As stock markets rallied after news of a 90-day trade war truce between China and the U.S., some stakeholders remain cautious about what it could mean for the Canadian economy and consumers.
“Canada’s industries have been hard hit by this trade war … any de-escalation at this time is good news for global trade,” says the Canadian Chamber of Commerce in a statement to Global News.
“We’ll be monitoring the China-U.S. discussion closely in the months ahead, as the details of any final agreement will matter.”
In a statement, the Retail Council of Canada also said the group, “welcomes this development, but we’re not popping the champagne just yet.”
“The 30% tariff that the U.S. continues to impose on itself is deeply damaging—not only to American businesses and consumers but also to global supply chains already facing significant disruption,” the council said.
What has changed in the trade war?
The U.S. agreed to drop its 145 per cent tariff rate on Chinese goods by 115 per cent to 30 per cent, while China agreed to lower its rate on U.S. goods by the same amount to 10 per cent.
Trump referred to Monday’s trade announcement as “a total reset with China.”
For the brief period that 145 per cent tariffs were imposed, it became very difficult for businesses to to operate normally with many seeking alternatives, or halting shipments altogether.
The news follows developments over the weekend after officials from China and the U.S. met in Geneva.
“The consensus from both delegations this weekend is neither side wants a decoupling,” said U.S. Treasury Secretary Bessent.
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“We want more balanced trade, and I think that both sides are committed to achieving that.”
Although a sense of optimism about the trade war potentially easing sent stock markets into the green worldwide Monday, including in Canada, there’s also caution.
“This shouldn’t be confused with progress relative to where we were in December, 2024,” says economic professor Peter Morrow at the University of Toronto.
“We should think of this as ‘things aren’t as bad as they were maybe a month ago.’”
How much progress has really been made?
Despite the relief on the stock markets, the long-term outlook is still very unpredictable.
Investors buying stocks on Wall Street and other markets on Monday may feel that if Trump is willing to negotiate on tariffs, then maybe the economy won’t go into a recession after all.
“There still remains a lot of uncertainty,” says Morrow.
“We’ve seen tariff levels gyrate dramatically over the past couple months. And in some sense, we’re just deferring the uncertainty for 90 days.”
What could this mean for Canada?
There have been concerns raised by economists and businesses that the U.S. tariffs on China could lead Chinese companies to raise their prices, impacting the prices of goods sent to Canada by extension.
That’s particularly the case with dollar stores.
For Canadian consumers, there are also potential ripple effects, which could mean paying higher prices for some goods, and continued uncertainty about what happens next.
This development may also raise questions about whether Trump is willing to negotiate on tariffs, with Prime Minister Mark Carney also looking to reach a deal with the U.S. administration to drop tariffs on Canada.
“I think there’s a chance that he (Carney) sees this as the Trump administration realizing some of the trouble they got themselves into,” says Morrow.
“Carney can say, OK, the Trump administration wants an off-ramp … wants to declare a political ‘win’ and an agreement where not as much really changes. But if you let Trump declare a win, you can both walk away with minimal damage.”
In the meantime, the U.S. and China are still in a trade war, but the tariffs have been greatly reduced for 90 days.
The situation between Canada and the U.S. has not changed yet, with both countries still imposing a 25 per cent tariff on all imported non-CUSM compliant products (Canada U.S. Mexico Agreement), with additional duties for aluminum and steel products, and smaller levies for energy imports into the U.S.
Although Carney has said he wants to see those tariffs removed as soon as possible, Canadian businesses are still saying they need relief now.
“We’re encouraged by the new Canadian government’s recent efforts in Washington, but we recognize that resolving the Canada–U.S. tariff dispute could take time. Meanwhile, the damage is ongoing,” says the Retail Council of Canada.
“We urge the government to be prepared to ramp up support should we enter a prolonged economic downturn.”
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