Why are tariffs a bad idea? Canada and, in fact, the world have benefited tremendously by lowering tariffs. If we go back to the end of the Second World War, basically, until the last few years, tariffs have been coming down globally. Trade has actually been growing faster than GDP. That's been an engine of growth in the economy.
How does that work? It allows each country and each business to specialize in what they do best and then to buy, from other countries, things that other countries do best. You get more economies of scale. There's pretty clear evidence that you also get more innovation when you have more trade. Innovation spurs productivity growth and raises standards of living.
The U.S., under President Trump, has swerved dramatically towards protectionism. That's raising costs. That's actually going to hurt both of our countries. It's going to weaken growth in countries around the world, but Canada is disproportionately affected. We are a very open economy. We have 75% of our trade with one country—the United States.
To get back to a previous question, we've talked for a long time about diversifying our trade, but we haven't made much progress. Now it's pretty clear that we have to get a lot more serious about that. From a Canadian perspective, tariffs are going to.... Right now, we have very steep tariffs on steel, aluminum and autos, and we have trade restrictions on lumber. The overall tariff rate for Canada is still relatively low compared to other countries. It's about 6%, which is one of the lowest in the world, but our economy is just so much more integrated with the United States than other countries that we are being very much affected.
As I said, if we don't do something about it, our economy is going to grow. It's going to get back to growth, but it's going to grow along a lower trajectory.