Trudeau expects a trade war between Canada and the U.S. for the 'foreseeable future'
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Prime Minister Justin Trudeau said Thursday he welcomed indications that the U.S. would delay substantial tariffs on Canadian products for a month, but said Canada’s retaliatory tariffs would remain in place for now.
U.S. President Donald Trump said Thursday that he has postponed 25 percent tariffs on most goods from Mexico for a month, amid widespread fears of a broader trade war. U.S. Commerce Secretary Howard Lutnick had said earlier Thursday that tariffs on both Canada and Mexico would “likely” be delayed. But no immediate decision was announced on Canada.
It was the second one-month postponement Trump has announced since first unveiling the import taxes in early February.
Ontario Premier Doug Ford, the leader of Canada’s most populous province, said Thursday that, starting on Monday, the province will charge 25 percent more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
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Ford said he does not want to do it, but will not back down until Trump rescinds all plans to impose tariffs.
“This whole thing with President Trump is a mess,” Ford said. “This reprieve, we've went down this road before. He still threatens the tariffs on April 2.”
Ford's office said that Ontario's tariff would remain in place even if there's a one-month reprieve from the Americans. Ford said Wednesday that so long as the threat of tariffs continue, Ontario's position would remain the same.
Canadian Foreign Minister Mélanie Joly has said that Canada is not interested in going “through this psychodrama every 30 days so.”
Trudeau said earlier Thursday that he expects Canada and the U.S. to be in a trade war for the foreseeable future after having what he called a colorful but constructive call with Trump on Tuesday.
Trudeau said the two sides are “actively engaged in ongoing conversations in trying to make sure these tariffs don’t overly harm” certain sectors and workers. He also reiterated that “we will not be backing down from our response tariffs until such a time as the unjustified American tariffs are Canadian goods are lifted.”
Trump launched a new trade war Tuesday by imposing tariffs against Washington’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin. Trump put 25 percent taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10 percent on Canadian energy.
On Thursday, Lutnick said in a television interview that Trump will likely suspend the 25 percent tariffs on Canada and Mexico for most products and services for a month, broadening an exemption that was granted on Wednesday only to autos.
In an interview on CNBC, Lutnick said the one-month delay in the import taxes “will likely cover" all goods and services under the United States-Mexico-Canada Agreement, or USMCA, the trade agreement Trump negotiated in his previous term that replaced NAFTA.
Lutnick estimated that more than half of what the U.S. imports from those two countries would be eligible for the exemption.
For companies with products that comply with the trade agreement, “you will get a reprieve now,” he said.
Trudeau said Lutnick's comments align with conversations Canadian officials have had with the Trump administration. "But I am going to wait for an official agreement to talk about Canadian response or look at the details of it but it is a promising sign." Trudeau said. “But I will highlight that it means that the tariffs remain in place and therefore our response will remain in place.”
A day after the new tariffs took effect, Trump had said he would grant a one-month exemption for U.S. automakers. The announcement came after Trump spoke Wednesday with leaders of Ford, General Motors and Stellantis, the parent company of Chrysler and Jeep. His press secretary said Trump told the chief executives to move auto production to the U.S. to avoid tariffs.
Canada's initial $30 billion Canadian (US$21 billion) worth of retaliatory tariffs have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products.
Ottawa plans a further $125 billion (US$87 billion) tariffs in three weeks on American products like electric vehicles, fruits and vegetables, diary, beef, pork, electronics, steel and trucks.
Despite Trump’s claim that the U.S doesn’t need Canada, nearly a quarter of the oil America consumes per day comes from Canada. About 60 percent of U.S. crude oil imports are from Canada, and 85 percent of U.S. electricity imports as well.
Canada is also the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for and investing for national security.
Canada is the top export destination for 36 U.S. states. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day.
Canada’s provinces, meanwhile, are lifting inter provincial trade barriers in an effort to lessen Canada's dependence on the U.S.