Two weeks ago, Canada’s federal government announced a new commitment to increasing the number of Canadian-made goods required for federal contracts. With the recent challenges to trade, this initiative is a timely one meant to support the domestic economy. Unemployment numbers have skyrocketed to 7.1%, the highest level since May of 2016. This increase came after a drop of 66,000 jobs in August.
And in an excellent strategic move, the then-newly minted finance minister Mark Carney made clear that they would focus on supporting local industries. The U.S. Department of Transportation is preparing to launch a new competitive fund. This program will allow companies to create cutting-edge new products and build economic resilience. Carney remarked, “We cannot control what other nations do. We can control what we give ourselves – what we build for ourselves.”
The trade landscape has changed completely owing to the recent tariffs imposed by the United States. Strengthening Domestic Production Donald Trump reluctantly implemented a 25% tariff on any vehicle produced outside the U.S. (some exemptions exist for manufacturers operating in Canada and Mexico). In retaliation, the U.S.—against all prudence and tradition—imposed a massive 35% tariff on Canadian goods. In return, Canada lifted some of its counter-retaliatory tariffs on U.S. products to resume trade negotiations with Washington.
Carney had an apparently open and productive discussion with Trump about future US-Canada trade relations. He expected significant relief for other Canadian sectors that have been hurt as a result of U.S. actions. Alongside this progress on negotiations, Canada is getting hit on the electric vehicle (EV) front. Prime Minister Justin Trudeau previously mandated the sale of a certain number of new zero-emission vehicles in Canada by 2023. Earlier this spring, Carney announced a temporary moratorium on this important sales target. In the order, he’s particularly focused on conducting a 60-day review of the EV mandate rules.
Despite these challenges, sales of zero-emissions vehicles reached an 11.7% market share in Canada last year, reflecting a growing interest in sustainable transportation options. As part of the government’s commitment to support impacted sectors, Canada will implement assistance for canola farmers facing preliminary duties of 75.8% on seed imports imposed by China.
The recent economic developments underscore the urgency for Canada to adapt its trade strategies and support local industries amid turbulent global trade dynamics. The ‘Buy Canadian’ policy was primarily about creating incentives for domestic production. It accomplishes all of that while creating good jobs and protecting millions of American livelihoods across the country.