The new U.S. administration could bring in 10-per-cent across-the-board tariffs, as the Republican promised during his campaign
Donald Trump signs the Canada -United States-Mexico Agreement with Mexican President Enrique Pena Nietom left, and Prime Minister Justin Trudeau during the G20 summit in Buenos Aires in 2018.Steve Verheul was Canada ’s chief trade negotiator from 2017-21, leading negotiations that resulted in the Canada -United States-Mexico Agreement. He is now a fellow at the Public Policy Forum and a principal with GT and Co. Executive Advisers.
Given Canada’s reliance on the U.S. market , Canada would have to press hard for an exemption from any across-the-board tariff the U.S. might impose.. We leveraged a united front, including the federal, provincial and territorial governments and a close alliance with industry and labour. We advanced an agile and broadly supported negotiating strategy to deal with unpredictable U.S. negotiating positions.
There is, after all, a reason tariffs between Canada and the U.S. are almost non-existent under CUSMA. But Mr. Trump feels most strongly about the first rationale – encouraging businesses to move to the U.S. – which Canada cannot address. This would create significant tensions with all of Canada’s trading partners outside the U.S. and would lock Canada even more tightly into its reliance on the U.S. market. Matching U.S. tariffs only on products that would be likely to end up in the U.S. market could be a start in limiting the impact, but the damage to Canada’s trade with non-U.S. markets would still be considerable.
Canada’s other option would be to do nothing and wait to see how further developments might unfold. The U.S. may find the tariffs too expensive to maintain and remove them either partly or completely or it may reach out to negotiate settlements with certain trade partners. After all, such tariffs breach every trade agreement to which the U.S. is a party and would
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