Morning Update: A guide to the latest trade negotiations

Globe and Mail

2 days ago

Good morning. Canada is facing (yet another) trade deadline with the United States tomorrow. And while many tariff deadlines have been delayed, this one could stick. More on that below, plus the latest news out of Gaza, and how B.C. prepared for a smaller-than-expected tsunami. But first:
Hi, I'm Matt Lundy, The Globe's economics editor.
U.S. President Donald Trump has insisted in recent days that on Aug. 1, tariffs will be heading higher – unless trading partners cut a deal with the White House. So far, those deals have been exceptionally one-sided, in favour of the Americans.
Here's a guide to another big day on the trade file. (And here's a cheat sheet, to help you follow along.)
The view from Washington
Prime Minister Mark Carney said Monday that talks with the White House had entered an 'intense phase.' A Canadian team of negotiators is headed to Washington this week, including Intergovernmental Affairs Minister Dominic LeBlanc and Carney's chief of staff, Marc-André Blanchard, and is looking to hammer out an 11th-hour deal.
Keep in mind, the Trump administration has reached trade agreements with seven partners, leaving dozens of other countries to go, including Mexico and India. For the White House, Canada might not be a top priority. Just this week, top U.S. officials were in Sweden to negotiate with China on their bruising trade war.
And on Wednesday, Trump said on his Truth Social platform that India would get hit with a 25-per-cent tariff on Friday – perhaps a last-minute ploy to extract new concessions.
The threats
In the absence of a deal, Trump has threatened to hike tariffs on Canadian imports to 35 per cent (from 25 per cent) for products that don't comply with rules of origin in the United States-Mexico-Canada Agreement. The vast majority of Canadian goods cross the U.S. border duty-free, however, so the impact here is muted.
Also on Friday, new 50-per-cent tariffs on copper will take effect for certain copper products, such as pipes and wires. But the duties announced by Trump on Wednesday were less sweeping than initially feared, sparing much of the Canadian industry.
Trump also signed an executive order Wednesday that will see the U.S. suspend the de minimis exemption, which allows for duty-free shipments of packages from around the world, under US$800. This would take effect in late August and potentially hammer the sales of retailers who ship low-value goods to Americans.
The other deals
The White House has reached deals – or perhaps, the frameworks of deals – with several countries. While the details differ, there are some broad themes in common.
First, Trump wants tariffs. These aren't being negotiated away – although, what's been agreed to isn't as dramatic as what the President had threatened. For example, the EU will face a 15-per-cent duty on most shipments to the U.S., against a threatened 30 per cent. Tariffs have ranged from 10 per cent (United Kingdom) to 20 per cent (Vietnam) in the agreements.
On the other hand, the U.S. has largely secured tariff-free access to the countries it has struck deals with.
Another component: investment commitments. Trump heralded that the EU deal would see the bloc purchase US$750-billion of U.S. energy and invest US$600-billion more in the country. Other deals have similar arrangements.
What exactly are these commitments? That seems subject to interpretation. For instance, as part of its agreement, Japan is supposed to invest US$550-billion in the U.S. at Washington's discretion. But Japan's chief trade negotiator said most of this sum would be loans.
The broad exemptions under USMCA have left Canada in a relatively strong position, compared to other countries facing huge tariffs on Friday. Carney has said his team isn't rushing to sign a bad deal, suggesting that Aug. 1 could pass without an agreement.
For Canada, it stands to reason that much of the focus would be on securing relief for battered sectors – steel, aluminum and autos – that are targeted by Trump's tariffs.
What's in place
Canada is getting hit by tariffs on several fronts, even with big exemptions in place.
The U.S. is imposing 50-per-cent tariffs on steel and aluminum products, and Canada is a big supplier of both. There are also 25-per-cent tariffs on vehicles; for USMCA-compliant cars, duties only apply to the value of non-U.S. parts, which waters down the taxes to a degree. And then there's the 25-per-cent tariff on non-USMCA goods. (For certain resources, the duty rate is 10 per cent, although these products tend to comply with the trade deal.)
Certain copper products will get added to the list on Friday, and in late August, the planned removal of the de minimis exemption will hamper many retailers that rely on American shoppers.
As ever, Trump's trade policies are subject to change. Stay tuned.
A powerful 8.8-magnitude earthquake shook Russia on Wednesday, triggering tsunami waves as far as Hawaii and even Canada. In the end, the tsunami that washed onto Tofino, B.C.'s shores was only about half the height of a school ruler– here's how British Columbians prepared for a potential tsunami.
At home: A judge has ruled Ontario's plan to remove bike lanes in Toronto as unconstitutional, saying that it violates the Charter.
Abroad: Israeli strikes killed at least 48 Palestinians waiting for food, meanwhile Israel says it could consider annexing parts of Gaza.
HBC: Billionaire Weston family plans to buy Hudson's Bay charter for donation to the Canadian Museum of History.
BOC: The Bank of Canada's rate decision offers little relief to homeowners facing mortgage renewal deadlines.