08:15 AM EDT, 03/28/2025 (MT Newswires) -- Now that the trade war with the United States has entered a new chapter, it is time for Canada to respond with force, said Rosenberg Research.

However, not a tit-for-tat tariff game, which will only undermine the local consumer more than is already the case, noted Rosenberg Research. Canada's manufacturing base must be protected, and a tariff on U.S.-made autos and parts would help in that regard, but would also be inflationary, and one could reasonably expect President Donald Trump to retaliate.

A small open economy that still depends critically on the U.S. can only lose in this scenario, stated Rosenberg. But what Canada still has to do is prevent a flight of capital out of the country which would deplete the manufacturing base and trigger permanent job loss.

There is another way to respond without poking the U.S. in the eye, it added. That is to take advantage of the relative strength Canada enjoys in its fiscal finances, having refrained from all the budgetary largess that has kept the U.S. going since the pandemic's worst days.

Canada does have more budgetary muscle, and if it gets a majority government on the April 28 election day, action can be taken far quicker than is the case in the U.S., where fiscal policy continues to be held up in a deeply divided Congress.

There is nationalist sentiment sweeping across the country, pointed out Rosenberg. Canadians are aware that they are in a war. It is an economic war, but still a war. That means that, besides helping defray the cost of big income tax cuts with a boost to the GST, Canada has to take advantage of this unprecedented wave of nationalist sentiment by restarting the Canada Savings Bond (CSB) program. The CSB campaign started in 1945, having replaced the old Victory Bonds that were first used to raise funds to fight World War I.

But there is no better time than now to rekindle the program. Call them "Tariff War Bonds," or "Canadian Investment Bonds," or just go back to the old "Canada Savings Bonds." That program was hugely popular and, in the current context, would be an ideal way to buy into the nationalistic feeling sweeping across the country, according to Rosenberg. If Canadians are willing to "Buy Canadian" at the local grocery store or retail outlet, and are choosing to vacation at home, the finance department should be aware that the demand for these bonds would be "immense."

A low-cost, stable source of funding that doesn't rely on the fickleness of international investors or bond fund managers. For Canadians, another way to express their dedication to the country and the vital need to protect the domestic economy from its U.S. foes.

This could just be a dream, but imagine if the federal government could find a way to tap the record level of $2.3 trillion of idle cash and cash-like assets sitting on household balance sheets, said Rosenberg. That sort of funds could end up financing not just a boom in vital infrastructure upgrades and mining/energy expansion, but also one hell of a tax cut which is at least equally important and has no gestation period -- and like Ireland, make Canada a global tax haven and a magnet for capital inflow and talent.