Canada risks losing investment, production and jobs while Ottawa still hasn’t explained what the economic sacrifice is meant to achieve for Canadians

The Canada–U.S. trade dispute has crossed another threshold. What began with tariffs moved to counter-tariffs and has now reached outright U.S. import bans. The economic pain is no longer theoretical.

Prime Minister Mark Carney has warned Canadians that reducing our dependence on the United States will come at a cost. At least he was honest. But Canadians deserve to know how much pain, who will bear it and what economic outcome their sacrifice is expected to purchase.

Washington’s agri-food response is sweeping. Beginning Sept. 29, the U.S.will ban most Canadian alcohol, including beer, wine, cider and spirits. The measures also cover whey products, molasses and non-alcoholic beer, while additional Canadian cheeses will face a 50 per cent tariff.

Based on recent trade flows, annual Canadian exposure is estimated at $2.3 billion to $2.8 billion. Alcohol represents roughly $1.8 billion to $2.1 billion; whey, $75 million to $105 million; non-alcoholic beer, $35 million to $70 million; cheese, $125 million; and other dairy, $275 million to $360 million.

It is surprising that an alcohol ban took this long. Several provinces made American liquor an early, visible target. Pulling U.S. bourbon from provincial shelves was easy to explain and photograph. Governments should have expected Washington to answer in kind.

Trade retaliation has a seductive simplicity: they hit us, so we hit them. But trade economics is about exposure, substitution and leverage, not moral symmetry. The American economy is roughly 13 times the size of Canada’s. Similar trade measures can have radically different consequences on either side of the border.

That asymmetry matters. Canadians are being asked to absorb economic pain without being told clearly what strategic gain will justify it.

American producers can spread lost Canadian sales across a larger domestic market. Canadian exporters often cannot. A whisky, cheese or whey product that loses its principal customer does not instantly find an equivalent buyer overseas. Diversification requires distribution networks, approvals, contracts and consumer development. These adjustments take years, not press conferences.

Canadian companies can also be squeezed from the other direction: Canada’s counter-tariffs raise the cost of imported ingredients, packaging and equipment. Processors can absorb some of those costs temporarily, but not indefinitely. Eventually, companies must renegotiate contracts, change suppliers, reformulate products, reduce investment or raise prices.

I estimate that, if the counter-tariffs remain, they could add roughly 0.3 percentage points to food inflation by spring 2027.

But higher prices are only part of the risk. The more lasting damage begins when companies stop absorbing costs and start moving production and investment.

The stakes are especially high because the U.S. is not simply another export destination. Almost 68 per cent of Canadian exports have gone to the U.S. market this year. For many Canadian producers, it is the market around which their businesses were built.

Japanese brewer Sapporo offers an early warning. The company is considering moving production of non-alcoholic beer destined for the U.S. market from Canada to the U.S. No decision has been made, but the possibility itself matters. When tariffs disrupt reliable access to customers, companies reconsider where they produce. Investment can follow, and eventually jobs can too.

If this dispute persists, Sapporo will not be the only company to make that calculation. The most damaging consequence may not be the tariff collected at the border. It may be the expansion that quietly goes to Ohio instead of Ontario, or the production line placed in Michigan instead of Manitoba.

Those decisions are much harder to reverse than a tariff.

Businesses can adapt to higher costs. What they struggle to manage is uncertainty. An open-ended confrontation makes Canada less attractive as a North American production base, particularly when companies cannot be confident Canadian-made goods will retain reliable access to the U.S. market.

Public opinion deserves an equally honest reading. A recent Build Canada survey found that 75 per cent of Canadians favour holding firm against the United States even if economic costs persist. Yet 68 per cent consider a higher household risk of job loss unacceptable. Between 56 and 60 per cent reject annual household tax increases of $500 to $2,500, while 58 to 68 per cent reject retirement or investment losses of five to 20 per cent.

That is not resolve. It is support conditioned on someone else paying the bill.

Standing up to President Donald Trump remains popular while the sacrifice is abstract. When the cost appears in a grocery bill, pension statement, cancelled shift, lost contract or delayed investment, support may prove less durable. Retaliation is not free.

That makes transparency more important as the economic stakes rise.

The government owes Canadians more than patriotic messaging and produced videos. If Ottawa rejected an agreement with Washington, it should disclose as much as confidentiality permits, identify the unacceptable provisions and explain the tradeoffs. Parliament should debate the strategy, and the prime minister should face sustained media questioning.

There may be legitimate reasons to reject Washington’s demands. Sovereignty has value. But if resisting those demands is worth the economic cost, Ottawa should be able to explain why.

Diversifying Canada’s trade relationships is also a worthwhile long-term objective. But diversification cannot be achieved simply by losing access to the market we already have. New customers, supply chains and investment relationships must actually be built, and that takes time.

Economic nationalism without economic arithmetic is simply theatre, and increasingly expensive theatre at that.

Canadians were told there would be pain. They now deserve more than reassurance that the pain is necessary.

They deserve a transparent accounting of what Canada stands to lose, what it expects to gain and, most importantly, what that sacrifice is ultimately meant to achieve.

Dr. Sylvain Charlebois is senior director of the Agri-Food Analytics Lab at Dalhousie University, co-host of The Food Professor Podcast and visiting scholar at McGill University.