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Federal government’s emission-reduction plan will cost Canadian workers $6,700 annually by 2030—while failing to meet government’s emission-reduction target

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From the Fraser Institute

By Ross McKitrick

The federal government’s plan to reduce greenhouse gas emissions will impose significant costs on Canadians—while also failing to meet the government’s own emission-reduction target, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“The government’s plan will significantly hurt Canada’s economy and cost workers money and jobs,” said Ross McKitrick, professor of economics at the University of Guelph, senior fellow at the Fraser Institute and author of The Economic Impact and GHG Effects of the Federal Government’s Emissions Reduction Plan through 2030.

The government wants to reduce greenhouse gas (GHG) emissions to 40 per cent below 2005 levels by 2030. To meet this target, the government has enacted a series of policies including the federal carbon tax, clean fuel standards and various other GHG-related regulations such as energy efficiency requirements for buildings,
fertilizer restrictions on farms, and electric vehicle mandates.

The study finds that these combined policies will only reduce GHG emissions by an estimated 57 per cent of the government’s 2030 emission-reduction target.

And crucially, by 2030 these policies will:

• reduce Canada’s GDP by 6.2 per cent
• cost $6,700 per worker annually
• reduce employment in Canada by 164,000 jobs

“This poorly-designed plan, which will worsen the current downward trends in productivity and income, will reduce emissions but at a cost many times higher than the government’s estimated benefits,” McKitrick said.

  • The federal government has set a GHG emissions reduction target of at least 40% below 2005 levels by 2030, equivalent to 38.5% below 2022 levels.
  • This report examines proposed policies aimed at achieving these goals and evaluates their potential impact, aiming to address the gap left by the federal government’s lack of efforts in this matter.
  • The paper uses a peer-reviewed macroeconomic model to assess the federal government’s Emissions Reduction Plan (ERP), including carbon pricing, Clean Fuel Regulations, and other regulatory measures such as EV mandates.
  • It is estimated that the ERP will reduce Canada’s GHG emissions by about 26.5% between 2019 and 2030, reaching approximately 57% of the government’s 2030 target, leaving a substantial gap.
  • The implementation of the ERP is expected to significantly dampen economic growth, with a projected 6.2% reduction in Canada’s economy (i.e., real GDP) compared to the base case by 2030.
  • Income per worker, adjusted for inflation, is forecasted to stagnate during the 2020s and decrease by 1.5% by 2030 compared to 2022 levels.
  • The ERP costs $6,700 per worker annually by 2030, which is more than five times the cost per worker compared to the carbon tax alone.
  • Overall, while the federal ERP will contribute to reducing GHG emissions, it falls short of meeting the 2026 or 2030 targets and imposes significant economic burdens on Canadian households. Additionally, due to the high marginal cost of many regulatory measures, the ERP plan is costlier than it needs to be for what it will accomplish.

Adobe PDF Read the Full Report

Business

Trump orders 10% baseline tariff on imports, closes de minimis loophole

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From The Center Square

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Reciprocal tariffs higher on many nations

President Donald Trump on Wednesday put the biggest piece of his new trade policy in effect by signing executive orders that place a 10% baseline tariff on all imports and much higher rates on nations that put taxes on U.S. products.

It could be the opening salvo in a global trade war, or, as Trump sees it, the beginning of a “Golden Age” for U.S. trade.

Trump also closed the small value packages loophole that allowed China to avoid taxes on packages valued at less than $800. Companies such as Temu and Shein used the loophole to ship billions of dollars worth of products directly to U.S. consumers and avoid paying the tax, as The Center Square previously reported.

President Trump speaks about tariffs at a Make America Wealthy Again event

Trump’s moves on Wednesday, which he termed “Liberation Day” for U.S. trade, marked the most significant shift in U.S. trade policy since the end of World War II.

In a speech from the White House’s Rose Garden, Trump said foreign nations for decades have stolen American jobs, factories and industries. He said the tariffs would bring in new jobs, factories and industries and return the U.S. to a manufacturing superpower.

“Our country and its taxpayers have been ripped off for more than 50 years,” Trump said. “But it is not going to happen anymore.”

Trump’s supporters praised the trade overhaul. U.S. Rep. Marjorie Taylor Greene said it was time for foreign nations to pay up.

“If you want to do business in America, you need to play by our rules,” she said. “For too long, American businesses, big and small, have been ripped off by bad trade deals and unfair competition. President Trump is putting a stop to it. He’s standing up for our workers, our companies and our consumers.”

Critics slammed Trump’s trade plans.

“Donald Trump may want to call this ‘Liberation Day,’ but there is nothing liberating for working families who are grappling with the high costs of food, housing, and utilities,” said Illinois Gov. J.B. Pritzker, a Democrat. “Tariffs are a tax. They are a tax on working families, a tax on groceries, and a tax on other everyday necessities.”

Other countries planned their own responses. The European Union plans to retaliate with its own measures.

“Europe has not started this confrontation,” EU boss Ursula von der Leyen said in a speech. “We do not necessarily want to retaliate but, if it is necessary, we have a strong plan to retaliate and we will use it.”

She said tariffs are taxes “paid by the people.”

“But Europe has everything to protect our people and our prosperity,” she wrote on X. “We will always promote & defend our interests and values. And we will always stand up for Europe.”

China, the world’s second-largest economy, said Monday that it was planning to coordinate its response to U.S. tariffs with Japan and South Korea.

Japan’s Prime Minister Shigeru Ishiba said Tuesday that he was willing to fly to the U.S. to meet with Trump to get an exemption for Japanese vehicle makers. He also said the government will take steps to minimize the impact of U.S. tariffs on Japanese industries and jobs.

Trump will impose a 10% tariff on all countries that will take effect April 5, 2025 at 12:01 a.m. EDT. Trump will impose an individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China, India and Vietnam, among others. All other countries will continue to be subject to the 10% tariff baseline, according to the White House.

“These tariffs will remain in effect until such a time as President Trump determines that the threat posed by the trade deficit and underlying nonreciprocal treatment is satisfied, resolved, or mitigated,” according to a White House fact sheet.

Trump’s executive order also gives him authority to increase the tariffs

“if trading partners retaliate” or “decrease the tariffs if trading partners take significant steps to remedy non-reciprocal trade arrangements and align with the United States on economic and national security matters,” according to the White House.

“Foreign cheaters have stolen our jobs, ransacked our factories and foreign scavengers have torn apart our once beautiful American dream,” Trump said in the Rose Garden.

For China, the tariff rate will be about 34% on imports from the world’s most populous nation. For European Union countries, it will be 20%. For Japan, the duty will be 24%. Imports from India will get a 26% tariff. Cambodia will get hit with a 49% tariff, among the highest Trump outlined on Wednesday.

For months, the U.S. Chamber of Commerce has warned that tariffs could increase costs for U.S. consumers and hurt businesses. Neil Bradley, the chamber’s chief policy officer, said businesses large and small don’t want tariffs.

“What we have heard from business of all sizes, across all industries, from around the country is that these broad tariffs are a tax increase that will raise prices for American consumers and hurt the economy,” he said.

Last week, Trump announced a 25% tariff on imported automobiles and auto parts, duties that he said would be “permanent.” The White House said it expects the auto tariffs on cars and light-duty trucks will generate up to $100 billion in federal revenue.

Trump said he hopes to bring in $600 billion to $1 trillion in tariff revenue in the next year or two. Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

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Alberta

Big win for Alberta and Canada: Statement from Premier Smith

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Premier Danielle Smith issued the following statement on the April 2, 2025 U.S. tariff announcement:

“Today was an important win for Canada and Alberta, as it appears the United States has decided to uphold the majority of the free trade agreement (CUSMA) between our two nations. It also appears this will continue to be the case until after the Canadian federal election has concluded and the newly elected Canadian government is able to renegotiate CUSMA with the U.S. administration.

“This is precisely what I have been advocating for from the U.S. administration for months.

“It means that the majority of goods sold into the United States from Canada will have no tariffs applied to them, including zero per cent tariffs on energy, minerals, agricultural products, uranium, seafood, potash and host of other Canadian goods.

“There is still work to be done, of course. Unfortunately, tariffs previously announced by the United States on Canadian automobiles, steel and aluminum have not been removed. The efforts of premiers and the federal government should therefore shift towards removing or significantly reducing these remaining tariffs as we go forward and ensuring affected workers across Canada are generously supported until the situation is resolved.

“I again call on all involved in our national advocacy efforts to focus on diplomacy and persuasion while avoiding unnecessary escalation. Clearly, this strategy has been the most effective to this point.

“As it appears the worst of this tariff dispute is behind us (though there is still work to be done), it is my sincere hope that we, as Canadians, can abandon the disastrous policies that have made Canada vulnerable to and overly dependent on the United States, fast-track national resource corridors, get out of the way of provincial resource development and turn our country into an independent economic juggernaut and energy superpower.”

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