WASHINGTON, D.C. \u2014 Canadians are tiring of Donald Trump\u2019s favourite word, \u201ctariffs,\u201d but they may need to brace for even more of them.<\/p>\n
Last month, the United States Trade Representative (USTR) launched investigations<\/a> into 60 economies, including Canada, under Section 301(b) of the Trade Act of 1974 to determine whether they have failed to impose and enforce a ban on imports produced with forced labour.\u00a0<\/p>\n Canada is being lumped together with China and dozens of other countries for an investigation into whether Ottawa\u2019s forced-labour rules and framework are sufficient for screening goods tied to forced or child labour. Hearings over this are being held this week in Washington, and trade watchers expect actions to be taken against most of the countries in question.<\/p>\n The resulting duties could help rebuild Trump\u2019s tariff wall, constructed last year under the International Emergency Economic Powers Act but torn down<\/a> by the U.S. Supreme Court in February.<\/p>\n Prime Minister Mark Carney has expressed frustration<\/a> with U.S. tariffs, labeling them violations of the Canada-U.S.-Mexico Agreement (CUSMA).\u00a0<\/p>\n \u201cYou know what\u2019s an irritant?\u201d he said last Thursday. \u201cA 50 per cent tariff on steel and aluminum, 25 per cent on automobiles, all of the tariffs on forest products. Those are more than irritants. Those are violations of our trade deal.\u201d<\/p>\n Carney was referring specifically to Section 232 tariffs on those products, most of which were put in place last year. The IEEPA tariffs and their temporary replacement in the form of Section 122 tariffs, meanwhile, have contained exemptions, meaning that CUSMA-compliant goods have thus far escaped those duties.<\/p>\n The prime minister also responded to the launch of the 301 probe by defending Canada\u2019s anti-forced labour laws.<\/p>\n \u201cCanada has a comprehensive legal framework around that \u2026. and we take it very seriously,\u201d he said.<\/p>\n Nonetheless, trade watchers in Washington expect Canada to be faced with 301 tariffs following the investigation.<\/p>\n \u201cThey\u2019re probably going to use that as the basis for creating a new baseline tariff,\u201d said Inu Manak, senior fellow for international trade at the Council on Foreign Relations. \u00a0\u201cSo that\u2019s sort of replicating the tariff wall that came with IEEPA, and then also using the Section 301 to enforce commitments that are made in other agreements.\u201d<\/p>\n \u201cThe outcome of those 301s is already well-known: We\u2019re expecting tariffs, regardless of what the investigation shows,\u201d she added.<\/p>\n So if we can assume that the 301s will lead to duties, the bigger question may be whether the duties will impact Canada\u2019s trade more broadly than the IEEPA or the Section 122 tariffs \u2014 namely by including CUSMA-compliant products.<\/p>\n Manak and some other trade watchers point to last year\u2019s carveouts as signals that the White House understands how devastating tariffing all of Canada\u2019s trade would be to the U.S. economy \u2014 and they assume any 301 tariffs will carry CUSMA exemptions.<\/p>\n \u201cI would think they would \u2026,\u201d Manak said, and \u201cparticularly if we\u2019re in the middle of negotiations and it seems like things are going the right way.\u201d<\/p>\n \u201cI don\u2019t think they would actually (tariff all goods) unless there was something significant that changed their minds.\u201d<\/p>\n Alfredo Carrillo Obregon, policy analyst at the Cato Institute, believes that carveouts are more likely the broader the tariff is because Washington will want to protect its own economy.<\/p>\n \u201cI think that the U.S. recognizes that tariffing everything that comes in from Mexico and Canada is against its own economic interest,\u201d he said, but he acknowledged that it was \u201cstill too early to tell.\u201d<\/p>\n He reckons that it will depend on how the investigations play out and where things stand with the CUSMA negotiations.<\/p>\n \u201cIf there\u2019s major progress in (the 301s) as we head into summer, they\u2019re going to be used as leverage in USMCA negotiations,\u201d Carrillo Obregon said.<\/p>\n But others see carveouts for CUSMA-compliant goods as less likely.<\/p>\n \u201cRather than having the same type of duty-free approach that has been the core of NAFTA and USMCA,\u201d said Arun Venkataraman, international trade partner at law firm Covington & Burling, \u201cI think there are probably questions as to whether that needs to be revisited, certainly from the U.S. perspective.\u201d<\/p>\n He said the exemptions offered under IEEPA and Section 122 should not be seen as a reliable guide for how the U.S. will approach tariffs in USMCA negotiations.<\/p>\n Diego Marroqu\u00edn Bitar, fellow at the Washington-based Center for Strategic and International Studies, pointed to reporting that USTR Jamieson Greer recently told the Mexican private sector that if CUSMA is extended, there will be some tariffs on top of it.<\/p>\n Marroqu\u00edn expressed concern that U.S. tariffs imposed even on USMCA-compliant goods would further undermine the agreement\u2019s credibility and raise North American production costs.<\/p>\n \u201cAn agreement that\u2019s supposed to reduce barriers to trade is less credible if you have something on top of it that\u2019s making us less competitive, that\u2019s making production more expensive, that\u2019s changing the incentives to comply with the agreement,\u201d he said.<\/p>\n Worryingly, business and politicos have largely assumed any 301s will lead to carveouts for goods covered under the trade agreement. But Jamie Tronnes, executive director of the Center for North American Prosperity and Security, a project of the Macdonald-Laurier Institute, says it has not escaped Ottawa\u2019s notice.<\/p>\n \u201cThere is growing fear that the United States will use the 301 tariffs as leverage or as a way to get out of the tariff-free trade that Canada and the United States have established through USMCA,\u201d she said.<\/p>\n Canada\u2019s been walking a fine line on this for longer than many people have realized, Tronnes added, but now, she says, \u201cI think most trade watchers are starting to become a little more concerned about the 301s than they are about the actual renewal of the USMCA.\u201d<\/p>\n Even more worrying, she said, is the possibility of stacked tariffs.<\/p>\n \u201cAny sector that has already received 232 tariffs is probably even more vulnerable because these (301s) could be stacked tariffs, which would make the tariff rate even higher,\u201d she warned, noting how the auto sector is already reeling.<\/p>\n \u201cIf USMCA-compliant parts and other USMCA-compliant goods go by the wayside,\u201d Tronnes warned, \u201cthen we\u2019re looking at a major shift in how we trade with the United States.\u201d<\/p>\n National Post<\/p>\n Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com<\/a> and sign up for our newsletters here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"WASHINGTON, D.C. \u2014 Canadians are tiring of Donald Trump\u2019s favourite word, \u201ctariffs,\u201d but they may need to brace…\n","protected":false},"author":2,"featured_media":24325,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[17,8716,11987,162,11986,434,111,11985,400],"class_list":{"0":"post-24324","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-canada","9":"tag-canada-and-the-united-states","10":"tag-child-labour","11":"tag-donald-trump","12":"tag-forced-labour","13":"tag-international-trade","14":"tag-mark-carney","15":"tag-section-301","16":"tag-tariffs"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/24324","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=24324"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/24324\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/24325"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=24324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=24324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=24324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}