Canada just can't win in trade war with Trump
The giant North American neighbors are rushing to conclude a new trade accord by July 21 but the process is proving painful for Canada.
Overnight Thursday, Trump threatened to slap a 35% tariff on imports from Canada starting August 1.
But products complying with an existing accord, the United States-Mexico-Canada Agreement (USMCA), are expected to remain exempt, according to a Trump administration official and a source in Canada.
"An agreement is of course possible but that shows how difficult it is for the Canadian government to negotiate with the U.S. president," said Daniel Beland, a political science professor at McGill University in Montreal, referring to Trump's sudden announcement.
Canada has been a key trading partner and ally of the United States for decades. But along with Mexico, it now wears a bull's eye for Trump in his second stint in the White House as he tries to reorder the global system of largely free trade by slapping tariffs on friends and foes alike to address what he calls unfair trading practices.
Trump has also spoken frequently of his idea of absorbing Canada to make it the 51st U.S. state, a concept most Canadians find repugnant.
Canada was rocked by Trump's first attacks after he took power in January. And bad blood between him and then-Prime Minister Justin Trudeau seemed to pour gas on the fire.
Some degree of hope emerged when Mark Carney was elected in late April to replace Trudeau, pledging to stand up to Trump and defend Canada, its jobs and its borders.
Since then, Carney and Trump have held two more or less cordial meetings — at the Oval Office in May and at a Group of Seven summit in western Canada last month.
Many people thought a new era was opening, and Carney won praise for his diplomatic and negotiating skills.
During the second of those meetings, the two sides agreed to sign a new trade agreement by July 21.
But in late June Trump angrily called off the trade talks, citing a new Canadian tax on U.S. Big Tech companies.
Canada scrapped the tax two days later so the trade talks could resume. Now they have been rocked again by Trump's new threat of 35% tariffs on Canadian goods.
Canada has taken to not reacting to everything Trump says. After Trump's latest outburst, Carney simply said, "the Canadian government has steadfastly defended our workers and businesses."
But among Canadian people, Trump's threat-rich negotiating style elicits contrasting reactions, said Beland.
"There are people who want a firmer response while others want to keep negotiating," he said.
Since the beginning of this tug of war, Canada has responded to U.S. action by imposing levies of its own on certain American products.
Philippe Bourbeau, a professor at HEC Montreal, a business school, said people have to realize Trump has an underlying strategy.
"You can criticize the aggressiveness of the announcements and the fact that it is done out in the open, but it is a negotiating tactic," said Bourbeau, adding that the relationship between the two countries is asymmetrical.
"It is illusory to think this is a negotiation between parties of the same size. Canada will surely have to give up more to reach an agreement," he said.
Before Trump came to power, three quarters of Canada's exports went to the United States. This was down to 68% in May, one of the lowest such shares ever recorded, as shipments to other countries hit record levels.
"We are Donald Trump's scapegoats," said Genevieve Tellier, a professor of political science at the University of Ottawa.
"He sees us as vulnerable, so he increases the pressure. He is surely telling himself that it is with us that he will score the big win he wants on tariffs," Tellier said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Japan Times
10 hours ago
- Japan Times
Trump tariffs spell trouble for Hawaii's few coffee farmers
Hawaiian coffee farmers have a message for President Donald Trump: Steep tariffs on major exporters such as Brazil will end up hurting them, too. Hawaii at first glance might seem the obvious beneficiary of tariffs on coffee. It is the only state in the country where the tropical goods grow, with the vast majority of java imbibed by Americans imported from South America and Vietnam. Higher-priced foreign imports should, in theory, make the island state's products comparatively more affordable. But growers say the opposite is true: rising prices across the board will hit consumers already struggling with inflation, curbing demand on everything from popular everyday roasts available at grocery stores to luxury Kona beans. While the discourse around trade and Trump's "Buy American' mantra could draw attention to Hawaiian goods, the upshot for the state's farmers is that "tariffs will probably hurt us as much as it would hurt the mainland roasters,' said Suzanne Shriner, the vice president of the Kona Coffee Farmers Association and the president of Lions Gate Farms. Brazil and Vietnam are the world's top coffee producers, and Trump has threatened a 50% and 20% levy on those countries, respectively, though Vietnamese officials have said negotiations are ongoing. Brazil, for its part, is weighing countermeasures and could ask for a reduction in the levies. But if tariffs hold, even at a lower rate, they would be a blow to U.S. consumers and companies that have already faced surging costs over the last year as poor weather impacted global coffee production. Americans' beloved morning cup of joe could get even more expensive as the cost of tariffs start getting passed down to consumers, and that could risk a ripple effect of decreased consumption. "Any time you drive up costs to the point where buyers reduce their demand, if people leave the coffee market in the sense that they'll switch to an energy drink versus a cup of coffee, that's going to harm us,' said Shriner. Starbucks Corp. could take about a 1.4% earnings hit if tariffs on Brazil increase from the current 10% to 50%, according to TD Cowen analyst Andrew Charles, who estimates that more than 20% of the roaster's North American beans come from Brazil. Starbucks had boosted lobbying spending earlier this year to the second-highest quarterly amount on record, noting tariff-related issues. Trump has said his tariff campaign is aimed at rewriting trade practices he thinks are unfair to the U.S. and encouraging a reshoring of production, from cars to metals mining. Coffee, however, is not an imported commodity that can easily be replaced. The owner of Kona Star Farms rakes coffee beans that are laid out for drying at his farm in Kailua-Kona, Hawaii, in October 2007. | BLOOMBERG "Unlike other cases where tariffs may address unfair practices or incentivize domestic producers, coffee simply cannot be grown in most of the United States,' National Coffee Association president Bill Murray wrote in a letter to the U.S. Trade Representative requesting an exemption from tariffs back in March. Coffee is more popular in the U.S. than even bottled water, with two-thirds of Americans drinking it every day. Those drinkers average three cups daily, according to the National Coffee Association. The U.S. imported more than 450,000 tons of unroasted coffee from Brazil in 2024, valued at nearly $2 billion, according to the U.S. Department of Agriculture. Hawaii is seen producing just 12,040 tons of coffee cherries in the 2024-2025 season, a figure that will shrink once the cherries are processed into beans, USDA data shows. Such production "is not anywhere near the scale required' to meet U.S. demand, Murray said in the letter. The association declined to comment on the latest Brazil tariffs. Hawaiian farmers don't see much room to expand production significantly, constrained by land, labor and climate. But demand has plenty of space to drop, especially if consumers decide that their "affordable luxury' isn't cost-effective anymore. "If they like drinking their Starbucks and then they come to Hawaii and they're like, 'Oh, I'll get the good stuff,' that's awesome. But if we price them out of a coffee at home, then we're going to price them out of exotic coffees too,' said Adam Potter, who owns or manages about 18,000 cocoa trees on the Big Island and farms another 3,000 coffee trees. Economists and consumers have been bracing for higher prices stemming from Trump's tariff campaign. So far, the impact has been relatively muted, though June's consumer price index, which excludes the volatile food and energy categories, showed some companies are starting to pass on higher import costs. Hawaiian coffee farmers received about $21.90 per pound for green coffee in the 2024-2025 marketing year, according to the USDA. By the time that makes it to consumers, the best quality beans can cost even more. A pound of roasted coffee from Ka'awaloa Trail Farm in Big Island's famed Kona coffee-growing region retails for $60. Even at a current record high in data going back to 1980, a pound of ground roast coffee in the U.S. averaged just over $8 a pound, according to the U.S. Bureau of Labor Statistics. "If the price of, let's say, Maxwell House, doubles at the grocery store, I don't think people are going to be like, 'Oh, now I'm going to buy Kona coffee,'' said Tony Tate, who along with his partner runs Ka'awaloa, a 7-acre coffee and cacao farm. The chocolate industry has also been pushing for an exemption from tariffs. Hawaii's cocoa production is barely existent, not even topping 50 tons of dry beans in 2022. The U.S. imported nearly 200,000 tons of cocoa beans last year — and that's already after a significant drop due to lower global production, according to the U.S. Department of Agriculture. Hershey Co. said in May that it would seek an exemption, citing as much as $20 million in tariff costs during the second quarter. Unmitigated impacts could rise to $100 million later in the year after working through existing inventories, the company said. A tariff would have to be "so high, like hundreds of percent, to make it start to be competitive — and then there'd be no chocolate,' said Mānoa Chocolate founder Dylan Butterbaugh. The company uses both Hawaiian and imported beans to produce about 50 tons of chocolate each year. Lonohana Estate Chocolate's plans to expand are also being stymied. The Honolulu-based company already grows raw cacao and churns out cocoa liquor every day, and is trying to take on the next step of processing — extracting butter and powder from the liquid. But Trump's levies on China, the only country currently making new machines in the necessary size, have complicated the project, said founder Seneca Klassen. "Not only has the machinery come up in price, the instability of the marketplace has to be priced into financing,' he said. "Everything gets more expensive, everything gets less reliable. It's just bad news for business.'
Nikkei Asia
10 hours ago
- Nikkei Asia
EU-China summit, Shanghai AI conference, Taiwan recall votes
Welcome to Your Week in Asia. Amid a shifting geopolitical order, European Union leaders are set to visit Beijing for a summit during which bilateral tensions are expected to dominate, even as China tries to use the fallout from U.S. President Donald Trump's policies to bolster its global position. Across the Taiwan Strait, voters will be preparing to cast their ballots over potential recalls of Kuomintang lawmakers. In Japan, as markets seek to make sense of the upper house election result, the Bank of Japan's deputy governor is expected to offer some hints to the central bank's policy direction in a speech. Get the best of our coverage of Asia and much more by following us on X, where our handle is @NikkeiAsia. We are also now on Bluesky, with the handle @ MONDAY Marcos' trip to U.S. Philippine President Ferdinand Marcos Jr.'s visit to the U.S. at Trump's invitation continues through Tuesday. Beyond tariff-related concerns, the long-standing allies are expected to address the evolving dynamics of their partnership, particularly in light of China's expanding influence. TUESDAY Data: Malaysia consumer price index WEDNESDAY ADB economic outlook The Asian Development Bank is set to release the latest update to its flagship "Asian Development Outlook" report, with the publication coming at a crucial time given the evolving impact of the U.S.-China trade war. In the previous edition, the multilateral lender flagged the impact of Trump's "reciprocal" tariffs in Asia, a region that faces the highest duties in the world. BOJ deputy governor speech Bank of Japan Deputy Gov. Shinichi Uchida will give a speech at a meeting with leaders in Kochi Prefecture. His remarks will be closely followed by market participants, as they will come just days after the July 20 upper house election, with the central bank's next monetary policy meeting following not long after at the end of the month. Earnings: Tesla, Infosys, Dr. Reddy's THURSDAY EU-China summit European Commission President Ursula von der Leyen and her delegation arrive in Beijing following a visit to Tokyo the previous day. Amid trade disputes and Beijing's support for Russia, the EU team are likely to face a frostier reception in China. Beijing has already set the tone by halving the invitation to one day, and it is unsure if President Xi Jinping will even attend the summit. Indonesia auto show Nearly 40 passenger vehicle brands, including BYD, Hyundai, Mitsubishi Motors and Toyota, will take part in the Gaikindo Indonesia International Auto Show organized by the Association of Indonesian Automotive Manufacturers. The event, which is being held in a Jakarta suburb, comes at a time when Indonesia's shrinking middle class is impacting ASEAN's largest auto market. Earnings: Mitsubishi Motors, Nestle India, SK Hynix, Hyundai Motor Data: India flash purchasing managers index Monetary policy: Turkey FRIDAY Earnings: LG Energy Solutions SATURDAY Shanghai AI conference The World Artificial Intelligence Conference, China's largest AI exhibition, opens in Shanghai. The annual event, lasting four days, is expected to showcase over 3,000 cutting-edge exhibits from tech companies including Alibaba Group, Moore Threads Technologies, QuantumCtek and Tesla. Taiwan recall elections No-confidence votes will be held against 24 KMT lawmakers, the first in a series of moves to potentially recall up to 31 of them. The action stems from growing backlash by lawyers, protesters and civil society groups against the KMT-led legislature's policies, which have impacted President Lai Ching-te's government budgets, the operations of the top court and defense and foreign policy initiatives. Earnings: Kotak Mahindra Bank
Japan Times
15 hours ago
- Japan Times
Clark calls for more pay as WNBA labor talks intensify
Indiana Fever sensation Caitlin Clark called for better pay in the WNBA on Saturday as labor negotiations between the league and players intensify, while Commissioner Cathy Engelbert said she was optimistic about their latest talks. Thousands of fans wearing Clark jerseys packed the Gainbridge Fieldhouse for the sold-out All-Star Game on Saturday, while the wildly popular Rookie of the Year was forced to sit out after sustaining a groin injury earlier in the week. Clark was an omnipresent figure in Indianapolis in the lead-up, despite not being able to play, as her face graced ads for Nike, Wilson and Gatorade that were plastered across the city center. Asked how those brand deals stacked against her league salary, Clark responded: "That's a good question." "That's where we're really fortunate is that we have those other deals. I think that's one of the things that we're in the room fighting for," Clark told reporters. "We should be paid more. Hopefully that's the case moving forward as the league continues to grow. I think it's something that's probably the most important thing that we are in the room advocating about." The Women's National Basketball Players Association and the league met on Thursday in Indianapolis to negotiate a new collective bargaining agreement after the players voted to opt out of their current deal at the end of the season. The union said after the meeting that the two sides were far apart on several issues and players were seen warming up for Saturday's game wearing shirts that read "Pay Us What You Owe Us." Engelbert struck a different tone with reporters, saying she felt the meeting with players had been productive. "(I'm) really optimistic that we'll get something done, that it'll be transformational, and that next year at All-Star, we'll be talking about how great everything is. But obviously, there's a lot of hard work to be done on both sides," she said. Engelbert, who also oversaw the league when the last deal was struck in January 2020, has been at the helm during a period of rapid growth in TV ratings and attendance for the WNBA. "We want the same things as the players," she told reporters. "We want to significantly increase their salary and benefits while balancing with our owners their ability to have a path of profitability."
