The escalation of the US-Canada trade war occurred as Prime Minister Justin Trudeau prepared to hand over power this week to his successor Mark Carney, who won the leadership race of the ruling Liberals last weekend.
On Monday, Carney said he could not speak with Trump until he was sworn in as prime minister. Trump again on social media said he wanted Canada “to become our cherished Fifty First State”.
Canadian Energy Minister Jonathan Wilkinson told Reuters that Canada could impose non-tariff measures such as restricting oil exports to the US or levying export duties on minerals, if US tariffs persist.
Canada ships about 4 million barrels of crude to the US per day via pipeline, mainly to Midwest refineries. Canadian tariffs on American ethanol are also an option, he added.
Most US-Canada trade remains duty free under the USMCA trade deal that Trump signed in 2020, but he continues to complain about Canada’s high tariff rates for dairy products.
Ottawa last week won a month’s reprieve for USMCA-compliant exports from Trump’s general 25 per cent tariffs for Canada threatened over fentanyl trafficking.
But in early April, Canada also faces Trump’s reciprocal tariffs aimed at raising US tariffs to match other countries’ rates and counteract non-tariff barriers.
Canada, with ample hydropower resources that has made primary aluminum production more cost effective than in the US, has built a commanding position in the US aluminum market, as US smelters once revived by Trump’s tariffs have been idled.
China remains the number two supplier of aluminum and goods made from aluminum, but already faces high tariffs to counteract alleged dumping and subsidies, as well as a new 20 per cent tariff that Trump has imposed over the past month over fentanyl trafficking.
Trump’s hyper-focus on tariffs since taking office in January has rattled investor, consumer and business confidence in ways that economists increasingly worry could cause a US recession.
A small business survey on Tuesday showed sentiment weakening for a third straight month, fully eroding a confidence boost following Trump’s Nov 5 election victory, and a survey of households by the New York Federal Reserve on Monday showed consumers growing more pessimistic about their finances, inflation and the job market.
Source: CNA
