Rob Breakenridge: Carney must be honest about the cost of counter-tariffs

As Canada absorbs the impact of freshly-implemented U.S. tariffs and braces for the impact of the soon-to-be-implemented counter tariffs, the Carney government is showing some signs that it’s not completely oblivious to all of the costs piling up for Canadian consumers and businesses.

It would be hard to deny that a trade war is a bad time to impose new costs on Canadians and it’s encouraging to see the government acknowledge this. Unfortunately, that logic only extends so far.

Earlier this week, the finance minister announced that the federal gasoline tax will not be re-imposed on Labour Day, as was previously planned. Instead, the tax holiday will be extended until the end of January, followed by a brief period of half the tax and full reinstatement on April 1, 2027.

François-Philippe Champagne says the government has flexibility, thanks to a resilient national economy and the additional government revenue generated by higher oil prices.

It remains to be seen just how resilient the economy will prove to be, especially in the face of a worsening and potentially prolonged trade dispute. Friday’s latest jobs report showed an unexpected loss last month of 42,000 jobs in the economy, so things may be a little more precarious than the government would like to admit.

Furthermore, while indeed higher oil prices have boosted government revenues, that’s very much a double-edged sword as that has also meant much higher costs for consumers. So while the gas tax holiday has provided some relief, it would have been quite a double-whammy to re-impose that tax just as new counter tariffs are kicking in.

Champagne’s announcement Wednesday coincided with the latest interest rate announcement from the Bank of Canada. While the bank’s benchmark rate is holding steady for now, Governor Tiff Macklem warned of a rising inflation risk, thanks to higher energy costs and the tariffs and counter tariffs spawned by this Canada-U.S. trade dispute.

It’s hardly breaking news that, as noted in the government’s press release, “affordability remains top of mind for families and businesses across the country.” In actuality, that’s been the case for quite some time now, even if this government is late to the party.

An affordability agenda, therefore, would certainly be welcome. The problem, though, is that this government’s agenda — scant as it is — is undermined by its own tepidness and by their own trade strategy.

In the government’s defence, the skyrocketing price of oil — and, by extension, gasoline and diesel — is due in large part to circumstances very much outside of their control. Furthermore, we didn’t ask for this trade war (even if it’s not entirely clear what led to this most recent breakdown in talks). We were content to live under the terms of CUSMA, and these new and unjustified U.S. tariffs arguably warranted some response.

But now we’ve got competing agendas operating at cross-purposes.

It’s hard to offer or deliver a credible affordability agenda — anchored in the premise that government-imposed costs are to be avoided and mitigated — while also pushing ahead with a new layer of government-imposed costs.

Look, the government may well believe that counter tariffs are necessary and that they serve the objective of ultimately arriving at a point where tariffs come down on both sides. But they should be more honest in acknowledging their belief that there are costs Canadians must absorb in pursuit of this goal.

All of which makes it more difficult to portray themselves as the guardians of affordability. The government seems to be picking and choosing when it matters or when it warrants a policy intervention.

That’s not to say counter tariffs should be off the table, even if there’s a case to be made for a Canadian response to be much much more targeted and limited. But it does mean that the government should live up to its own rhetoric.

If counter tariffs are essential in defending our national interests, and if affordability is still a priority, then much more can and should be done elsewhere to further mitigate the blow.

No, we can’t control what Donald Trump does, whether it’s his own trade agenda or his war in the Middle East. But there’s much that’s within the government’s control that impacts not only affordability but overall competitiveness and productivity: taxes (both personal and corporate), other tariffs and trade barriers, as well as regulations and red tape — just to name a few..

The extended gas tax pause is welcome but it should be merely the beginning of a broader government strategy to alleviate existing affordability pressures and to offset the additional pressures that now loom.

As much as we’d prefer a quick end to trade hostilities and a return to open trade between the U.S. and Canada, we can’t count on that. Things could actually get worse before they get better.

It’s pointing out the obvious to note that there are no cost-free trade wars. There’s never a good time for one, either, especially not in an environment of existing strains on affordability.

The government needs to acknowledge these realities. The moment calls for a much more ambitious and meaningful affordability strategy — one that matches both the government’s own rhetoric and the costs of their own policies.

Rob Breakenridge is a Calgary-based podcaster and writer. He can be found at robbreakenridge.ca and reached at rob.breakenridge@gmail.com