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Trump slaps 50% tariffs on Canada and Carney vows to 'intensify' trade talks
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Nadine Yousif,Toronto,
Michael Race,
Francisco Velasquezand
Peter Hoskins,Business reporters
US President Donald Trump has imposed a 50% tariff on a wide range of goods imported from Canada, in retaliation for what he called "unequal treatment" of US cars, dairy and alcohol.
Everyday consumer items like wine and hockey sticks as well as industrial goods such as cement are on the target list. Several key exports, though, will be spared, including energy, potash, critical minerals and fish.
Prime Minister Mark Carney said Canada stands ready to "intensify" trade talks with the US, telling reporters that he had spoken to Trump.
The White House said the duties would take effect in 30 days. It marks a major escalation in trade tensions between the North American neighbours.
Tensions between the major trading partners have been simmering since Trump returned to office in January last year and unleashed a wide-ranging global programme of tariffs, sometimes to pursue objectives not directly linked to trade.
Following the announcement of the new raft of tariffs, Carney told reporters he had spoken to Trump and that the two leaders had agreed to "intensify negotiations in the coming weeks".
"The team and myself look forward to doing that," he said, adding that all options were on the table if the US went ahead with its latest tariffs threat.
Tariffs are taxes on imported goods that are paid to the government by companies bringing in the foreign products.
The US Supreme Court ruled earlier this year that many of Trump's tariffs imposed globally under emergency powers were illegally enacted, but Trump has since sought other legal avenues to push through his flagship trade policy and announced the most recent tariffs on Monday.
The president has said the levies will boost American manufacturing and jobs, but some economists have warned that higher charges on imported goods risks pushing up prices for consumers.
This new round of duties on Canadian goods is helping fuel speculation about a potential announcement of new US tariffs on countries across the world. US Trade Representative Jamieson Greer said on Tuesday that he expected to "see some action soon", when asked on CNBC about the possibility of forthcoming levies.
Canada, which is one of the US's closest trading partners, was one of the few countries to retaliate last year against Trump's tariffs, placing a 25% levy of its own on about C$30bn (£16bn; $21.7bn) worth of US goods.
Carney later dropped some of them.
The new US tariffs add to trade barriers already in place between the two nations.
The US has been maintaining active tariffs ranging from 15% to 50% on Canadian steel, aluminium and copper. It also charges a 35% tariff on Canadian softwood lumber, alongside a 25% tax on non-US parts in cars.
Meanwhile Canada has its own 25% counter-tariff on selected imports of American steel, aluminium and vehicles.
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A White House fact sheet said the new tariffs announced this week applied regardless of whether the product was included under the existing free trade agreement between Canada, the US and Mexico, known as the USMCA.
But Carney said the move was the "latest in a series of unilateral US trade actions that began with the US imposing a series of tariffs in direct violation" of the USMCA.
The prime minister also cited "threats to Canadian sovereignty", possibly in reference to Trump's repeated calls to make America's northern neighbour the 51st US state.
Ontario Premier Doug Ford said that if the US goes ahead with its latest threat, "Canada should respond tariff for tariff, dollar for dollar".
The BBC has contacted the White House and the Canadian government for further comment.
Trump names three trade complaints
As part of his executive action announcing the new tariffs, Trump issued three proclamations, relating to to cars, dairy products and alcohol.- Cars: Trump's proclamation pointed to Canada charging a tax on imports of US motor vehicles and parts that are not covered under USMCA. He argued it was "unreasonable" and that Canada has discriminated against the US by not charging other countries a similar tax. Automotive manufacturing in North America is highly integrated between Canada, the US and Mexico.
- Dairy: The administration says Canada has taken protectionist measures on cheese, discriminating against US producers and putting the country as a whole at a disadvantage. In Canada, dairy products that exceed its importation limits are charged a tariff up to 300%.
- Alcohol: The boycott of US alcoholic drinks by most Canadian provinces has become a major sore point for the Americans since it started last year, but Canadian premiers have said that the boycott will be lifted if the US removes its tariffs on key Canadian sectors, including metals and automobiles.
Uncertain future of North American trade
Earlier this year, the US chose not to renew the USMCA in its current form, while Canada and Mexico sought a renewal of the trade agreement, seeking to make changes to the deal, which was reached during Trump's first term in office.Despite the recent US action, the treaty will continue to govern North American trade over the next decade on a rolling basis - but it will require annual reviews.
The recently announced tariffs highlight the Trump administration's opposition to USMCA, said Michael Devereux, a professor of economics at the University of British Columbia.
"It is a significant escalation because it directly targets goods that were previously exempt under the US, Canada, Mexico trade agreement that President Trump negotiated and signed himself in 2018," he added.
In February, the US Supreme Court struck down sweeping international tariffs imposed by Trump through the International Emergency Economic Powers Act (IEEPA) of 1977, which the president had used to attempt to justify the imposition of tariffs.
The Supreme Court ruled Trump had exceeded his authority when he announced the duties under a law reserved for national emergencies. The White House then vowed to invoke other mechanisms to impose import taxes.
In recent weeks, Trump has used Section 301 of the Trade Act of 1974 to announced fresh tariffs on a range of countries, including a 25% tax on goods from Brazil.
Like Canada and China, Brazil has vowed to retaliate.
The new tariffs threatened against Canada, are due to be introduced under a different law.
Trump slaps 50% tariffs on Canada and Carney vows to 'intensify' trade talks
The duties mark a major escalation in trade tensions between the North American neighbours.
www.bbc.com
