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If you don’t like the latest U.S. tariffs, just wait five minutes. The country’s trade war with Canada — its northern neighbour and largest trading partner — appears to be on an ever-shifting battlefield. 

On Feb. 1, U.S. president Donald Trump announced a 25-per-cent tariff on products from Canada and a 10-per-cent tariff on Canadian energy. They were to come into effect a few days later but after Canada announced retaliatory tariffs, Trump delayed implementing tariffs for a month. Since then, he has on Canadian goods from potash and dairy to steel and aluminum.

So what is a tariff, anyway? To help us make sense of these topsy-turvy tariffs, we asked , a U of A economics professor, to break down the basics.

What is a tariff? 

A tariff is a tax. Imagine you’re buying an item from another country. Your country might add an extra fee to that item when it crosses the border. That extra fee is a tariff, and it makes your item more expensive. Canada supplies a bunch of products to the U.S. and if the U.S. puts tariffs on them, its businesses and consumers face a price hike, which lowers demand for Canadian products.

Are tariffs common?

There are relatively few tariffs charged by other countries for goods made in Canada, especially the U.S., mainly because of our free trade agreement with the U.S. and Mexico. Canada has trade agreements with other countries too — for example, the European Union and certain countries in Asia, but they are less comprehensive than the one with the U.S. and Mexico.

Why is Trump imposing tariffs on Canada? 

I used to think it was strategic, and the idea was to prompt a renegotiation of the free trade agreement, which could bring Canada, the U.S. and Mexico much closer economically and benefit each country. 

But I think Trump believes that he can replace income tax revenue with tariff revenue. Elon Musk and other wealthy people close to Trump want a massive tax cut and, somehow, they think that tariffs are a magic wand they can wave that will make up for the money that would be lost by not taxing the rich.

I don’t know why Trump thinks this. It’s hurting the American economy. . Inflation is spiking. American consumer sentiment — how optimistic people feel about their finances and the state of the economy — has dropped significantly.

What does this mean for the average Canadian? 

Tariffs on Canadian goods will reduce U.S. demand for Canada’s products like oil, aluminum and steel as American consumers look for cheaper alternatives. Since exports are a main source of income for Canada, it means a negative economic shock and a reduced Canadian GDP, as we rely a great deal on exporting to the U.S. 

Canadians are already feeling the effects because business investment in Canada is going down. With so much policy uncertainty, which is what Trump’s administration has created, businesses and consumers pull back. If it’s not clear whether you’ll have a job in two months or your investments are going to tank by 10 per cent, what are you going to do with all this uncertainty? You’re going to pull back on your spending. If you’re a business, you’re going to pull back on your investment plans to grow your business. And that’s already happening. You don’t have to implement tariffs for them to start hurting both American and Canadian people.

Are there any silver linings to Trump’s trade war? 

One silver lining is that there is a renewed sense of national unity in Canada. Canadians are not exactly your flag-waving, “‘rah, rah, rah”’ nationalists, but I have never seen such a turnaround. 

I think we’re going to see a reduction in regionalism, a drop in interprovincial trade barriers and, I hope, a renewed emphasis on getting Canadian products out to the rest of the world.

The whole world is facing this threat. Other small countries are worried about tariffs too, and that’s an opportunity for them and Canada to play nice together. Now I think Canada will work to bypass the U.S., which will be to their long-term detriment. 

We’re never going to win a trade fight against the United States. We’re going to get punched straight in the face. So the question is: do you take that as an opportunity just to fight, or do you take that as an opportunity to become stronger? 

This interview has been edited for length and clarity.