New tariffs on Canada slated to take effect after midnight
Last-minute talks between the U.S. and Canada were ongoing Tuesday about a potential deal.
WASHINGTON —
The clock is ticking as President Donald Trump’s new tariffs on certain Canadian goods are slated to take effect at 12:01 a.m. on Wednesday.
Canadian Prime Minister Mark Carney’s office said the leaders spoke on Tuesday afternoon, but the White House didn’t immediately respond to questions about the likelihood of a potential deal or extension before Trump’s self-imposed deadline.
Without an agreement, 50% tariffs are expected to impact $20 billion worth of Canadian products, from wine to cement and even hockey sticks.
The levies also apply to goods that were previously protected by the US-Mexico-Canada Agreement, a trade pact struck during Trump’s first term that is being renegotiated.
Alfredo Carrillo Obregon, a trade policy analyst at the Cato Institute, said the Trump administration is likely using the threat of new tariffs as leverage in those talks.
“The 50% rate sounds high, and it is, but they only cover about 5% of what Canada exported to the U.S. last year. So really, when we think about these tariffs and their significance economically, it’s more of a negotiating tool,” said Carrillo Obregon.
Earlier this year, the Supreme Court blocked one major tool that the president used to impose sweeping global tariffs by declaring an economic emergency. Since then, the president has turned to other legal tools to rebuild.
In this case, he’s using a never-before-used section of a Great Depression-era law, by claiming that Canadian policies unfairly discriminate against American exports of cars, alcohol and dairy compared to other countries.
In a fact sheet explaining its rationale, the White House also pointed out that Canada and China were the only countries that chose to retaliate against Trump’s previous rounds of tariffs, while other countries negotiated deals.
Critics of the Trump administration’s approach argue that it could lead to another tit-for-tat trade war with one of America’s closest economic partners.
New tariffs could also have consequences for American shoppers, as companies often pass through added costs to consumers.
Last month, the president also imposed tariffs of 10% to 12.5% on 59 countries and the European Union. He justified those tariffs by claiming that these countries aren’t doing enough to crack down on forced labor, but critics contend that the Trump administration merely used that as an excuse to replace the levies that were struck down by the Supreme Court.
The Supreme Court decision didn’t impact the president’s sector-specific tariffs on things like steel, aluminum, lumber and automobiles, which remain intact.