Canada to Unveil Retaliatory Tariffs Targeting US Goods on Tuesday

Dow Jones
15 hours ago

OTTAWA--Canadian officials on Tuesday will unveil the government's retaliatory tariffs against the U.S. as the collateral damage from failed trade talks spreads.

Canadian Finance Minister François-Philippe Champagne will be accompanied by other senior cabinet members to spell out which parts of the U.S. economy and which regions will be targeted by retaliatory tariffs. Canada's retaliatory duties would take effect Sept. 8, or the Tuesday after Labor Day, thereby in theory providing some time for the U.S. and Canada to return to negotiations.

President Trump imposed 50% duties on $20 billion of Canadian goods after two weeks of high-stakes trade talks faltered, with both Canada and U.S. accusing the other of making last-minute demands.

The U.S. said the new tariff, which kicked in on Saturday, is in response to what the U.S. says is Canadian mistreatment of U.S.-made automobiles, alcohol and agricultural products.

Earlier Monday, Trump said he would impose a 50% tariff on Canadian-made automobiles and auto parts on Jan. 1 -- a move that would upend the North American motor-vehicle supply chain and cause damage to Canada's manufacturing sector, economists say.

Prime Minister Mark Carney said Monday that it would be difficult for Canada to match tariffs on a dollar-for-dollar basis, given how the U.S. economy dwarfs Canada's. "So we might go the more targeted way," Carney said. "We're not setting aside any solution. Everything is on the table."

Derek Holt, an economist at Bank of Nova Scotia, said he expects the retaliatory measures "to strike deep into Republican territory, and particularly hit sectors and individual firms in areas where [midterm] races are close."

A piece from the conservative-leaning Fraser Institute think tank argued that retaliation might backfire. "Canadian retaliation will lead to higher costs for our firms and consumers, put additional strain on integrated North American supply chains, and slow overall economic growth on our side of the border," said economists Jock Finlayson and Steven Globerman.

Carney added he wasn't surprised by Trump's new vow to impose a 50% tariff on Canadian motor vehicles and auto parts. He had previously said an unwillingness by Washington to reduce tariffs on medium- and heavy-duty trucks was one reason that a tentative deal fell apart.

During the talks, Carney said officials learned that the Trump administration "wants to destroy our major industries, including our auto industry, including our steel industry, our aluminum industry, with negotiating terms that were simply not fair."

Doug Ford, the premier of Canada's most populous province, Ontario, said he wanted all the provinces to align on a strategy that envisages restricting exports to the U.S. of key commodities like oil, gas, electricity, potash and rare earths.

He said this was the best way to exert pressure on Washington. That strategy was rejected by oil-rich Alberta, whose premier, Danielle Smith, said this wasn't a viable option because it would hurt Canadian exporters.

 
 

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