Canada and Mexico were spared new tariffs in the U.S. president’s “Liberation Day” announcement on April 2.
Speaking from the Rose Garden with most of his cabinet accompanying him, President Trump announced so-called “reciprocal” tariffs ranging from 10 to 50 per cent on a long list of countries starting April 9, with a baseline 10 per cent duty applied to imports not covered under the Canada-U.S.-Mexico trade agreement (CUSMA or USMCA) as of April 5.
While the announcement of the status quo for Canada is welcome news for many Canadians who work in export-reliant sectors that were bracing for new levies, other Trump tariffs implemented or announced over the past month on Canadian steel, aluminum, autos, and auto parts are still in place or going ahead.
Canadian exports that are not shipped under USMCA terms also continue to face the so-called “fentanyl tariffs” that were imposed by the Trump administration in early March. These products, most of which have traditionally been shipped under the World Trade Organization most-favoured nation rate, still face a 25 per cent tariff, with a lower 10 per cent rate on energy products and potash fertilizer that are not USMCA-compliant.
If Trump’s national emergency order regarding fentanyl and illegal migrants is cancelled, as called for by a non-binding bill that was passed in the U.S. Senate after the president’s tariff announcement on April 2, the White House says non-USMCA-compliant goods from Canada would be subject to a 12 per cent “reciprocal” tariff.
As for other countries involved in agricultural trade, Chinese exports will face a new 34 per cent “reciprocal” tariff into the U.S., in addition to previously-applied duties in the range of 20 per cent. The European Union is facing a 20 per cent tariff, while South Korea, and Japan are in line for 25 and 24 per cent levies, respectively. Vietnam is set to face a massive 46 per cent tariff, while Taiwan faces a 32 per cent levy. Australia, Brazil, and the UK are among the countries slated for the baseline 10 per cent rate.
It appears the size of the U.S.’s bilateral trade deficit with a country — not their tariffs on U.S. exports — was the primary factor in determining the higher rates.
Economists say the weighted average tariff on U.S. imports with the actions announced on Wednesday, if fully imposed, would reach levels not seen in over a century, surpassing the average tariff under Smoot-Hawley in 1930 at the beginning of the Great Depression.
U.S. farm groups are raising concerns about the impact trade uncertainty and retaliation will have on export demand.
American Farm Bureau Federation president Zippy Duvall, in a post on X, says AFBF “encourages the administration to work toward a swift resolution to trade disagreements to avoid tariffs that put farmers and ranchers in the crosshairs of retaliation, and to pursue strategies that expand market opportunities.”
While there may be opportunities for Canadian ag exports, having avoided new levies on April 2, there’s still major downside demand risk from a global or U.S. economic slowdown as the rest of the world navigates the tariffs, with the possibility for retaliation and new trade alliances that exclude the U.S.
Trump’s legal justification for invoking the sweeping tariffs was that they’re needed to address a “national emergency” posed by the U.S. trade deficit.
Related: We are one step closer to Fortress North America
Editor’s note: This story has been updated as of early April 3.
