09:12 AM EST, 11/26/2024 (MT Newswires) -- Canada's economic backdrop is so rough that the federal government and some of the provinces are starting to put their Santa suits on, said Rosenberg Research.

Canada's government has drawn up a gimmick that provides for a two-month sales tax holiday and a stimulus check of C$250 for anyone with a net income of under C$150,000 for a total stimulus cost of over C$6 billion, noted Rosenberg Research.

Ontario had introduced similar measures through its cash rebate program and other provinces in the Atlantic region are unveiling sales tax holidays for a total of C$11 billion of aggregate stimulus or the equivalent of a 0.3% boost to gross domestic product. Although that is over a full year -- the initial quarterly impact will likely be over a full percentage point impact on growth while much will hinge on how much gets spent and how much gets saved, added Rosenberg.

Meanwhile, none of these measures have stopped the Canadian dollar (CAD or loonie) from breaking above C$1.41 for the first time since April 2020 -- the Mexican peso got hammered too -- as United States President-elect Donald Trump announced late Monday that he is going to make a 25% tariff on all imports from the two countries an executive order reality on Day One of his presidency.

Trump must certainly be aware that unilateral tariffs on Mexico and Canada would violate the United States-Mexico-Canada Agreement (USMCA), the Trump-negotiated replacement to NAFTA during his first term in office, pointed out Rosenberg.

It should be duly noted that Mexico and Canada are the only countries in the world that ship out more than 20% of their GDP to the United States -- 27% for the former and 21% for the latter.