A brown paper price tag advising to people to 'Made in Canada'

The #BuyCanadian movement has taken off and inspired some Canadian consumers to focus their purchases on Canadian-made products in a show of solidarity for national products while trying to support the economy. (Thinglass/Shutterstock)

Canada | Economy

Buy Canadian: Should this be our response to the trade war with the U.S.?

Canadians are taking matters into their own hands to try and boost the economy, but the effort may be lost 

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When the White House announced tariffs on Canadian-made goods, some citizens on the northern side of the border took matters into their own hands. The #BuyCanadian movement has taken off and inspired some Canadian consumers to focus their purchases on Canadian-made products in a show of solidarity for national products while trying to support the economy.

Canadians have cancelled vacations in the United States and filled their shopping carts with locally produced groceries. A 17-year-old boy from Ontario was even inspired to spend his summer vacation compiling a reference list of Canadian-made goods.

“It’s an understandable reaction to what are completely unjustifiable tariff barriers being put up by the United States on steel and aluminum, the threat of further tariffs on automobiles and the very aggressive line on renegotiation of NAFTA that the White House has taken,” says Brett House, vice president and deputy chief economist at Scotiabank.

Even so, experts are not convinced this movement will have a strong effect on the economy. House says the response may even increase costs for residents since Canada is one of the most trade-dependent countries in the world.

“In many areas we don’t have a local [product] alternative and the investment it would require to produce a local alternative would be substantial,” he says. “By the time those investments actually come to fruition and create productive capacity, it’s likely that a couple years down the line this trade spat with the U.S. will have passed.”

According to baseline projections, House says, constructive negotiations with the U.S. on NAFTA are likely to be reached. In the meantime, the best thing people can do is keep calm and keep trading.

Pointing to a past Buy Canadian movement, David Jacks, an economics professor at Simon Fraser University, references the 1930 Smoot-Hawley Tariff, which raised U.S. tariffs on thousands of imported goods and prompted Canada to respond by imposing its own tariffs, but achieved very little economically.

“The historical evidence in this regard is not terribly encouraging,” says Jacks. “I would expect very minor effects of such a movement on the Canadian macroeconomy—and even more so, in the case of the U.S. macroeconomy.”

It’s also difficult to avoid American products completely since production supply chains are often transcontinental. Jacks points to the iPhone, “the quintessential American product of the present day” as the perfect example.

“The iPhone is not even manufactured in the United States. But nor is it wholly manufactured in China,” he says. “China is just the last step in a long supply chain for the iPhone, which entails thousands of parts from hundreds of suppliers in dozens of countries. So, it is hard to see that boycotting Apple is the most effective response since so much of its commercial activity occurs outside the boundaries of the United States.”

But having consumers think consciously about where their purchasing power is placed is never a bad thing, House says. It forces people to think about environmental sustainability and production standards in addition to the product’s country of origin.

In the end, keeping markets open and trading with the world will keep the economy moving in the right direction.

“If we continue to make Canada a more attractive place to invest, to produce, more attractive place for skilled immigrants to come to, then in the end we will do well,” says House.

Read more from CPA Canada

Did you know? Canada continues to be viewed as a less competitive place to invest and do business in when compared with the U.S. Read about this and more in the quarterly issued CPA Canada Business Monitor, which surveys professional accountants in leadership positions.