Latest news with #CUSMA-compliant
Hamilton Spectator
02-08-2025
- Business
- Hamilton Spectator
Donald Trump's next target could be deal that shields most Canadian imports from tariffs, experts warn
Canada's biggest shield against U.S. tariffs is still intact after Donald Trump's latest trade deadline, but that could change by next year, experts warn, as Prime Minister Mark Carney prepares for a new round of talks with the mercurial American president. While Trump raised the tariff on Canadian goods to 35 per cent in an executive order Thursday night, an exemption for goods which comply with the Canada-U.S.-Mexico Agreement (CUSMA) was maintained. The order was signed after Ottawa and Washington failed to reach an economic and security deal. That means, most economists agree, that roughly 90 per cent of Canadian exports will still enter the U.S. tariff-free. But, warned BMO chief economist Douglas Porter, that agreement is up for renegotiation in 2026. 'Even though we're in a relatively good spot right now, I don't think that should give us much confidence in the longer term,' Porter said Friday. With CUSMA-compliant goods facing no tariffs, and sector-specific tariffs of 50 per cent on steel and aluminum, Canadian goods currently face an average tariff in the low single digits. But that could easily change when the agreement is renegotiated, Porter added. The fact that Canadian negotiators weren't able to get any agreement lowering the 35 per cent tariff — or cutting sector-specific tariffs — ahead of Trump's Aug. 1 deadline isn't exactly reassuring either, Porter said. 'It really does raise some questions over how smoothly the renegotiation of (CUSMA) is going to go,' said Porter. 'We're going to come into it with the U.S. holding this 35 per cent over our head.' Shortly after midnight on Thursday, just after the hike came into effect, Carney said he was 'disappointed' by Trump's decision, after Canadian officials spent several days this week hunkered down in Washington meeting with U.S. Commerce Secretary Howard Lutnick and representatives of Senate Republicans. 'We remain committed to CUSMA, which is the world's second-largest free trade agreement by trading volume,' Carney's statement read. 'Other sectors of our economy — including lumber, steel, aluminum, and automobiles — are, however, heavily impacted by U.S. duties and tariffs. For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian and diversify our export markets.' Dominic LeBlanc, Carney's point-person on Canada-U.S. trade, told Radio-Canada's 'Midi info' that Canadian officials have always maintained that they 'wouldn't accept just any agreement.' 'We'd accept an agreement that was in the interests of workers, of the Canadian economy, and at the end of the day yesterday that agreement wasn't in sight,' LeBlanc said Friday, as he was set to leave Washington after meeting with Lutnick on Thursday. The head of the association representing small businesses said Canada avoided the worst-case scenario this week by keeping CUSMA-compliant goods tariff-free, but said the country is not out of the woods yet. In next year's renegotiation, the U.S. could give preferential status to goods which comply with CUSMA — but that doesn't mean they'd still be duty free, warned Dan Kelly, CEO of the Canadian Federation of Independent Business. 'That's absolutely one of the prospects I fear,' said Kelly of the idea that U.S. negotiators would try to put tariffs on CUSMA-compliant goods. 'There's also nothing stopping him from pulling out of CUSMA altogether. That would be the nuclear scenario.' A senior official with the Canadian Chamber of Commerce also said Canadian businesses need to be wary of the CUSMA revamp, and any lingering uncertainty until it's completed. 'The review could start Monday,' said Matthew Holmes, the chamber's head of public policy. 'But we're going to be talking about CUSMA until 2026, and that's the third act of this play.' At the moment, Holmes estimated, Canadian exports to the U.S. face an average tariff of anywhere from 2.9 to five per cent, which still gives this country the best treatment of any American trading partner. Still, Holmes isn't under any illusion that that low rate will continue — even if Canada's access remains better than most. 'I think it's reasonable to expect they come to the table with a baseline tariff,' Holmes said of U.S. negotiators. 'If they establish a floor of 15 per cent on the world and we come in at 10, we're in relatively good shape, but it's still not great for our businesses.' For sectors like steel and aluminum which still face targeted tariffs, the continuation of the CUSMA exemption didn't provide much comfort at all, said Catherine Cobden, CEO of the Canadian Steel Producers Association. 'What we see is some of our largest trading allies, both with us and the United States, accepting and normalizing 50 per cent tariffs,' said Cobden. 'That cannot happen in the case of Canada.' 'We don't have months to wait for a USMCA process. We are in the thick of it now,' she said. Dan Ujczo, an Ohio-based international trade lawyer, said in spite of sectoral pressures, Canada needs to get a clearer sense of the deals the White House has struck with the European Union, Japan and South Korea. 'Canada and Mexico started these negotiations with the best access to the United States in the world. They don't want to put themselves in a position now to accept a deal where that's going to get them less access to the United States than any other trading partner, so I think we still need to see what those other parties have agreed to,' said Ujczo, who has also worked for both Canadian and U.S. governments. Ujczo also said it's time for Carney and other Canadian political leaders to dial down the partisan rhetoric. On Friday, the Conservatives and the NDP accused Carney of failing to improve circumstances for Canadian workers. 'This is a negotiation,' Ujzco said. 'The political campaigns are over now.'
Hamilton Spectator
01-08-2025
- Business
- Hamilton Spectator
Reaction to Trump's 35 per cent tariffs on Canada
'Mr. Carney gave in on key issues, including scrapping the digital services tax on multi-billionaire tech giants, committing to NATO's excessive 5 per cent target, and violating Canadians' privacy rights by signing up to Trump's ominous ICE security state with Bill C-2. But none of this worked. Instead, Trump has slapped Canada with a 35 per cent tariff and continued his attack on our country and workers.' 'We are pleased to see that CUSMA-compliant goods remain tariff-free, including the vast majority of goods Alberta sells to the U.S. such as all oil and gas and agricultural products. That said, it's also disappointing to see tariffs on other Canadian goods increase to 35 per cent. These tariffs hurt both Canadian and American businesses and workers, and they weaken one of the most important trade and security alliances in the world.' 'The White House fact sheet should be called a fact-less sheet when it comes to basing trade decisions about Canada on the fentanyl emergency … The Carney government is right to prioritize a strong, future-focused deal over a rushed one. A little more time now can deliver lasting benefits for an integrated North American economy — and that's well worth the wait.' 'The hike in U.S. tariffs to 35 per cent will harm small businesses on both sides of the border. The fentanyl rationale is even more ridiculous than the decision itself. While it is good news that most Canadian exports will remain tariff-free due to the CUSMA/USMCA exemption, the uncertainty alone will continue to take a toll on Canada's small businesses.'
31-07-2025
- Automotive
Here's a timeline of Trump's tariffs on Canada
It's down to the wire on U.S. President Donald Trump's threat to raise his tariff on Canadian goods entering the United States to 35 per cent, up from the 25 per cent rate that he imposed soon after taking office. Trump set Aug. 1 as the deadline for Canada to reach a trade deal or face the tariff increase. Here's a brief timeline of the key tariffs on Canada. Feb. 1 Trump signs an executive order (new window) levying tariffs on Canadian exports to the U.S. at 25 per cent on all products, except energy, critical minerals and potash, which are hit with a rate of 10 per cent. The order justifies the tariffs as a way to address the flow of illicit drugs across our northern border, citing fentanyl as a threat to national security. Trump later announces the tariffs will take effect March 4 (new window) . WATCH | What a trade war with the U.S. would mean for Canada: March 6 Just two days after Trump's tariffs on Canada come into force, Trump amends his executive order (new window) , giving an exemption for products that comply with the terms of the Canada-U.S.-Mexico Agreement (CUSMA). The exemption covers nearly 90 per cent (new window) of Canadian exports to the U.S., which means the vast bulk of products can cross the border tariff-free. Trump pausing tariffs on some Canadian goods until April 2 (new window) WATCH | What you need to know about Trump's tariffs on Canada: April 29 After threatening to impose a 25 per cent tariff on automobiles and auto parts from outside the U.S., Trump waters down (new window) the levy, so it only applies to parts that aren't CUSMA-compliant (new window) and the non-U.S. portion of assembled vehicles. Still, the tariffs have an impact on Canada's auto sector and bite into the profits of North American automakers. WATCH | Here's where things stand with Trump's auto tariffs: May 6 Prime Minister Mark Carney, just days after leading his Liberal Party to a minority election win, meets Trump at the White House. Carney presses Canada's case for the removal of tariffs, and while Trump speaks highly of his guest, the president gives no sign he's changing his mind on the issue. WATCH | How Carney reacts to Trump's 'never say never' comments: June 3 Separately from the tariffs on Canadian goods, Trump doubles his tariff on steel and aluminum imports from all countries, to 50 per cent. Canada is the top supplier of both products to the U.S. WATCH | How Canada's steel producers are reacting to Trump's latest tariff threat: July 10 Trump threatens in a letter posted on his Truth Social platform (new window) to boost the tariff on Canadian goods to 35 per cent, effective Aug. 1. If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter, Trump writes. WATCH | Here's what a deal by Trump's deadline could cost Canada: July 11 Goods that comply with CUSMA will continue to be exempt from the tariff even if the rate rises on Aug. 1, according to a White House official. WATCH | Why most Canadian exports still get into the U.S. tariff-free: July 25 One day after Canada's top negotiators downplay the prospects of getting a deal by Trump's deadline, the U.S. president also throws cold water on Canada's chances. We haven't really had a lot of luck with Canada, he tells reporters at the White House. I think Canada could be one [country] where there's just a tariff, not really a negotiation. U.S. and Canada might not reach trade deal, Trump says (new window) WATCH | 'We haven't really had a lot of luck with Canada,' Trump says: July 30 Prime Minister Mark Carney says Canada's negotiating team is back in Washington for trade talks but gives his clearest indication yet that Canada might not land a deal by Trump's Aug. 1 deadline. Then shortly after midnight, Trump posted on his Truth Social platform (new window) , Wow! Canada has just announced that it is backing statehood for Palestine. That will make it very hard for us to make a Trade Deal with them. WATCH | As Trump's deadline nears, Carney says deal may not happen in time: Mike Crawley (new window) · CBC News · Senior reporter Mike Crawley has covered Ontario politics for CBC News since 2009. He began his career as a newspaper reporter in B.C., spent six years as a freelance journalist in various parts of Africa, then joined the CBC in 2005. Mike was born and raised in Saint John, N.B. Follow Mike Crawley on Twitter (new window)
Edmonton Journal
29-07-2025
- Business
- Edmonton Journal
Canada's trade talks with U.S. in 'intense phase' after European Union makes deal ahead of deadline
Article content Carney and other Canadian officials have been downplaying expectations that a deal will be made by Friday. Article content Most of the goods Canada sends to the U.S. are CUSMA-compliant and won't be affected by the 35 per cent duties. The Canadian economy is still being slammed by Trump's Section 232 tariffs on steel, aluminum and automobiles, and will be hit by copper tariffs the president has said will take effect by the week's end. Article content So far, Trump's trade deals 'are really bad omens for Canada,' said William Pellerin, a trade lawyer and partner at the firm McMillan LLP. Article content '(It shows) that the tariffs, particularly the sectoral tariffs, are stickier than we would have thought,' Pellerin said. 'If none of those countries were able to secure a drop in the sectoral tariffs, that is certainly bad news.' Article content Those Section 232 duties are a key target for Canadian negotiators and Pellerin said it's unlikely any deal will be struck by Ottawa if they remain at their current levels. Article content Article content While there are similarities between the Canada-U.S. negotiations and those involving Europe, Carney said there are also many differences. While Europe is looking to end its reliance on Russian energy, Carney said Canada is a reliable supplier of energy to the United States. Article content The prime minister said negotiations remain complex but 'there is a landing zone that's possible.' Article content 'But we have to get there,' he said. Article content The EU agreement also averts significant retaliatory duties from a major United States customer — meaning that if Canada can't reach a deal with Washington, it would be more isolated if it attempts to retaliate against the U.S. Article content Canada and China have implemented retaliatory tariffs in response to Trump's trade war but, to allow talks to continue, Ottawa didn't move forward with additional duties. Article content Ontario Premier Doug Ford said Monday he supports a dollar-for-dollar tariff response, particularly to Trump's treatment of Canada's steel and aluminum industry. Article content Article content 'I'm confident with Prime Minister Carney, I know he's going to do his very best to get a deal,' Ford said. 'But I don't trust President Trump.' Article content B.C. Premier David Eby said Canada is in a 'different position' than the European Union or Japan, given the deeply integrated nature of North American supply chains. Article content 'We are a reliable partner, we are a good partner, but we also won't get kicked around,' he said. Article content Sands said Carney's recent move to limit imports of foreign steel into Canada will help shore up the domestic market during the tariff tumult while also avoiding the ire of the Trump administration. Article content The prime minister recognizes you can engage in retaliation, Sands said, but 'it doesn't bring you much joy.' He said there are other actions, such as import quotas, that would better protect Canadian markets.
Yahoo
25-06-2025
- Business
- Yahoo
Trump's tariff war: Canada expected to keep NAFTA 2.0 'carve-out' in new U.S. trade deal
A new Canada-U.S. trade deal will likely carry forward the Canada-United States-Mexico Agreement (CUSMA) tariff exemptions currently shielding most Canadian exports from American tariffs today, says Deloitte Canada chief economist Dawn Desjardins. She's optimistic that Canada can avoid the economic hit that may be in store for other U.S. trading partners. U.S. President Donald Trump has set July 9 as the deadline for countries to ink a trade deal in order to avoid his 'Liberation Day' tariffs, many of which are higher than the baseline 10 per cent levy the White House has applied to most countries. For Canada, Prime Minister Mark Carney and Trump agreed on the sidelines of the recent G7 meeting in Alberta to strike a deal by July 21. 'Our baseline view assumes that at a minimum, we continue to operate with our CUSMA carve-outs. Meaning, the vast majority of Canadian goods that we sell into the U.S. will continue to be tariff-free,' Desjardins told Yahoo Finance Canada in an interview earlier this week. 'The sounds we're hearing seem to be moving in the right direction. Obviously, [I have] no inside information. It's just an assumption that we will not be severely hit by 25 per cent tariffs across the board.' While Trump has ramped up tariffs on Canadian steel and aluminum, as well as the auto sector, economists say Canada achieved the lowest U.S. tariff rate among major trade partners when CUSMA-compliant goods were exempted on April 2. On Wednesday, RBC Economics estimated that roughly 86 per cent of Canadian exports should ultimately be able to access the U.S. market duty free under current trade rules. RBC expects the share of CUSMA-compliant trade to rise rapidly from 50 per cent in March. Trump signed CUSMA, also known as United States-Mexico-Canada Agreement, into U.S. law on Jan. 29, 2020. The deal was dubbed 'NAFTA 2.0' or 'New NAFTA,' as it replaced the North American Free Trade Agreement implemented in 1994. 'I'm a little surprised that we were already front and centre in terms of the initial tariffs being applied to Canada, given that we have that trade agreement,' Desjardins said. 'The element of trust that we have with our biggest trading partner has been quite damaged by this.' Deloitte Canada's latest economic forecast, published on Wednesday, calls for that damage to result in a 'modest recession' in the second and third quarters of the year. Ontario and Quebec are due to be hardest hit, given their weight in the manufacturing sector. Statistics Canada's latest GDP reading shows the economy grew at an annual rate of 2.2 per cent in the first quarter. Earlier this month, the Bank of Canada warned the economy will be "substantially weaker" in the second quarter of 2025, versus the start of the year as the full impact of U.S. import tariffs hits Canadian businesses. Deloitte sees Canada's real GDP growth rising 1.1 per cent in 2025, before accelerating to 1.6 per cent in 2026. 'As we move forward, and we have more clarity, whatever clarity looks like, but more clarity on our relationship with the U.S., and how the [Canadian] government is actually going to get into action, these are going to be the things that lift us as we go into 2026,' Desjardins said. Canadians will have to wait until the federal government's fall budget for more details on Carney's plans to spend billions on building housing inventory, advancing infrastructure projects, and investing in Canada's military. 'There's a lot in the hopper,' Desjardins added. 'There are just so many underlying factors at this stage that could have either a temporary or short-term impact, or be more persistent.' Deloitte Canada's optimistic take on rebuilding Canada-U.S. trade links comes on the heels of a similar analysis by the Canadian arm of fellow accounting giant PricewaterhouseCoopers (PwC) released last week. 'Canada is maybe in the best position of any other country,' Michael Dobner, PwC Canada's national leader of economics and policy practice, told Yahoo Finance Canada last Tuesday. 'The negotiation between Canada and the U.S. may further cement Canada's position over other countries as an exporter to the U.S.' Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
