Even non-hockey fans might be familiar with this image from Saturday night’s U.S. vs. Canada hockey game in Montreal as part of the 4 Nations Face-Off. It’s emblematic of some of the tough talk we’ve heard from the new U.S. administration directed at allies including Canada, eliciting a chorus of boos by the fans in Montreal during the American anthem.
Hockey is a rough game. On Saturday, I played one in Philadelphia that was supposedly non-contact, yet a teammate cracked a rib when checked into the boards. This left us with only 8 skaters as we clawed our way back from a 5-0 first-period deficit before losing 7-5. Afterward, the teams drank beers together, with the unspoken understanding to “keep it on the ice.”
Tariffs are a rough game, too. “For context, in 2018, the U.S. average import tariff rose from 1.5% to roughly 3%. Under the new policy [proposed in February 2025], the U.S. average tariff rate rises to nearly 11%, the highest average ratio since the 1940s.” (1) Circa 2018, Canada remained in the 1.5% ballpark while BRIC markets averaged >5% and Korea >8%. (2)
Here’s a breakdown of the tariff rates by product category before the latest tariff threats – and proposed retaliation – of the last couple weeks.
^Increased from 8% in August, 2024, per Wiki.
This data shows the U.S. has been more tariff-happy, but double-clicking on some examples, U.S. claims about Canadian trade practices have merit.
Canadian forests, mostly publicly owned and managed by provincial governments, set "stumpage fees" lower than market rates in the U.S., where most timber is harvested from private land, amounting to a subsidy because Canadian producers pay artificially low prices for raw materials. (3)
Canada’s dairy industry engages in anti-free-market actions including production quotas, price fixing, and high tariffs (up to 298%). Canadians thus pay more for dairy products (up to $100 more per family per year) than they should. Fewer than 10,000 dairy farmers – whose average income is $148K (CDN) – take advantage of more than 40 million Canadians whose average income is $69K (CDN). A reverse-Robin Hood effect in which the comparatively rich benefit at the expense of the poor, and families with kids consume the most milk. (4, 5)
My take is that tariffs are a race to the bottom, and free trade – both across and within nations – has done more to lift people out of poverty than any other factor. As proof, there’s near-perfect correlation – across nations and centuries – between the embrace of free market principles and citizens’ living standards. Including the poor? Especially the poor. Only 30 years ago, a blip in time by historical standards, 40% of the world lived beneath the poverty line, whereas today it’s <10%. When government gets involved, consumers lose. The only people who win are bureaucrats, the special interest groups they’re protecting, and lawyers. The threat of tariffs might be an effective – if unpopular – negotiating tactic, and we’ll see the degree to which President Trump is saber-rattling.
Canadian consumers are bracing for price hikes in categories including cereal, fruit juices, fruits and vegetables, seafood, alcohol, chocolates, flowers, cosmetics, clothing, fabric, apparel and shoes. No matter what, U.S. companies will still sell their goods to Canadians, and vice-versa.
I named my management consulting firm Parallel-49 after the line of latitude that defines much of the longest undefended border in the world. I’ve advised more than 20 companies, in rough proportion to the populations (90% U.S., 10% Canadian). With a passport for both great nations (and an expired one for the UK), I understand the economy, perspective, and culture of each. If your company needs help in developing cross-border revenue growth plans amid an array of possibilities that might play out in the coming months, let’s chat.
Enjoy the re-match between the U.S. and Canada hockey teams. Afterward, the players will "keep it on the ice” as they decamp to their various NHL teams. The bigger question is how the U.S. and Canadian economies will find a path back to mutually beneficial free trade.
Photo Credit: The Guardian
Sources:
(3) ChatGPT
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