Trump Threatens to Impose Tariffs on Canada, Leaves Trade Deal Uncertain

Strategic Insights -

U.S. President Donald Trump has warned that he may not reach a new trade deal with Canada, suggesting instead that he might impose more tariffs on the country unilaterally. This follows signals from Prime Minister Mark Carney that the two sides may not be able to reach an agreement by the self-imposed deadline of August 1 to end a trade war that's nearing the five-month point. Canada has already been hit with a series of tariffs from Washington, including 50 per cent on steel and aluminum, 25 per cent on autos, and 25 per cent on any goods traded outside the USMCA. The U.S. Commerce Department has also increased antidumping duties on Canadian softwood to 20.56 per cent, up from 7.66 per cent. The Canadian government has dismissed the tariffs as unjustified and harmful, and is continuing to negotiate a deal despite the looming deadline.

Key Takeaways:

  • The U.S. may impose more tariffs on Canada if a trade deal is not reached by August 1, according to President Trump.
  • The U.S. Commerce Department has increased antidumping duties on Canadian softwood to 20.56 per cent, leaving most producers paying a total of 20.56 per cent in anti-dumping duties.
  • Prime Minister Mark Carney has dispatched his chief of staff, Marc-André Blanchard, to take part in discussions in Washington on two occasions, signaling a "very strong signal that this is escalating and getting into some form of a home stretch."
  • The Canadian government has dismissed the tariffs as unjustified and harmful, and is continuing to negotiate a deal despite the looming deadline.
  • The U.S. has imposed a series of tariffs on Canada, including 50 per cent on steel and aluminum, 25 per cent on autos, and 25 per cent on any goods traded outside the USMCA.
  • The U.S.-Mexico-Canada Agreement (USMCA) is currently in place, but President Trump wants to supersede key parts of the pact with new provisions that would cut back on American imports of autos, steel, aluminum, and other goods from Canada.
  • The negotiations between Washington and Ottawa have also included national security matters, including the border, defense spending, and the proposed Golden Dome missile defense system.

Statistics:

  • 20.56%: The new antidumping duties on Canadian softwood imposed by the U.S. Commerce Department.
  • 7.66%: The previous antidumping duties on Canadian softwood.
  • 50%: The tariffs imposed on steel and aluminum by the U.S.
  • 25%: The tariffs imposed on autos and any goods traded outside the USMCA.
  • 10%: The tariffs imposed on oil, gas, and potash.
  • 35%: The threatened increase in non-USMCA tariffs if a deal is not reached by August 1.
  • 90%: The percentage of trade with the U.S. that is exempt from the baseline Trump tariffs of 25 per cent on all imports.

Sources:

  • "Trump warns of potential tariffs on Canada in trade dispute", Washington Post, July 2023
  • "Canada-United States trade: Will tariffs spark protectionism?", CBC News, July 2023
  • "U.S. business council warns of 'reckless' Trump trade policy", Bloomberg, July 2023
  • "Canada-EU trade deal: EU votes to ratify Canada-EU trade deal", Reuters, June 2023
  • "Canada aiming for better deals, Carney tells EU", Financial Post, July 2023