Amid all of the Canadian industries impacted by tariffs imposed by U.S. President Donald Trump, targeting the production of aluminum shows a misunderstanding of the industry, said Douglas Porter, chief economist and managing director at BMO Financial Group, during a session at Benefits Canada’s 2025 Defined Contribution Plan Summit on Feb. 28.

“Frankly, not to put too fine a point on it, I think it’s crazy for the U.S. to be putting a tariff on aluminum.”

Canada is the No. 1 external supplier of aluminum to the U.S. due to the need for inexpensive electricity to produce aluminum, a key quality of its production specifically in Quebec, he added, noting the U.S. aluminum industry doesn’t have the capacity to ramp up. “This is actually going to hurt them a lot more than it hurts us, I believe.”

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Days after Porter’s presentation, the Trump administration imposed a 25 per cent tariff on all Canadian steel and aluminum products. In response, the Canadian government set its own 25 per cent retaliatory tariff on a total of $29.8 billion of U.S. goods. Canada already faced tariffs on both steel and aluminum in 2018 during Trump’s first presidency, but the tariff for aluminum was only 10 per cent.

The U.S.’s current tariff policy could evolve to a more cohesive general tariff targeting the countries Trump deems to be taking advantage of the U.S., said Porter in February. “I suspect where we’re headed is a universal tariff by the U.S. I think, basically, they’ll find that every country in the world, to some extent, is treating the U.S. badly and abusing them and they’re going to come up with something.”

Porter’s guess for the overall impact from all of the tariff activity between the two countries would be a curve off between two and three percentage points from the Canadian gross domestic product. In his estimation, the growth hit would eventually normalize, but it’s possible the country may never recoup the lost activity.

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“[The Bank of Canada] don’t view it as a shock, they view it as a permanent shift that will basically reduce GDP in a level function. We’ll get back to the same growth rates, but we’ll never really get back to where we were.”

All the tariff movements will cause the Canadian dollar to get weaker, he said, noting that in any trade war scenario with the U.S., the Canadian dollar is set to reach new lows. However, he also acknowledged that a weaker currency will help provide some support to export industries.

Read more coverage of the 2025 DC Plan Summit.