Trump upsets trade world with tariff proposals

It’s been a busy day for Canada-United States trade.

It all started at 5:47 a.m. when Donald Trump typed out a convoluted tweet, linking steel tariffs, Canadian restrictions on U.S. agricultural goods and the North American Free Trade Deal.

“Tariffs on steel and aluminum will come off if new & fair NAFTA agreement is signed. Also Canada must treat our farmers much better. Highly restrictive.”

It’s not certain what Trump meant by “highly restrictive” but it’s possibly a reference to Canada’s supply management system for dairy, poultry and eggs, where there are extremely high tariffs on imported products.

The tweet was a follow-up to a Trump announcement from March 1. The President said the U.S. would impose new tariffs of 25 percent on steel imports and 10 percent on aluminum. Since March 1, Canada’s federal government and steel makers were hoping the country would be exempt from the tariffs.

But Trump’s early morning tweet on March 5 made it clear the proposed tariffs would apply to Canada and Mexico.

Trump’s tweet came on the same day that Canada’s Foreign Affairs Minister Chyrstia Freeland was in Mexico City, with her counterparts from Mexico and the U.S., to wrap up a week of negotiations for NAFTA.

Freeland said negotiators made reasonable progress in Mexico, closing out three chapters of a modernized NAFTA deal, including a chapter on phyto and phytosanitary rules.

The minister’s presentation was calm and matter of fact at a news conference wrapping up the negotiating round. But Freeland repeated a statement she released March 1 about the proposed tariffs on steel and aluminum.

“Canada would view any trade restrictions on Canadian steel and aluminum as absolutely unacceptable,” she said.

“Should restrictions be imposed… Canada will take appropriate response and measures to defend our trade interests and our workers.”

The U.S. imported US$29 billion worth of steel in 2017, based on CNN report.

Canada is the number one supplier of steel and aluminum to the U.S., representing 17 percent of imports.

If the new tariffs do include Canadian steel and aluminum, it’s not known what the Canadian government would deem to be an “appropriate response.”

A few trade analysts have suggested that Canada might target imports of U.S. wine or alcohol.

Trump is expected to provide details on the steel and aluminum tariffs later this week.


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