By Pam Wright
Local Journalism Initiative Reporter
When it comes to tariff threats from U.S. President Donald Trump, the Conference Board of Canada’s chief economist says to stay calm and carry on.
“Canadian politicians and the public shouldn’t overreact to these threats,” advised Pedro Antunes. “It’s a tough job, but we should keep our cool.”
As lead speaker at the recent Chatham-Kent Local Immigration Partnership forum, the long-time economist answered questions from the audience as to what can be done in the face of Trump’s bullying tactics.
Overreaction “lends fire” to Trump’s remarks, he told a large crowd at the John D. Bradley Centre, noting the president could be out on the golf course while everyone else is panicking.
According to Antunes, 25-per-cent tariffs on Canadian goods across the board will lead to hard times on both sides of the border – and, if they go on a long while, a recession in Canada.
“If they apply 25-per-cent tariffs, it will be a disaster,” Antunes explained, adding it could lead to the death of manufacturing in Canada. However, he reiterated that U.S.-imposed tariffs on Canada, in concert with Canada’s retaliatory tariffs, would be “devastating” for the American economy, leading to increased prices for goods around the world.
“As nervous as we are about the economy, my advice is to keep our heads,” he added, noting the tariffs, currently imposed on Canadian steel and aluminum only, may turn out to be temporary.
As part of his presentation regarding immigration and the economy, Antunes said he wanted to dispel two myths about impacts of immigration.
The first, he said, is the myth that immigration created Canada’s housing affordability crisis, when in fact housing prices were on the upswing prior to the pandemic.
But there were other factors, he said. During the pandemic, consumer behaviour changed. People began working from home and staying home, leading people to invest in where they lived.
Many Canadians were also receiving income supports such as CERB and weren’t spending money, so disposal incomes and savings grew, prompting people to invest in their homes.
Low interest rates at the time were another major factor.
As a result, housing prices hit record highs, Antunes told the group, including in Southwestern Ontario, where the cost of housing increased 2.8 times what it was in 2015.
The second myth Antunes said he wanted to bust is the belief that “really strong” immigration growth is the cause of increased inflation, when in fact immigration helped subdue inflationary pressure.
According to Antunes, inflation rose in 2021-22 for a number of reasons, including supply chain constraints, changing consumer habits, transportation bottlenecks and the Russian invasion of Ukraine.
Immigration started to surge in 2022, with unemployment hitting record low levels and job vacancies became the number one concern for the Bank of Canada, Antunes said. This led government to facilitate the employment of non-permanent residents such as international students, as well as encouraging businesses to recruit immigrants to fill positions.
Ironically, the economist explained, the people most impacted by challenges such as affordable housing are newcomers to Canada, noting that Canadians need to remember that immigration helped fill a crucial need in the Canadian labour market created in part by the pandemic.
Antunes said business leaders and economists are concerned about the federal government’s decision to cut back immigration numbers last year, as well as the possibility of not renewing work permits. Ultimately he said this will put pressure on employers who are counting on immigration to fill jobs, especially with the wave of retiring baby boomers expected to peak in the next five years.
Antunes warned that while the lower immigration numbers will help take pressure off housing prices, they also negatively impact Canada’s GDP, noting Canada is facing a “fairly frail” economy this year.
There’s also concern, he said, about Canadian debt load, as many five-year mortgages are coming due this year.
