IT’S not a good sign for business when students in a high school economics classes have a better grasp on international trade concepts than the leader of the free world.
Manitoba companies in a number of sectors, including plastics, furniture, paper, wood, machinery and beverages, are being squeezed by the latest round of tariffs imposed by U.S. president Donald Trump.
As with most things with this U.S. administration, the tariffs are more bluster than substance. They impact about $28 billion worth of Canadian exports to the U.S. or about five per cent of what we
ship south of the 49th parallel. Economists estimate the tariffs will reduce Canadian GDP by 0.6 per cent to 0.9 per cent and considering the resiliency shown by the Canadian economy since the first found of tariffs were imposed in March 2025, they’re not expecting a recession.
A big part of Trump’s rationale for the tariffs in the first place is the U.S. has a trade deficit with Canada. We’re “ripping them off.” Right there Trump would have failed Mr. Dickens’ Grade 11 Economics class at Kelvin High School in the mid-1980s. All a trade deficit means is that one country buys more goods and services from the other than the other way around.
Are there any two countries in the world that are at trading equilibrium? Highly doubtful.
It’s not like there’s interest to be paid on it.
It’s just a statistic.
Alan Arcand, chief economist at the Canadian Manufacturers & Exporters, put it best on our latest edition of the Manitoba Inc. podcast.
“The best way to think about a trade deficit is to never think about a trade deficit,” he said. It simply doesn’t impact your life as key indicators, such as the inflation rate and
unemployment rate, do.
Arcand admits to having a trade deficit of his own — with Amazon. “I purchase a lot of goods from Amazon and they’ve never purchased a single thing from me. Amazon is ripping me off,” he says, in one of the best examples of economist humour I’ve ever heard. “Canada runs an overall trade deficit. The average Canadian doesn’t know that or care. It just doesn’t matter.”
So, we’ve got Trump making trade policy based on an inconsequential metric and calling us “nasty.” Arcand says there’s no question that some companies, particularly smaller and medium-sized ones, will be impacted by the tariffs. But the more that Canada can diversify its trading partnerships with other countries — hello, European Union — that impact will be minimized. He’s confident that Canada has the necessary expertise around the trade negotiating table and it certainly helps that Prime Minister Mark Carney is an economist.
“I think that’s good. But I’m biased,” he says.
Me, too. But it doesn’t take much. I passed Grade 11 Economics.
Geoff Kirbyson
Publisher, Manitoba Inc.
4 Manitoba Inc. Fall 2026
