With the August 1 deadline now behind us and no trade deal in sight, the United States bumped its tariff on Canadian goods from 25 per cent to 35 per cent on August 1. The tariff applies to products not covered by the Canada-United States-Mexico Agreement, according to a White House press release.
Prime Minister Marc Carney released a statement the same day, noting that while the Canadian government is disappointed by this action, “we remain committed to CUSMA, which is the world’s second-largest free trade agreement by trading volume.”
He also said the U.S. had justified its tariff on the basis of the cross-border flow of fentanyl, “despite the fact that Canada accounts for only 1 per cent of U.S. fentanyl imports and has been working intensively to further reduce these volumes.”
David Adams, President and CEO of Global Automakers of Canada, said it was unfortunate that a deal between the U.S. and Canada had yet to be reached, leaving the situation unchanged for Canada’s auto sector. “Our industry continues to bear the weight of tariffs imposed earlier this year.”
He added that any level of tariffs, “general or specific,” have long-term consequences for Canada’s auto sector. “It means that Canadian manufacturing is that much more uncompetitive with respect to the U.S. and that businesses investing here face significant uncertainty.”
Adams said they need parties to stay at the negotiating table. “This isn’t just about getting a deal — it’s about getting a deal that is good for Canada, good for automakers, and good for the jobs they support on both sides of the border.”
Carney said the federal government will continue to negotiate with the U.S. on their trading relationship.
Deal or no deal, however, Jordan Brennan, Head of Thought Leadership at the Royal Bank of Canada, said the country faces significant headwinds. “A multi-year productivity recession combined with tightened immigration, trade frictions, and elevated macro uncertainty mean there are difficult choices ahead for Canada’s political and business leaders.”
