Trump's Tariff Threats: Uncertainty Persists Despite Ongoing Negotiations

Strategic Insights -

The continuing uncertainty in the midst of ongoing trade negotiations between the United States and Canada remains high, with a U.S. administration official confirming that the threatened 35-per-cent tariffs on Canadian goods would most likely only apply to those traded outside the United States-Mexico-Canada Agreement. The official also stated that the higher tariffs, set to start on August 1, would not cover goods traded under USMCA or oil, gas, and potash traded outside the deal, which have been hit with 10-per-cent tariffs. This clarification comes as a week of failed promises and escalating trade tensions has capped, with President Trump issuing a flurry of letters threatening new tariffs against dozens of countries in his global trade war.

Key Takeaways:

  • The threatened 35-per-cent tariffs on Canadian goods would most likely only apply to those traded outside the United States-Mexico-Canada Agreement.
  • The higher tariffs, set to start on August 1, would not cover goods traded under USMCA or oil, gas, and potash traded outside the deal.
  • The U.S. administration official clarified that the tariffs would only apply to goods traded outside the USMCA, not those sold under the agreement.
  • President Trump has continued to escalate his trade attacks, doubling tariffs on steel and aluminum to 50 per cent last month and announcing a 50-per-cent tariff on copper.
  • Kellie Meiman Hock, a former U.S. trade official, stated that President Trump's approach seems to be transactional, with an emphasis on changing demands to extract concessions.
  • Lana Payne, the head of Canada's largest private-sector union, advocated for Canada to put more pressure on the U.S. by increasing retaliatory tariffs or stockpiling key exports.
  • Industry Minister Mélanie Joly expressed Canada's reluctance to retaliate, citing concerns about protecting jobs and hurting the Canadian economy.

Statistics:

  • 43 pounds of fentanyl seized at the Canadian border last year, representing 0.2 per cent of the nationwide total of 21,900 pounds.
  • 10-per-cent tariffs currently imposed on oil, gas, and potash traded outside the USMCA.
  • 25-per-cent tariffs currently imposed on nonUSMCA goods from Canada and Mexico.
  • 50 per cent tariffs currently imposed on steel and aluminum due to President Trump's escalation last month.

Sources:

  • A U.S. administration official, quoted by The Globe and Mail
  • Kellie Meiman Hock, former U.S. trade official, as quoted in The Globe and Mail
  • Lana Payne, head of Canada's largest private-sector union, as quoted in The Globe and Mail
  • Industry Minister Mélanie Joly, as quoted in The Globe and Mail
  • The Globe and Mail article, "Trump's tariff threats spark uncertainty, as Canada prepares for potential 35% hit"