Canada announced on Sunday a new 25% tariff on assorted US metal products. A 10% tariff on another 250 products such as beer kegs, orange juice, and whiskey was also confirmed. The tariffs are the culmination of increased trade tensions between the US and Canada over the last few months. Canada is responding to US metal tariffs that were imposed by the Trump administration last month.
Senior Canadian officials said that the tariffs are placed to exert political pressure on the US and make it notice how its protectionist decisions are affecting trade. Canada has termed the steel and aluminum levies “unjustified” and “illegal.” The tariffs have also affected Mexico and the European Union. The Canadian government is setting aside C$2 billion to help protect the local steel and aluminum industry from Trump’s tariffs.
Canadian Foreign Minister Chrystia Freeland said in a statement that even though her country will not escalate this matter further, it won’t back down. Canada is not the only country that has responded to the steel and aluminum tariffs by the White House. The EU and Mexico have also slapped tariffs. EU duties are targeting over $3 billion in US goods while Mexico has targeted goods worth $3 billion. The US could also be on the receiving end of additional levies from China as trade tensions between the two countries continue to grow.
The steel and aluminum tariffs have attracted global criticism. They have also triggered a series of complaints against the US at the WTO. However, Trump has made it clear that his policy will not change. The president maintains that other countries have “taken advantage” of the US for many years. The new tariffs are partly a strategy to try and address this.
Nonetheless, the relations between the US and Canada haven’t been good in the last few months. Just recently, both the Canadian Prime Minister Justin Trudeau and President Trump had a heated exchange after the G7 Summit held in Canada. On one hand, Trump referred to Trudeau as a “small man” in reference to what he called “betrayal” after the G7 trade negotiations. However, Trudeau said his country will not be “pushed around.”
In addition to this, Trump has also called for the renegotiation of the North American Free Trade Agreement. The agreement includes the US, Canada, and Mexico. The Canadians have remained opposed to any changes to the program as it is.
It’s very likely though that these aren’t the last tariffs we are going to see. There’s a very real chance of escalation. For instance, the US may respond to the new Canadian tariffs. The cycle might go on and on until it’s no longer sustainable. The Trump administration had ordered in May a national security probe into car imports too. Many analysts believe that the results of this probe could in fact open a new window for more tariffs on vehicles and auto parts over the coming months.