{"id":75474,"date":"2025-07-19T13:36:15","date_gmt":"2025-07-19T13:36:15","guid":{"rendered":"https:\/\/www.europesays.com\/us\/75474\/"},"modified":"2025-07-19T13:36:15","modified_gmt":"2025-07-19T13:36:15","slug":"tariffs-are-likely-here-to-stay-what-now-for-canada","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/75474\/","title":{"rendered":"Tariffs are likely here to stay. What now, for Canada?"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The highly integrated aluminum, steel and automotive sectors have limited options to diversify away from the U.S., leaving their fate largely at the mercy of the trade war.Cole Burston\/The Canadian Press<\/p>\n

When Donald Trump<\/a> took office earlier this year, trading partners were unsure how serious he was about pursuing the tariffs<\/a> he campaigned on, and many wondered whether the levies would be primarily used as a negotiation tactic. <\/p>\n

But six months later, it\u2019s increasingly clear that the U.S. President is committed to his protectionist trade policies, even if the tariff rates and targets constantly change. <\/p>\n

After promising to fight U.S. tariffs until they\u2019re lifted, Prime Minister Mark Carney acknowledged<\/a> to reporters this week that there\u2019s little evidence a trade deal without tariffs is possible. <\/p>\n

The prospect of a prolonged trade war<\/a> is particularly devastating for businesses in the aluminum, steel and automotive sectors, which have been targeted by steep tariffs under national security grounds and have limited options to diversify away from the U.S., leaving their fate largely at the mercy of Mr. Trump. <\/p>\n

On Friday, the chief executive officer of Pittsburgh-based Alcoa Corp.<\/a>, which operates three aluminum smelters in Quebec, told Bloomberg News that it\u2019s been forced to pause its plans for growth projects in Canada, and warned the company may need financial help from the federal government if levies remain in place.<\/p>\n

The trade war has been largely contained so far, and its impact on economic growth and inflation may be limited if Canada doesn\u2019t face new or higher tariffs. But Mr. Carney\u2019s comments signal a recognition that the global trading system has been fundamentally altered by the U.S., and Canada can do little about it.<\/p>\n

Steel producers warn of dire consequences of 50% tariff if broader U.S. trade deal isn\u2019t reached<\/a><\/p>\n

\u201cI think it\u2019s been very clear that Trump is a tariff man,\u201d said Wolfgang Alschner, the Hyman Soloway chair in business and trade law at the University of Ottawa. <\/p>\n

\u201cSo, it would have been an unrealistic proposition that Canada can achieve a feat that no other country has thus far achieved, and that would be to convince the U.S. of not imposing any tariffs.\u201d <\/p>\n

Mr. Trump demonstrated an affinity for tariffs during his first term, imposing a range of levies as part of his \u201cAmerica First\u201d trade policy. But his trade actions were limited, frequently short-lived and largely targeted China<\/a>. <\/p>\n

This time, he has launched a global trade war that targets friends and foes alike. <\/p>\n

Mr. Trump has also shown no appetite for re-establishing free trade with any trading partners, striking only a few deals so far with countries such as Britain<\/a> and Vietnam<\/a> that still include sizable and broad-based U.S. tariffs. <\/p>\n

\u201cHe truly loves tariffs for a wide variety of reasons, but maybe the revenues above all else,\u201d said Bank of Montreal chief economist Douglas Porter. <\/p>\n

Mr. Carney<\/a> was nevertheless hoping to secure an economic and security agreement with Mr. Trump by next week that would help resolve some of the trade tensions, pushing off a larger negotiation until the review of the United States-Mexico-Canada Agreement next year.<\/p>\n

But that timeline was moved to Aug. 1 when Mr. Trump sent letters<\/a> this month to a host of countries, including Canada, threatening new tariff rates. Mr. Trump wrote that he will increase the blanket tariff rate against Canada<\/a> to 35 per cent as of that date, although it\u2019s unclear whether USMCA exemptions would remain. <\/p>\n

Prof. Alschner said Canada is still in a relatively enviable position, given most goods are crossing the southern border tariff-free. <\/p>\n

Opinion: Hard line? Soft line? There may be no way of dealing with Trump that works<\/a><\/p>\n

That\u2019s because the U.S. has exempted goods that are compliant with the North American free-trade agreement from blanket 25-per-cent tariffs, and a lower 10-per-cent rate on energy products, that were imposed in March.<\/p>\n

\u201cWe don\u2019t need to necessarily negotiate our way out of this. If we are stuck where we are, that\u2019s not such a bad place,\u201d he said. \u201cThe only place where we are not in a good spot is in relation to the sectoral tariffs.\u201d<\/p>\n

Canadian-made cars exported to the United States face 25-per-cent tariffs, reduced by the proportion of their U.S. content. The U.S. also doubled its tariffs on all steel and aluminum imports to 50-per-cent in June, three months after first imposing them.<\/p>\n

Mr. Trump has also threatened to impose other sectoral tariffs on pharmaceuticals, lumber and copper<\/a>. <\/p>\n

Prof. Alschner said it\u2019s unlikely Canada will be able to convince the U.S. to abandon sectoral tariffs completely, given they reflect the White House\u2019s desire to build up the country\u2019s domestic manufacturing capacity.<\/p>\n

\u201cThe real impetus there is it\u2019s not that Canadian steel, Canadian lumber, Canadian copper, is creating a national security concern. It is that the United States wants to have the industrial capabilities to meet its own potential defence needs, if the need arises,\u201d he said.<\/p>\n

In the short run, tariffs will continue to slow the Canadian economy and fuel inflation. The trade war will also increase fiscal pressures on the federal and provincial governments, which will have to support businesses and workers while raking in less in tax revenues.<\/p>\n

But Mr. Porter is cautiously optimistic that the economy will eventually adjust, so long as the trade war doesn\u2019t escalate.<\/p>\n

\u201cI\u2019m not especially concerned that the long-term growth or inflation outlook will be permanently affected by this,\u201d he said. <\/p>\n

As for businesses affected by sectoral tariffs, Mr. Porter said any reprieve Mr. Carney can secure will be critical, noting that \u201ctheir viability has to be questioned if the status quo is maintained.\u201d<\/p>\n

Global metals giant Rio Tinto said in a recent report that U.S. tariffs on its aluminum exports from Canada cost the company around US$300-million<\/a> in the first half of the year. However, the company said a substantial portion of that amount was recuperated by passing down costs.<\/p>\n

Mr. Porter said aluminum producers may be better equipped to handle tariffs because of their dominance in the U.S. market. The industry also has options beyond the United States. Alcoa said this week that it\u2019s redirecting shipments overseas to mitigate U.S. tariff costs.<\/p>\n

The steel industry is in a tougher position. The Canadian Steel Producers Association warned<\/a> this week that 50-per-cent tariffs have effectively shut it out of the U.S. market.<\/p>\n

Federal and provincial leaders have emphasized the need to diversify trade away from the United States. But for the sectors hardest hit in Canada right now, diversifying is challenging.<\/p>\n

Brian Kingston, the CEO of the Canadian Vehicle Manufacturers\u2019 Association, said it\u2019s is not an option for the automotive sector because of how highly integrated it is within North America.<\/p>\n

But he acknowledged that the industry has little control over its fate, and that Mr. Trump ultimately is the one who decides what tariffs to impose. <\/p>\n

Toyota sees possible \u2018adjustments\u2019 if Trump\u2019s tariffs aren\u2019t dropped<\/a><\/p>\n

To support the industry during this difficult time, Mr. Kingston is calling on the federal government to repeal the EV mandate that requires all new cars sold in 2035 to be zero-emission vehicles, with an interim target of 20 per cent by next year. <\/p>\n

\u201cLet\u2019s control the things that we have direct influence over and make Canada more competitive for automotive manufacturing,\u201d he said. <\/p>\n

During the election campaign, Mr. Carney promised a $2-billion fund to boost the automotive sector\u2019s competitiveness. <\/p>\n

This week he also announced<\/a> more limits on steel imports to protect Canadian mills from foreign companies dumping cheap product in the country.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The highly integrated aluminum, steel and automotive sectors have limited options to diversify…\n","protected":false},"author":3,"featured_media":75475,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[2147,17837,50],"class_list":{"0":"post-75474","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"tag-canada","9":"tag-e-ny","10":"tag-news"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114880170091322640","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/75474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=75474"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/75474\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/75475"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=75474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=75474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=75474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}