectionism might actually play in Canada’s favour. While initially alarming, the broader sweep of Trump’s tariff agenda could put Canada on more competitive footing rather than isolating it for punishment.

Back in January, when Trump first proposed hitting even close allies with tariffs, Canada found itself in the crosshairs. But the April 2 plan suggests that many other countries, including those in Europe and Asia, may be subject to the same treatment. Shenfeld argues that this “misery loves company” scenario may work to Canada’s advantage by diluting the impact of U.S. tariffs on Canadian exports. If other major trading partners are also targeted, Canada won’t stand out as an outlier and could more easily push for tariff rollbacks as part of a wider international front.

Industries that rely heavily on global competition — like fisheries, base metal manufacturing, and mining — may see particular benefit. With other nations retaliating against U.S. goods, Canadian producers could find new opportunities to fill supply gaps in markets that boycott American exports. In effect, Canada could step in as a reliable alternative, expanding its presence in Europe and Asia amid global trade reshuffling.

There’s also a political strategy in play. Should Canada and other nations impose countermeasures, such as their own tariffs or Buy National campaigns, the economic backlash would impact U.S. companies and consumers. This could prompt domestic pressure within the United States to ease restrictions and pursue a negotiated solution. Inflation, already a concern, would be exacerbated by import duties, leading to mounting frustration among voters.

Still, some risks remain. Shenfeld warns that Trump may insist on keeping a portion of these tariffs intact to satisfy campaign promises. However, if the administration decides to focus punitive trade measures on countries that have historically restricted U.S. imports more aggressively, Canada could be spared the harshest penalties — unless, of course, the president decides Canada is already too close for comfort.

In the meantime, Canada’s housing and economic landscape is adjusting. A new report from the National Bank of Canada reveals that population growth has slowed to more manageable levels, easing pressure on housing demand. Yet even with this moderation, the country will need continued construction and trade stability to address its housing crisis. With trade tensions heating up, however, uncertainty around material costs and investment could derail progress.