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Estimating Canadian Provincial Impacts of U.S. Tariffs
We have published a number of pieces that outline estimates from our macroeconomic model of the impacts of the U.S. tariffs on the Canadian economy under different scenarios, including this and this. Tariffs reduce potential GDP as they distort optimal allocation of resources, increase the cost of imported inputs for production, and create supply bottlenecks and supply chain disruptions. This reduces potential GDP and creates inflationary pressures. The inflationary pressures are further amplified by the direct price effects of tariffs in the event of a retaliation. Tariffs also generate a fall of aggregate demand ... (full story)