WASHINGTON — U.S.
president-elect Donald Trump's pledge to hit Canada and Mexico with 25 per cent across-the-board tariffs has sent shockwaves through America's closest neighbours — but it's likely just a first step in his plan to rattle a critical trilateral trade pact.
Trump demonstrated how vulnerable Canada is to America's whims when he scrapped the North American Free Trade Agreement during his first administration. During negotiations in 2018, Trump floated the idea of a 25 per cent tariff on the Canadian auto sector but it was never implemented. But he did use his national security powers to impose a 25 per cent tariff on steel and a 10 per cent tariff on aluminum imports.
But Carlo Dade, director of trade and trade infrastructure at the Canada West Foundation, is less optimistic. During the presidential campaign, Trump said that"upon taking office, I will formally notify Mexico and Canada of my intention to invoke the six-year renegotiation provision of the that I put in.""Negotiations are as much about sitting down at the table as ... they are about setting conditions for when you do sit down at the table," he said.
The third possible outcome - the one Dade said would be the worst for Canada - would see the Trump administration withhold U.S. renewal, pushing the issue back for 12 months.In fact, the Trump administration could continue delaying CUSMA's renewal for years until the entire agreement is scrapped, causing investment insecurity in Canada along the way.
Ottawa also should have more extensively tapped into Canadian business and industry for information and advice long before the presidential election, he added.Lilly said the federal government made the proper preparations. Ottawa opened public consultations last year and continues to connect with various Canadian interests.
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