Canada could impose duties on U.S. yogurt, meat, and jam, as well as mirroring tariffs on steel and aluminum starting in July, in response to the Donald Trump administration’s tariffs on those metals, foreign minister Chrystia Freeland announced this afternoon. Minutes before, Prime Minister had declared the U.S. measures “completely unacceptable.”
The U.S. levies will take effect at midnight, after the original one-month exemptions granted to Canada, Mexico and the European Union expire. Commerce secretary Wilbur Ross explicitly linked the move to the ongoing renegotiation of the North American Free Trade Agreement (NAFTA), which he said was “taking longer than we had hoped” in a conference call with reporters.
The U.S. tariffs are 10 per cent on aluminium and 25 per cent on steel.
An early sign of the impending action may have been Freeland’s abrupt return from Washington, D.C., halfway through what was supposed to be a two-day trip to talk about NAFTA and the tariffs.
Trudeau said that in a conversation this week with Vice-President Mike Pence, he offered to go to Washington to negotiate on NAFTA, but the U.S. demanded a sunset clause—limiting any new agreement to a five-year lifespan—be included in the deal as a precondition for any meeting. The Prime Minister said he made clear Canada would not concede that point.
The U.S. duties are being imposed under Section 232 of the U.S. Trade Expansion Act, which pertains to national security. Freeland called that rationale “entirely inappropriate” in Washington on Tuesday, noting that the U.S. and Canadian industries are highly integrated.
“We came to America’s aid after 9/11 as America has come to our aid in the past,” Trudeau reminded the room, listing off the various forms of security cooperation between the two countries.
Freeland added the non-steel and aluminium retaliatory tariffs focus on end-use products, to prevent input price inflation for Canadian manufacturers, and ones where domestic alternatives are readily available. Steel products will be levied at 25 per cent, while aluminium and the non-metal goods are subject to a 10 per cent duty. They total $16.6 billion , equivalent to the exports affected by the new U.S. duties. Also on the list are paper products like post cards and toilet paper, as well as motorboats and mattresses.
Canada has also made conciliatory moves in the time since Trump first mooted the tariffs, including the announcement just this morning that country of origin labelling rules for steel and aluminium would be brought in line with those of the U.S. to “help support effective customs enforcement.” Trump has reportedly previously expressed to Trudeau his concern that Chinese steel was being laundered through Canada, a belief the Prime Minister has challenged. The government has also revealed plans to add 40 additional Customs and Border Services Agency (CBSA) officers to look into trade complaints, and given the department new powers to identify and combat companies that evade import duties.
Some members of Cabinet met earlier in the day to decide on retaliatory measures. Governments planning such responses try to be “focused and proportionate,” Laura Dawson, director of the Canada Institute at the Washington, D.C.-based Wilson Centre said in March, when Trump first mused about imposing steel and aluminium tariffs. “Policy planners don’t want to screw up the economy too badly.”
Agricultural products were also a focus when the Canadian government identified retaliatory tariff targets—never used—in a 2015 battle over meat imports. California wine and Washington apples were on that list.
Mexico announced its response to the current set of U.S. measures earlier in the day, picking on pork legs, apples, grapes, cheese and steel. The EU issued a 10-page list in March of potential products to levy, including stainless steel sinks, rice, orange juice and more. European Commission president Jean-Claude Juncker, seemingly flippantly, identified Harley-Davidson motorcycles, Kentucky bourbon and Levi’s jeans in particular in a German TV interview.
Beyond their Americana associations, those choices—if they were to be enacted—target important political leaders in the U.S. Harleys hail from Wisconsin, the home state of outgoing House of Representatives Speaker Paul Ryan, while bourbon is the specialty of Kentucky, where Senate majority leader Mitch McConnell is from. “You try to identify products that will strategically bring the other party to the table to change their mind,” said Mark Warner, an international trade lawyer and principal at Toronto’s MAAW Law, in March.
“We have to believe at some point common sense will prevail,” Trudeau said, adding that wasn’t reflected in today’s actions by the U.S.
Prime Minister Justin Trudeau’s prepared remarks as Canada announced retaliatory trade measures:
Good afternoon everyone. Thank you for joining us.
Today we find ourselves the target of punitive tariffs on Canadian aluminum and steel, under pretext of a 232 national security provision.
Let me be clear: These tariffs are totally unacceptable.
For 150 years, Canada has been America’s most steadfast ally.
Canadians have served alongside Americans in two world wars and in Korea.
From the beaches of Normandy to the mountains of Afghanistan, we have fought and died together.
Canadian personnel are serving alongside Americans at this very moment. We are partners in NORAD, NATO, and around the world.
We came to America’s aid after 9/11 – as Americans have come to our aid in the past.
We are fighting together against Daesh in Northern Iraq.
The numbers are clear: The United States has a $2 billion US dollars surplus in steel trade with Canada – and Canada buys more American steel than any other country in the world, half of U.S. steel exports.
Canada is a secure supplier of aluminum and steel to the U.S. defence industry, putting aluminum in American planes and steel in American tanks.
That Canada could be considered a national security threat to the United States is inconceivable.
These tariffs will harm industry and workers on both sides of the Canada-U.S. border, disrupting linked supply chains that have made North American steel and aluminum more competitive around the world.
Beyond that, these tariffs are an affront to the long-standing security partnership between Canada and the United States, and in particular, to the thousands of Canadians who have fought and died alongside American comrades-in-arms.
The ties of commerce, friendship and, in many cases, family between Americans and Canadians are undiminished – indeed, they have never been stronger.
The Government of Canada is confident that shared values, geography and common interests will ultimately overcome protectionism.
As we have consistently said, we will always protect Canadian workers and Canadian interests.
Minister Freeland is here to outline retaliatory measures. This morning, I called the Opposition leaders to notify them of our response.
In closing, I want to be very clear about one thing: Americans remain our partners, friends, and allies. This is not about the American people. We have to believe that at some point their common sense will prevail.
But we see no sign of that in this action today by the US administration.