BY SHONDELL SABAD, SENIOR STRATEGIC ADVISOR AT THE ALBERTA ENTERPRISE GROUP

As conversations around global trade heat up – again – two recent articles offer powerful insights into the complexity of tariffs and how Canada should respond.

In The Tariff Recession?, John Mauldin, a respected U.S. economist and author of Thoughts from the Frontline – one of the longest-running and most widely read macroeconomic newsletters – dives into why tariffs, while politically appealing, are economically dangerous. He explains that the U.S. runs persistent trade deficits not because it’s “losing” in global trade, but because it holds the world’s reserve currency. Other countries must hold U.S. dollars to facilitate trade, and that naturally results in the U.S. importing more than it exports. Far from being a weakness, this dynamic has helped stabilize global markets. Tariffs aimed at “correcting” trade imbalances miss this nuance and risk triggering inflation, job losses, and even recession. 

From a Canadian perspective, economist Jack Mintz addresses the same issue in How to respond to Trump’s tariff provocations. Mintz cautions that Canada should avoid knee-jerk retaliation. Instead, he encourages strategic engagement with the U.S., while also doubling down on diversifying trade relationships – especially with countries like the U.K., India, and those in the Indo-Pacific region. He also notes that internal issues, like Canada’s own interprovincial trade barriers, need to be addressed to strengthen our economic position.

Together, these two pieces underscore the need for thoughtful, informed responses to the growing rhetoric around tariffs. Rather than inflaming tensions or overreacting, the smartest path forward –for Canada and our business community – is one grounded in strategy, diversification, and economic fundamentals.