Canada’s additional customs tariffs on a range of US products worth a total of $20 billion took effect shortly after midnight on Tuesday, local time.
The measures, imposed in retaliation for US tariffs that came into effect in late August, introduce levies ranging from 15% to 50% on products including steel, furniture, clothing and electronic goods. They cover products of equivalent value to those targeted by the United States.
The development marks a new escalation in the trade dispute between the two countries, which has lasted for around 18 months. Officials from Canada and the US have blamed each other for the failure to reach an agreement that, two weeks ago, appeared close to completion.
The tensions are also creating uncertainty over the future of the United States-Mexico-Canada trade agreement (USMCA), following US President Donald Trump’s decision not to extend it for another decade.
“What concerns us is an escalating spiral of confrontation,” said Michael Harvey, Executive Director of the Canadian Agri-Food Trade Alliance and a member of Prime Minister Mark Carney’s advisory committee on economic relations with the US.
He added, however, that the Canadian Government’s effort to acquire means of pressure was understandable.
The US tariffs imposed last month cover, among other products, Canadian wine, furniture, dairy products, cement, clothing and hockey equipment. They cover exports worth approximately $20 billion, or 5% of Canada’s exports to the US.
Almost 68% of Canada’s total exports went to the US market this year, with approximately 80% of those goods moving tariff-free under USMCA exemptions. However, the new US tariffs, imposed under legislation dating from the Great Depression era, do not allow Ottawa to make use of those exemptions.
Uncertainty over the future of USMCA is increasing concerns about investment and growth in Canada, which is engaged in a trade dispute with an economy approximately 13 times larger than its own.
A Reuters/Ipsos poll showed that only 20% of Americans approve of President Trump’s tariffs on Canadian products.
Mr Carney said last week that his Government remained ready to sign a trade agreement beneficial to both countries. A government source said, however, that talks between the two sides were not currently taking place, either at ministerial or official level.
Last month, President Trump also threatened to raise to 50%, from January 1, tariffs on cars, trucks and automotive parts imported from Canada.
Source: CNA