Canada’s Prime Minister, Mark Carney has sent his principal advisor, Marc-André Blanchard to the United States to partake in bilateral trade talks in a bid to disentangle the current trade impasse that has lasted for half a year. Top members of Mr. Carney’s cabinet, including chief aide Blanchard and Minister for Intergovernmental Affairs, Dominic LeBlanc, have journeyed to the U.S. capital to deliberate with representatives from the Trump administration. This visit by Blanchard to Washington, occasions the third intervention in recent weeks. If an agreement isn’t reached by the end of the month, President Trump could potentially escalate tariffs on Canadian imports from 25 percent to 35 percent. Neither leader appears confident that a resolution can be achieved by the week’s end.
Since his return to the presidential seat earlier this year, Trump has imposed a barrage of tariffs on Canadian products. These include a 50 percent tariff on steel and aluminum, 25 percent hike on automobiles, and an equivalent tax on other goods not covered by the tri-country agreement between the United States, Mexico, and Canada, barring oil, gas and potash commodities which were subjected to a 10 percent tariff. The European Union has recently negotiated a trade deal with the United States, understanding the higher tariff obligations to sidestep more severe consequences from Trump’s resistance to open trade. Following the agreed-upon 15 percent base tariffs, the EU also committed to the purchase of $750 billion in US energy and a near $600 billion investment in the country.
Canadian politicians, businesses and investors have been keenly observing the progress of the EU-US trade agreement as a likely precursory event to any potential deal between US and Canada. The EU, akin to Japan – who recently acquiesced to a 15 percent base tariff from the United States – is a critical ally and considerable trade associate of the United States.
In a discussion about the EU-US trade agreement, Prime Minister Mark Carney reiterated Canada’s anticipation of enduring some degree of U.S. tariffs, irrespective of the outcome of a potential Canada-US deal, be it before or after the impending deadline set by President Trump. Carney emphasised that Canada’s situation is unique from other US trade partners, as they enter what is described as an ‘intense phase’ of discussions.
The EU agreement marks the sixth in a series of trade deals Mr. Trump has brokered in recent times, as he aims to renovate the international trade framework by imposing the heaviest tariffs since the Great Depression. Other countries that have managed to strike deals with the United States include the United Kingdom, Japan, Indonesia, Vietnam, and the Philippines. These agreements have reshaped the tariff landscape, leaving a base US tariff ranging from 10 to 20 percent in place – a noticeably higher tariff level than at the beginning of the year, but still less than what Trump originally threatened. Sector-based tariffs remain intact, although some have been reduced, with both Japan and the EU accepting 15-percent auto tariffs instead of the 25 percent applied elsewhere.
Despite the transformation in the global trade scene, Canada retains an advantageous standing in terms of U.S. market accessibility. Similar to other countries, Canada has been confronted with specific industrial tariffs on steel, aluminum, and vehicles. However, the blanket 25-percent tariff that was originally applied to Canadian goods by Mr. Trump in March has been somewhat mitigated by an exemption for all goods complying with USMCA’s rules of origin. This has facilitated the bulk of Canadian exports to continue flowing into the U.S. without incurring tariffs. As per U.S. Census Bureau data, in May, 90 percent of Canadian products accessed the U.S. market without duties, by either making use of the USMCA exemption or through other tariff-avoidance strategies.
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