A Hectic Week in Canadian Politics and Trade, With More Action on the Way
[Listen to “The Daily”: Elbows Up: Canada’s Response to Trump’s Trade War]
What’s next: Mr. Ford, along with Dominic LeBlanc, the new international trade minister, and François-Philippe Champagne, the new finance minister, met with their counterparts in Washington: Howard Lutnick, the U.S. commerce secretary, and Jamieson Greer, the U.S. trade representative. The message they received, Matina reports, is “there was no way Canada, or any other country in President Trump’s cross hairs, could avoid a new round of sweeping tariffs on April 2.”
[Read: Tariff Pain First, Deals Later, U.S. Tells Canada in Key Meeting]
Those tariffs will be “reciprocal” — that is, the United States will apply the same tariffs against exports from Canada that Canada puts on exports from the United States.
Because of the U.S.M.C.A. (or CUSMA, as it’s called in Canada), the free trade agreement signed under the first Trump administration, Canada has relatively few tariffs on American imports aside from some farm products, particularly dairy, that are part of the supply management system. So, in theory, reciprocal tariffs may have relatively little effect.
But there is a wild card. Mr. Trump sees value-added taxes, like the goods and services tax, as tariffs because they are not applied to exports — a view not shared by most trade economists. How Mr. Trump might go after the G.S.T., and how that could affect trade between Canada and the United States, is unclear.
A much larger trade problem may explode on April 2, when Mr. Trump’s suspension of a sweeping and potentially devastating 25 percent tariff on most Canadian exports and a 10 percent tariff on energy and some minerals expires. (Those charges are already being imposed on some Canadian exports that are not certified as complying with the U.S.M.C.A.’s North American content rules.)
