Whatever tariff formula U.S. President Donald Trump imposes, Canada's "economy is on solid ground" and the country should be able to weather the stormy economic climate.
That's the position of Pierre Cléroux, vice-president of research and chief economist at BDC, who was the keynote speaker April 2 at a luncheon hosted by the Greater Sudbury Chamber of Commerce.
Speaking over the noon hour, Cleroux said the one clear thing about U.S. President Donald Trump's Wednesday afternoon announcement regarding reciprocal tariffs is that it will create economic uncertainty for a period of time.
"The crystal ball is a bit foggy these days," Cleroux joked with the chamber audience.
Cleroux said the two existing tariffs — 25 per cent on steel and aluminum — are already having a negative impact on the economy. Those tariffs came into effect on March 12.
But things are no better in the U.S. he said, where the economy is already slowing down because of massive public-sector layoffs and negative immigration actions and discussions. Americans have stopped buying as much in the retail sector.
Cleroux said this was despite the U.S. having the best economic growth of any developed country in 2024, at nearly three per cent. He said that was twice as much as in Canada.
But there is uncertainty in the U.S. because Canada, and other countries, are hitting back with their own tariffs on U.S. imported goods, said Cleroux.
At the same time, he said, business investment is down in Canada because of the uncertainty that’s been created. This is already showing in the housing market, where he said sales have dropped in the past two months. Cleroux said uncertainty is showing.
"So because our economy is still working very well, it's still performing well, but the uncertainty is just making people wait to see what will happen, and as a result in Canada the economy has slowed down."
Cleroux said most economists work with scenarios that try to predict how the economy responds to political action.
He presented a scenario from the Bank of Canada showing economic performance from a 25 per cent tariff. Cleroux said the economy will suffer at the beginning, but then after a period of a few months, things will change.
The interesting part, Cleroux said, is that the Canadian economy will bounce back.
"The Canadian economy will grow again. So tariffs are not the end of everything. We will find a way to grow our economy, even with tariffs,” he said. “We'll have absorbed the shock, and after that, we will be able to pivot, and we will be able to grow again.”
Cleroux said he could not predict what the U.S. tariff plan might entail, "but I guess I can tell you that we will be able to have a growing economy despite that, after we absorb this shock."
Cleroux did say he anticipates tariffs might have a bigger impact in Ontario because of the automotive sector. He said that will likely be offset by the strength of the mining sector.
"The mining sector is performing well. Last year, the entire mining sector in Canada increased by almost four per cent, which is one of the best sectors that has been the best growth in any sector in Canada," said Cleroux.
"The nickel price is lower, but it's stable, and there's no reason to believe that will change. And as you probably know, the gold price is performing very well."
He added that economic uncertainty is one of the reasons why people like to invest in gold.
"What is also helping our mining industry is our dollar. Our dollar is low. So when we export, we actually benefit from a lower dollar (CDN$0.70 on Tuesday)," said Cleroux.
"It has been lower just because of the uncertainty. It lost six per cent since October because of the uncertainty. So it's not a good time to go to Florida for two reasons," Cleroux added.
One reason is the low value of the dollar he said and, with a smile on his face, Cleroux said he would let the audience guess the other reason.
Len Gillis covers mining news as well as health care stories for Sudbury.com.
