Experts believe that the US threat to impose 50 percent tariffs on Canadian goods would have repercussions on Canada's economy, but it could also be a negotiating tactic by the US administration.

The new tariffs, announced by US President Donald Trump on Monday, are scheduled to take effect on August 19. They cover a wide range of goods including honey, cement, dairy products, some wood products, hockey sticks, essential oils, perfumes, candles, dog collars, and wigs, according to the Associated Press.

The tariffs exempt energy products, potash, fish, and base metals, but will include goods previously exempt from import duties under the US-Mexico-Canada Agreement (USMCA).

The United States did not renew the 2020 trade agreement, leading to a new round of negotiations that could last until 2036. Prince Edward Island Premier Rob Lantz stated that the tariffs create uncertainty.

Lantz said on Wednesday after a meeting of provincial premiers and territorial leaders in Charlottetown, the provincial capital: "We live in a time where uncertainty has become the norm."

Randall Bartlett, deputy chief economist at Desjardins, one of Canada's largest financial institutions, said the tariffs would affect annual Canadian exports to the US worth C$28 billion (US$19.8 billion). This represents about 5 percent of US imports from Canada annually.

Bartlett added that the tariffs could reduce Canada's economic growth by 0.2 to 0.3 percentage points in 2026 and 2027, although he does not expect a recession.

Bartlett said: "We expect this to freeze more investments and possibly curb hiring. This in turn will negatively affect consumer activity and residential investment."

A sign urging customers to choose Canadian products in the dietary supplement and health aisle at a Whole Foods store (Reuters)

Fen Osler Hampson, a professor of international relations at Carleton University in Ottawa, said the products affected by the tariffs are goods that American consumers may decide not to buy if prices rise.

The loss of American customers could lead to layoffs at companies employing between 10 and 200 workers, who represent the 'backbone of the Canadian economy'.

Hampson, co-chair of the expert group on Canada-US relations, added: 'This has broad implications for the economy; if people lose their jobs, they won't spend.'

Dennis Darby, President and CEO of Canadian Manufacturers & Exporters, said the tariffs will severely harm manufacturers, workers, and consumers on both sides of the border.

He added in a statement: 'These tariffs will raise costs, disrupt production, and reduce North America's competitiveness at a time when we should be strengthening our shared industrial base.'

British Columbia Premier David Eby said it is frustrating that the US is proposing tariffs on some Canadian goods while simultaneously seeking to invest in Canadian mines to secure minerals.

Eby added: 'It is unreasonable for a country to attack a group of families and workers while simultaneously hoping to access Canadian resources that the rest of the world desires.' He indicated that Canada should limit access to the resources the US wants if its stance continues.

Experts Bartlett and Hampson said the tariffs might just be a negotiating tactic and may not take effect. However, they advised Canadian trade negotiators to be cautious going forward.

Hampson warned against imposing retaliatory tariffs or reducing oil or electricity shipments to the United States.

He said: 'We don't want to provoke the United States. If we enter a war of this kind, we will lose. Our economy is smaller, and they can absorb the blow much more than we can.'

Hampson said the tariffs may reflect tension in relations between Trump and Canadian Prime Minister Mark Carney, which has worsened since Carney criticized his counterpart at the World Economic Forum in Davos.

On Tuesday, Carney stated that he and Trump agreed to intensify trade talks.

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