Canada avoids Trump's tariffs - for now
2025-01-21
Category: economic

After bracing for weeks for a trade war with the US, Canada has - for now - evaded tariffs that Donald Trump threatened to impose on the country as soon as he takes office.But Trump said on Monday the tariffs on Canada and Mexico could come on 1 February and ordered federal officials to review US trade relationships for unfair practices, including those with Canada, Mexico and China. The incoming president pledged import duties of 25% on Canada and Mexico, as well as 10% on global imports and 60% on Chinese goods. Trump, who was sworn in on Monday, warned in his inaugural address that the US "will tariff and tax foreign countries to enrich our citizens".
On Monday, Canadian officials appeared relieved at the reprieve, but warned the tariff threat was still real. Canada is highly dependent on trade with the US, with roughly 75% of its exports heading south.Canada's Foreign Minister Melanie Joly last week had warned the tariffs could spark the "biggest trade war between Canada and the US in decades".Ottawa is preparing counter-tariffs in response to the threat, reportedly worth billions of dollars. Members of Prime Minister Justin Trudeau's cabinet are gathered in Quebec for two days of meetings focused on the US-Canada relationship. On Monday, Joly told reporters that officials will continue efforts to lobby US counterparts on the benefits of trade between the two nations, which totaled an estimated $909bn in 2022."We are very cautious," Joly said, speaking before Trump said he was considering imposing the tariffs next month.  LIVE: Follow BBC's live coverageANALYSIS: The promise and peril of Trump's speechIN PICTURES: Key moments of the inaugurationWATCH: The new president's day so farEXPLAINED: What Trump is doing on day oneFASHION: Melania's striking hat and other eye-catching looksVIRAL MOMENTS: Carrie Underwood goes a cappella and other moments"It's really, really important that we continue to roll up our sleeves and make sure that we defend Canadian interests."The leader of Canada's province of Alberta, Danielle Smith, said in a statement the delay was an "implied acknowledgement that this is a complex and delicate issue with serious implications for American and Canadian workers, businesses and consumers".Canada, the US and Mexico renegotiated a trilateral free trade deal during Trump's first term in office. The presidential memo Trump signed after his inauguration directs federal agencies to assess how that deal affects American "workers, farmers, ranchers, service providers, and other businesses". It also asked the commerce and homeland security secretaries to assess the "unlawful migration and fentanyl flows" from Canada and Mexico.In November, Trump said his administration would impose across -the-board tariffs on Canadian and Mexican goods in an effort to force the countries to crack down on illegal immigration and drug smuggling into the US.While both the northern and southern US borders have reported unlawful crossings and drug seizures, the numbers at the border with Canada are considerably lower than those at the Mexico border, according to official data.Has Trump promised too much on US economy?Global growth forecast to flatline as tariffs add to strainsIn December, Canada promised to implement C$1.3bn ($900m; £700m) worth of new security measures along its US border, including strengthened surveillance and a joint "strike force" to target transnational organised crime. Tariffs are a central part of Trump's economic vision - he sees them as a way of growing the US economy, protecting jobs and raising tax revenue.But many economists have warned the policy could lead to higher prices for Americans and pain for companies hit by foreign retaliation, and slow.
LIVE: Follow BBC's live coverageANALYSIS: The promise and peril of Trump's speechIN PICTURES: Key moments of the inaugurationWATCH: The new president's day so farEXPLAINED: What Trump is doing on day one