Ok, but what about profiteering?

A sober reminder of what's actually at stake in the Canada-US tariff war

The era of Neoliberalism officially ended yesterday. The tit-for-tat tariff war between Canada, the US and Mexico is an about-face and our economic paradigm is set to shift on Tuesday; free trade is out (long live free trade?)

Of course, these things don’t just end and what comes next, given the weakness of the left, is going to be worse, but regardless, it’s still a turning point.

Last night, senior executives across Canada were surely on calls trying to figure out what a tariff war means for their bottom lines, because regardless of the issue, the answer is always higher profit. While the leaders of corporate Canada figure out the questions to ask to get them to this answer, Canadians need to pay very close attention to what happens to prices if tariffs are added to virtually all US goods (and services?).

For example, will we see a price differential between American goods and non-American goods? Canada has 14 free trade agreements with 49 countries (I have removed NAFTA from that total) and so if the tariff war will impact anything, we should see a price increase on US goods while there is no price increase for goods from other countries with whom we have free trade.

The same should go for Canadian goods.

Sure, there could be inputs that are subject to tariffs and then that are repackaged as Canadian goods and then sold to us at a higher price, but that won’t be the case for all goods. And certainly not goods that are wholly made in Canada, like beef or for anything that is controlled by supply management, like dairy or eggs.

My hunch though, is that in the quest to find the questions that get corporations to the answer that is higher profits, corporations see opportunity to use the cover of tariffs to jack up their prices. We saw this during the earlier years of the pandemic and we will see this again. We will also see a lot of CEO whining that their profit targets might be missed this year (only to perhaps see that they still exceeded profit expectations at the end of 2025, despite the headwinds).

There also could be a rush of US companies to buy similar or affiliated Canadian companies so that they can operate them in Canada and avoid paying the tariffs. Could we be entering a new era of foreign branch plants?

Recall that the US already has the advantage of a low Canadian dollar — as of last night, it was just $0.688 of an American dollar. By imposing tariffs on Canada, Canadians buying US goods are doubly-dinged by the exchange rate when purchasing from the US (a combined percentage increase of 56.2% over the cost of 1 US dollar), while the Americans will still have a 6.2% savings on every dollar spent in Canada. In this tit-for-tat, the US still comes out ahead.

What’s more, everyone is assuming that the 25% tariff will automatically be passed onto the consumer. It doesn’t have to be. We can actually make it so that it’s absorbed by the corporations, who, by the way, have collectively been making record-breaking profits. Hell, why would a US company with Canadian operations, who has two feet on either side of this 25%-25% war, need to ding Canadians or Americans for the new tarrifs at all?

But with no price controls, or controls over gouging us under the cover of tariffs, average and below-average Canadians are likely in for even more pain than we should be. Just think about what Trudeau focused on talking about in his live address tonight: our critical minerals, our energy exports — the stuff that does not actually create anything in this country. He gave a boilerplate, rah rah, team canada bullshit speech. And while people ate Trudeau speaking slowly and in complete sentences, up (I am looking at you who ate it up), the big question was completely buried: what is Canada going to do to stop price gouging and profiteering, how will we stop job losses, and how are we going to use the chaos of a Trump presidency to actually rebuild our manufacturing base and restore sovereignty to our economy?

Sure, maybe it’s too early to start talking about brass tacks. Certainly Jagmeet Singh thought that today was the moment to use ChatGPT to write a statement that said absolutely nothing (Poilievre understood the assignment). But the bar cannot be so low that it’s about to be mined and sold off to the US Department of Defense. We have to demand that Trudeau, in his moment of suspended parliament and lack of opposition scrutiny, actually acts to protect Canadians as much as he talks about loving them. Because in absence of some serious market interventions, the impact of the tariffs will go way beyond the actual impact of the tariffs.