Would US tariffs on Canada really be as bad as predicted?

I thought I understood how the expected US tariffs would affect Canada. But then, the more I thought about it, the less certain I was. So, I'm going to write it down to see if it makes any sense. Some of this is based on my own interpretation of analyses like Dalhousie University's Ask An Expert. I'm no economist, but this is how I see it - am I wrong?

So, say Donald Trump, in his infinite wisdom, decides to impose a 25% tariff on imports of Canadian steel and aluminum tomorrow. The only immediate effect would be that US importers of our steel and aluminum would be paying 25% more for their goods. 

So, they may decide to import less and source their steel and aluminum elsewhere (not easy, certainly in the short run). Trump expects the US steel and aluminum industries to up their game and produce more domestically, but that is also not easy, particularly in the case of aluminum (Canada accounts for 56% of US aluminum imports but only 15-20% of steel imports; the US produces a lot of its own steel, but very little aluminum). 

Or US companies may continue to import from Canada, and either take a hit to their profits due to their higher costs, or, more likely, increase the prices of their end products (or some combination of the two). Bear in mind that steel and aluminum are only two of the ingredients of their final products, and, due to market considerations, they may not decide to pass on all of their cost increases anyway. So, the prices American companies charge their customers will increase, yes, but not by 25%. 

Either way, thus far, Canadians are not affected at all by the tariffs. When we become affected is when we decide to import these now-more-expensive products from the US. The costs for Canadian companies importing these goods will go up but, once again, their final products will not be 25% more expensive when sold to Canadian consumers, because these US imports will not be 25% more expensive (as mentioned above), they will not typically make up 100% of the final Canadian product, and the Canadian exporters may not pass on all of their increased costs to final Canadian consumers (or they may).

So, the eventual impact on  the general Canadian public may actually be minimal (but hard, even impossible, to predict). Inflation may go up a little, although it inflation is currently pretty well controlled here (unlike America's inflation situation). If the loonie continues to depreciate against the greenback, as is also likely, the effects are further diminished.

If the US tariffs are imposed on ALL American imports from Canada, however, as they are also threatening, the effects would be more widespread, but still mainly borne by American companies and American consumers, only affecting Canadians to the extent that we import affected goods from America, and again by much less than 25% (for the reasons stated above).

In addition to all that, of course, there would be an effect on Canadian producers of steel and aluminum (and other products if the tariffs are expanded). If it becomes more expensive for American companies to import from Canada, they may import less, or source their raw materials elsewhere. 

This is where the sky-is-falling predictions of Canadian industry groups get their dire prognostications about the entire Canadian steel and aluminum industries closing down, with hundreds of thousands of layoffs  (estimates vary from 30,000 jobs to 600,000!) and myriad insolvencies. But it's not that easy for American companies to just switch suppliers, so it seems to me that there may be some industry layoffs, but maybe not the complete decimation many commentators seem to be suggesting.

After the 2018 temporary Trump tariffs on steel and aluminum, Canadian steel exports to the USA went down by a sizeable 38%, and aluminum exports by a more modest 19%. (Note that this is specifically the effect on US exports, not total Canadian steel and aluminum production). I have not seen any figures on industry layoffs or insolvencies.

There's more, though. If, as seems more than likely, Canada responds to the US tariffs with commensurate tit-for-tat dollar-for-dollar retaliatory tariffs of its own, then the effects on Canada will be much more more pronounced. In that case, Canada would suffer the immediate affects that the US is described as suffering above, while the US would only feel the more limited secondary effects described above.

Either way, it's a race to the bottom. But what's a country to do? In the end, it's a political calculation of what people think may sway Donald Trump. And that, as we already know, is a known unknown.

So, "existential threat"? Maybe not. Pain in the ass, to be sure. "Ceases to exist as a viable country" without the US (as Trump recently claimed)? Not neither.