US President Donald Trump stated he will introduce new tariffs on goods crossing the US-Canada border within the next week. This announcement through social media would prove to be a watershed moment in the trade relationship between the two long-standing rival countries. The move to impose tariffs follows Trump’s surprise tweet last week on ending trade negotiations with Canada. Those negotiations were intended to set terms for the new trade agreement by high-noon mid-July.
Negotiations fell apart over a poisonous tax policy. In fact, Trump himself has attacked it as an “egregious tax” discriminating against tech companies. Canada actually plans to implement this tech company-targeted tax policy, which Trump strongly, and very publicly, objects to. The tax dispute has produced a firestorm of opposition on the left side of the aisle. Sadly, negotiations that were once moving quickly have come to a sudden and ugly stop.
On a yet-to-be determined date in the near future, Trump will host Canadian Prime Minister Justin Trudeau in the Oval Office. Together, they joined in the fight on multiple trade fronts. It’s clear that meeting did little to allay the still simmering, but loud and clamorous protest over the proposed new taboo tax policy. Following the unproductive talks, Trump took to social media to express his outrage. He sure signaled that he was terminating debate, once and for all.
The president’s announcement yesterday that he will impose tariffs on Canadian timber imports is yet another sign that the United States-Canada trade relationship is on dangerously thin ice. This newly expanded list would hit every American economy, business, and consumer with the pain of these tariffs on nearly 1000 different goods. Now, Canada is preparing to put that new tax into effect. All of which makes it hard to predict just how these tariffs will change the calculus of trade.
Trade analysts have lamented the ramifications of Trump’s choice. They caution that raising tariffs will only invite retaliative action from Canada, compounding the already tenuous relationship. The aim for a trade deal by mid-July now appears increasingly unlikely as both parties brace for the potential fallout from this decision.