United States Tariffs and the Canadian Federal Election

United States Tariffs and the Canadian Federal Election by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East The world is in real turmoil and the “Liberation Day Tariffs” issued by the President of the United States Donald Trump created tsunami waves on trade relations we have been accustomed too. It is a new world in the making with an unforeseeable future. For the moment, it seems that we are living in a Trump-generated chaos. It is quite clear that United States President Donald Trump's move to levy tariffs on virtually every country will sink the global economy, torpedo economic growth and prompt devastating consequences for workers and businesses in Canada and around the world. Using national emergency powers, Trump announced 10% tariffs on all imports into the United States, and even higher tariffs on goods from about 60 countries or trading blocs that have a high trade deficit with the US. That includes China and the European Union, which will be levied new duties of 34% and 20%, respectively. Trump’s latest actions represent the most significant escalation in US tariffs in nearly a century, since the Smoot-Hawley Act of 1930. Trump’s so-called reciprocal tariffs won’t match the ones foreign countries impose on the United States unless a country already had a 10% US tariff. “We will charge them approximately half of what they are and have been charging us, so the tariffs will be not a full reciprocal,” Trump said from the Rose Garden last week. “I could have done that, I guess, but it would have been tough for a lot of countries and we didn’t want to do that.” For example, instead of matching the European Union’s 39% tariff on US goods, the new duty on the EU will be 20%. China, which was already slapped with a 20% tariff for its role in the fentanyl trade, will be levied an additional 34% — half of the 67% tariff it imposes on the US — bringing its new rate to 54%. About 60 countries will see tariffs higher than 10%. The baseline 10% tariff goes into effect on April 4, one minute after midnight. The higher tariffs will go into effect on April 9. The new tariffs won’t add on to tariffs previously announced on steel, aluminum and cars. The 25% tariff on goods from Mexico and Canada that don’t comply with the United States-Mexico-Canada Agreement will remain in place until Trump determines that issues around fentanyl and illegal immigration have been resolved. Whenever that happens, Canada and Mexico will then default to the administration’s current trade approach for other countries. Fortunately, for the moment it seems that Canada is in the eye of the storm and was spared additional tariffs on this fatidic day of the world, April 2nd. In this doomsday of the world economy, Canada was excluded from the sweeping new round of reciprocal tariffs. It appears, at first glance, to be a welcome reprieve for Canadian industry, but the reality is more complicated. While we have dodged the latest bullet, the previously announced tariffs, particularly on autos, steel, and aluminum remain a considerable threat. As Canada is in the middle of a crucial election politically, the question becomes: does this development take pressure off the governing Liberals and their leader, Mark Carney, or does it open the door for Pierre Poilievre’s Conservatives to highlight other concerns? Carney said Trump's tariffs against Canadian goods are "unjustified, unwarranted and misguided," and the country must hit back with what he called "carefully calibrated and targeted countermeasures" to make it clear Canada will not stand for this sort of economic broadside. The Liberal leader said the government would levy a tariff on U.S.-made vehicles that are not compliant with the Canada-U.S.-Mexico Agreement (CUSMA), to match what the Americans did to the Canadian auto industry. Carney said the U.S. trade war is already having an impact, Stellantis will idle its massive Windsor, Ontario, auto assembly plant because of Trump's tariffs. Ottawa "will do everything in our power" to protect workers, including with financial assistance, he said. Carney said Trump is dismantling the world trading system and Canada must make a hard pivot to build up its own economy and pursue better relations with "reliable" trading partners, including Commonwealth countries like Australia and the U.K., but also Mexico, France and other countries in Europe. "We must do extraordinary things for ourselves, we must do things previously thought impossible at speeds we haven't seen in generations," Carney said, promising to turbocharge economic development with an ambitious building program. "We are living in a new world now. It will be hard on Canadians but I have no doubt we will rise to the challenge," he said, adding that the country has rallied in the past in the face of seemingly insurmountable obstacles, and can do so again. Carney said Canada's "old relationship" with the U.S. is "over" and the decades-long push to become more integrated with the Americans will come to an end as Trump ramps up his attacks on the country. However, Carney said there is still an opportunity to come to some sort of an agreement with Trump on economic and security issues after the upcoming federal election. Carney said he agreed with Trump to sit down after the campaign — if he wins the election — to renegotiate CUSMA, which has been left in tatters as a result of the president's trade war. In these fast evolving events the Conservative Party seems to have been left adrift. The party concentrated its campaign on Trudeau lead liberals and seems to be unable to pivot in response to evolving events; to embrace a new approach in the face of a real threat of economic disaster. We are still in the early stages of the electoral campaign, and we will see if the Conservative Party is able to find a solution to reverse its fast and furious decline in popularity. It looks like the strong disapproval Trudeau suffered over the past two years masked the underlying weakness of the Conservative electoral coalition. As soon as he was gone, the dissatisfaction started to come undone, revealing a country that, for demographic reasons, has a natural tendency to elect progressives. There are some days left until Election Day, but unless some big things change soon, it looks like Poilievre is going to discover that the supporters who brought him close to the precipice of power were the wrong people to get him over the top. Voice your opinion. Get out and vote!