In many ways, President Donald Trump’s trade war has been a boon for Canadian nationalists. He increased tariffs on other goods – aluminum, steel, and even on imported automobiles. These new measures implement a worldwide tariff of 50% on aluminum and steel imports. Moreover, they will impose a 25% tariff on all cars and trucks not made in the US which would have a devastating impact on Canada’s economy.
As of August 1, Canada will be subject to a swingeing 35% duty on its products coming into the US. This new 32% rate represents a significant jump from the prior 25%. Canada exports roughly three-quarters of its goods to the US. This dependence renders Canada uniquely vulnerable, as it currently produces over 70% of all supplied metals and supplied automobiles. Recent tariffs represent a very real threat to Canadian sectors integral to their economic future. This is particularly worrying given that around 91% of Canadian exports to the US already cross the border duty-free today thanks to the US-Mexico-Canada Agreement (CUSMA).
The trade conflict started just after Trump’s inauguration in January. Canada has been very aggressive in retaliating against US tariffs with their own tariffs. Mark Carney, the former governor of Canada’s central bank and now U.N. Either way, he argues that Canada should probably be prepared to concede something in the order of tariffs with a broader US trade agreement at some point in the future.
Carney explained on a recent edition of CBC News that the Trump administration is not being very amenable to completely excluding the levies from any deal. The evidence to support this claim is scant at this point. This language belies the hesitant distance Canada has maintained during this unfolding crisis as tensions have increased.
Earlier this month, Trump said he would impose a 50% tariff on copper imports. This new tariff will go into effect next month, on top of the other tariffs already in place. These targeted tariffs are just the latest example of the complicated and contentious state of US-Canada trade relations and the possible long-term economic consequences.
During the campaign, Canadian Prime Minister Justin Trudeau worries about Trump’s approach to trade negotiations. He points out that every meeting up to now has been about tariffs. Trudeau sent a signal by confirming his commitment to ensuring that any agreements reached would put Canada’s interests first. He reiterated this message, in no uncertain terms, at the G7 summit in mid-June.
Although these challenges make the deal appear threatened, Trump was still optimistic about continuing negotiations with Canada. In an interview with the BBC, he remarked that discussions were progressing well and anticipated a favorable outcome: “It’s going to work out very well.”
Both countries are going through a politically chaotic adjustment period as they both move through these transformational changes. The full impact of the tariffs continues to play out, affecting trade patterns and the overall economic environment in North America.