The Canadian government was quick to announce $16.6 billion in retaliatory tariffs after U.S. Commerce Secretary Wilbur Ross confirmed that Canada, Mexico, and the EU will lose their exemptions to 25 percent and 10 percent tariffs on steel and aluminum, as of June 1.
The escalation comes as NAFTA negotiations appear to have stalled.
Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland announced the countermeasures during an afternoon press conference on Thursday.
“I want to be very clear about one thing: Americans remain our partners, friends, and allies. This is not about the American people. We have to believe that at some point their common sense will prevail. But we see no sign of that in this action today by the U.S. administration,” said Trudeau.
Freeland noted “this is the strongest trade action Canada has taken in the post-war era. This is a very strong response, it is a proportionate response, and it is perfectly reciprocal.”
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The proposed list that would face tariffs coming into Canada features more than 125 items, including steel and aluminum products, but also a diverse basket of U.S.-made goods.
The Canadian government says it will hold consultations on the proposed tariff list until June 15th, with the tariffs taking effect July 1st and remaining in place “until the U.S. eliminates its trade-restrictive measures against Canada.”
“Any time we have a trade war, I think we’re all concerned in a country where we export so much, and none more-so than agriculture,” said Brian Innes, president of the Canadian Agri-Food Trade Alliance (CAFTA), on RealAg Radio on Thursday afternoon.
The Agricultural Manufacturers of Canada tweeted that it was “very concerned by the breakdown in trade relations with the United States.”
U.S. farm group leaders echoed that sentiment.
“Imposing tariffs has the potential to undermine positive relationships with our closest allies and erode long-standing market access,” said Kevin Skunes, president of the National Corn Growers Association. “NCGA urges policymakers to strengthen cooperation with our trading partners and stay at the negotiating table.”
Brian Kuehl, executive director of the U.S. group Farmers for Free Trade (whose members include the American Farm Bureau), said the retaliatory tariffs applied to U.S. agricultural exports “will harm U.S. farmers and take many American farm operations to the breaking point… The addition of new retaliatory tariffs on everything from bourbon, to rice, to orange juice and cranberries will only widen the pain to additional farmers across the country.”
“American farmers overwhelmingly supported President Trump in 2016 but will not be silent in the face of trade wars that harm U.S. agriculture,” continued Kuehl. “This summer, as lawmakers return home, the voices of farmers who are bearing the brunt of trade chaos and uncertainty will be heard.
Mexico and the EU also responded swiftly with retaliatory measures. Mexico’s tariff list includes pork bellies, fruits, and cheeses, while the EU plans to counter with tariffs on orange juice, yachts and motorbikes.
“This is a destructively bad-faith move on the part of Trump and his White House, bringing Canada-U.S. relations to an historic low. It almost certainly torpedoes NAFTA negotiations, even if Canada has tried to delink the issues. And beyond that, it deepens distrust and foreshadows very dark and difficult days for Canada-U.S. relations generally,” veteran Canadian trade lawyer Lawrence Herman told the Globe and Mail.
But not everyone in Canada is convinced retaliation is a great strategy for Canada:
We cannot win a trade war with a country ten times our size to whom we send 75 per cent of our exports and on whom we depend for 25% of our GDP. All this talk of retaliation is chest-beating nonsense. It will not make a shred of difference, except to invite further escalation.
— Andrew Coyne (@acoyne) May 31, 2018
Why do countries rarely impose tariffs in the name of national security? “I know if I do it, you’ll do it, too, and that could ruin the whole thing for everybody,” says @ChadBown to @washingtonpost. https://t.co/2u5NOAeztD
— Peterson Institute (@PIIE) May 31, 2018
Conservative leader Andrew Scheer was also critical of the Liberals and their leader.
“This threat to the steel and aluminum industry has been looming for a year, causing massive uncertainty and a turbulent investment climate,” he said, in a statement. “Justin Trudeau missed an opportunity by failing to provide any measures in his latest Budget that would prepare industry for this possibility. Conservatives warned the Prime Minister that his government was unprepared for this development.”
More to come.