Tariffs , according to Donald Trump , were supposed to make foreign exporters pay, revive U.S. manufacturing and reduce U.S. trade and government deficits.

High ambitions, but though it’s still early days yet, evidence is mounting that they are unlikely to accomplish any of these goals, said economists with

Royal Bank of Canada. So far it’s not foreign exporters but U.S. buyers who have absorbed most of the tariff costs.

Though U.S. buyers technically pay import duties, exporters can share those costs by lowering their prices. Yet the U.S. Import Price Index, which does not include duties, has “persistently” risen this year.

“This indicates U.S. buyers are continuing to pay higher prices, and there has been minimal tariff-sharing from foreign sellers,” said

RBC senior economist Claire Fan in her report. “Consumer price data suggests to-date, those tariff costs have not been passed along to households but that leaves U.S. businesses to absorb the costs, putting jobs at risk.”

There is also little evidence that tariffs are boosting U.S. manufacturing. Factory jobs dropped by more than 100,000 in July from a year ago and future hiring intentions remain weak. The ISM Manufacturing Employment Index hit its lowest level since the financial crisis, outside of the pandemic.

“The reality is that the scale of capital investment required to significantly reshore manufacturing activity is too large for businesses to justify when the future of U.S. tariff policy remains highly uncertain,” said Fan.

Even if more factories were built, staffing them would be a challenge considering America’s aging population.

The past has also shown that forcing reshoring through tariffs can be counterproductive, she said. During Trump’s first term, tariffs on steel and aluminum temporarily increased production in the United States by US$2.3 billion. But this boost cost US$3.5 billion in lost production in downstream industries that were hit by higher costs.

As for the trade deficit , when you take into account the rush of goods into the country to avoid duties earlier this year, it is actually 28 per cent wider in 2025 than it was a year ago.

In the longer term, RBC believes that little progress will be made to reduce the trade deficit while U.S. fiscal deficits remain so high.

On that score, the United States since April has collected US$65 billion more in duties than last year, and RBC thinks total annual revenue from tariffs could reach US$350 billion.

But that’s a “drop in the bucket” when compared to a federal deficit that is expected to grow from US$1.8 trillion this year to US$3 trillion in 2034, thanks in part to Trump’s “One big beautiful bill,” said Fan.

Add to that an economy that is slowing under the weight of tariffs, and RBC believes that current rates are unsustainable and will start to come down before the end of the year.

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Over the past decade Canada’s real economic growth has lagged America with the U.S. economy growing a cumulative 5.6 per cent more since 2015. But what was the cost of that growth? While some suggest the former Trudeau government and poor productivity are to blame for Canada falling behind, Douglas Porter, chief economist for BMO Capital Markets, has another take.

Over those 10 years the finances of the U.S. government have deteriorated, with the budget deficit swelling from 2.4 per cent of gross domestic product in 2015 to 6.4 per cent this year, he said. Meanwhile, Ottawa’s budget has gone from about balance to a deficit of about 2 per cent of GDP during that time — “a much smaller net deterioration.”

“That alone accounts for a good portion of the growth gap; that is, the U.S. has bought some of the stronger growth by seriously weakening government finances,” wrote Porter.

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If you are renting an apartment today, there has probably never been a better time to negotiate with a landlord. Landlords are getting creative and offering gift cards at furniture stores, free parking and even providing a free designer to help you set up your apartment in some cases, but they rarely offer to lower the rent. Financial Post columnist Garry Marr says the window is open to negotiate, but just remember that it could be brief.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Read more Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

Financial Post on YouTube

mortgage rate page for Canada’s lowest national mortgage rates, updated daily. Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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