Apparently, in addition to halting trade negotiations with Canada, an additional 10% tariff is to be applied to imports from Canada. It’s unclear which imports will be tariffed (i.e., will USMCA-covered goods be affected?).
Figure 1: EPU-trade from Baker, Bloom and Davis (blue, left scale), and Trade Policy Uncertainty from Caldara et al. (red, right scale). Source: policyuncertainty.com and Iacoviello.com.
To me, it will be interesting to see (1) how much measured policy uncertainty rises, and (2) whether anybody believes in the durability of Trump’s latest trade threat.
