The Trudeau government intensified Friday its trade fight with U.S. President Donald Trump, posting an extensive final hit list of $16.6-billion worth of American imports that will be slapped with retaliatory tariffs this weekend.
The federal government also released specifics of a financial aid package for industries caught in the crossfire, including up to $2 billion in fresh funding and support for workers in Canada’s steel, aluminum and manufacturing sectors.
Ottawa’s unprecedented reprisal against its closest ally comes in response to the Trump administration’s punishing tariffs on Canadian steel and aluminum.
It begs the question: what comes next? There are preparations for the possibility of a drawn-out and escalating dispute.
Foreign Affairs Minister Chrystia Freeland unveiled the details — including a finished list of the targeted U.S. products — during a news conference at a steel factory in Hamilton.
“Canada has no choice but to retaliate with a measured, perfectly reciprocal dollar-for-dollar response — and that is what we are doing,” Freeland said.
“They will take effect on July 1 and will remain in place until the United States eliminates its trade-restrictive measures against Canada.”
Prime Minister Justin Trudeau apparently reiterated that position to the president himself in a phone call on Friday.
A readout of the call released by the prime minister’s office says Trudeau called Trump to express his condolences on a deadly shooting at a newspaper in Maryland this week — but the two leaders also discussed trade.
“As he has said in past conversations and in public, the prime minister conveyed that Canada has had no choice but to announce reciprocal countermeasures to the steel and aluminum tariffs that the United States imposed on June 1, 2018,” the readout stated.
“The two leaders agreed to stay in close touch on a way forward.”
Aside from tariffs on steel and aluminum imports from the U.S., dozens of additional consumer goods will be subject to 10 per cent duties — from ketchup, to lawn mowers, to playing cards.
It’s all part of Ottawa’s plan to strike back at the U.S. in response to hefty tariffs on steel and aluminum, 25 per cent and 10 per cent respectively, imposed last month by Trump.
Freeland called the legal pretext used by the U.S. to impose the duties — that Canada poses a national security threat — “not only absurd, it’s hurtful.”
“We are perfectly within our rights to respond,” said Freeland, who was joined at the announcement by Trudeau cabinet colleagues Patty Hajdu and Navdeep Bains.
There are fears, however, that Canadian tariffs — some of which target businesses in states that are important to Trump and his supporters — could lead to fresh trade action from the U.S.
Trump himself has already threatened to put tariffs on the automotive sector, which could prove far worse for the Canadian economy than the steel and aluminum duties.
Peter Clark, an Ottawa trade consultant, said U.S. automotive tariffs would be a “disaster — pure, unmitigated disaster” for Canada.
Freeland, asked whether she feared the U.S. would escalate matters, recalled a public comment she made right before the start of NAFTA negotiations — another tough Canada-U.S. trade file. At the time, she said she told Canadians the federal government expected “moments of drama in this process.”
“I think that prediction has been borne out,” she said. “I think all of us, at this point, fully anticipate there will be some moments of drama in the future.”
Ohio-based trade lawyer Dan Ujczo said he believes there’s a significant chance Trump will introduce auto tariffs to some degree, although he predicted they could target the European Union rather than Canada.
Overall, Ujczo said Canada’s retaliatory tariffs have been baked into the White House’s calculus for months. The situation means it’s now a top priority for stalled NAFTA talks to get moving as soon as possible, he said.
The U.S. tariffs, he insisted, are inextricably intertwined with the NAFTA negotiations. And at the end of the day, Ujczo added the Trump administration’s overarching objective of the talks has been to stop Canada and Mexico from being the back door to North America for Chinese goods, like steel.
“What we’ve seen over the last six months or so is Canada take measures to stop that,” he said. “But from the U.S. perspective, it took the threat of tariffs to do that, to prod Canada toward that goal.”
Last week, U.S. Commerce Secretary Wilbur Ross said the U.S. tariffs against Canada and other allies were designed to force them into action to address the world’s overproduction and overcapacity of steel.
Freeland has insisted that Canada introduced stronger safeguards on steel well before the U.S. imposed the tariffs.
On this front, Ottawa feels it has more work to do. Bains, the economic development minister, said Friday that the feds are consulting with industry so even more can be done to address the diversion and dumping of aluminum and steel in the Canadian market.
The Trudeau government’s decision to stand up to Trump with countermeasures has attracted wide support in Canada. But domestic businesses, particularly those in the steel sector, have expressed deep concerns about any escalation in the trade battle.
More broadly, the effects of the trade fight are expected to hurt both economies — putting jobs at risk and potentially raising consumer prices.
For example, Clark said as the price of products like steel rise, the increases will move through the system and hit the consumer in the wallet.
On support for businesses and workers, Friday’s federal package includes similar measures to those offered by Ottawa last year in response U.S. duties on softwood lumber products from Canada.
For the latest dispute, the government intends to help affected workers by doubling the duration of work-sharing agreements under the employment insurance program to 76 weeks from 38 weeks. The aim is to help businesses retain skilled workers and avoid layoffs during any rough patches ahead.
Ottawa is also vowing to boost funding for the provinces and territories to increase job and training programs.
For companies, Ottawa is promising up to $1.7 billion worth of financing and services for steel and aluminum industries through the Business Development Bank of Canada and Export Development Canada.
Through its strategic innovation fund, Ottawa is also offering up to $250 million in support to reinforce the competitiveness of Canadian manufacturers and strengthen the integration of Canada’s steel and aluminum supply chain.
Bains said the support is aimed at helping firms adjust to the difficult circumstances while enabling them to continue to innovate along the way.
The government also plans to invest $50 million over five years to help firms take full advantage of recent trade agreements, including Canada’s deal with the European Union and its membership in the Trans-Pacific Partnership.