Trump's global tariff pause expires Wednesday. What's at stake for Canada?

CBC

2 days ago

U.S. President Donald Trump's three-month pause on his sweeping global tariffs is set to expire in just a few days. Ahead of the deadline, some trade experts say Canada still faces big risks, despite avoiding that round of levies back in April.
"What the president needs is a bunch of wins by July 9 because he needs to show that his strategy is working," said Inu Manak, a fellow for trade policy at the Council on Foreign Relations, during an interview with CBC's The House that aired Saturday.
On April 2, Trump held up a list in the Rose Garden of the White House and announced what he called "reciprocal tariffs" on more than 150 countries, including China and the European Union. The rates for individual countries on the list varied from 10 per cent to more than 40 per cent.
Canada wasn't on that list, though other tariffs Trump had previously imposed on Canadian goods remained.
One week after he unveiled the list, the president backed down and said he would freeze the global tariffs for 90 days to allow each country to negotiate deals with his administration.
The problem for Canada is Trump hasn't closed many deals in those 90 days, Manak said. So far, the U.S. has reached agreements with Britain and Vietnam. Negotiations with other top markets like China, India, the European Union and Japan are ongoing.
"If we don't see a lot of deals coming out of this, what we're likely to see is [Trump] to get more agitated and ask for more concessions from the countries that he knows he can push a little harder," Manak said. "So I think for Canada, that would be a very bad situation."
Carlo Dade, international policy director at the University of Calgary's School of Public Policy, told CBC News "there's a risk every day of the week that [Trump] decides to come after Canada. That is not an exaggeration."
"We're open to this potential as long as the president has unrestrained power to implement tariffs whenever, wherever, however he wants," he said.
Trump used a law called the International Emergency Economic Powers Act (IEEPA) to apply the worldwide tariffs and his earlier fentanyl tariffs on Canada and Mexico. The law is intended to address "unusual and extraordinary" threats during national emergencies.
In late May, the New York-based U.S. Court of International Trade ruled Trump exceeded his authority by invoking IEEPA. The White House swiftly appealed and a federal appeals court allowed IEEPA tariffs to remain in effect while it reviewed the decision.
WATCH | Europe gets a reprieve on tariffs:
Trump delays tariff threat on EU to July
1 month ago
Duration 2:52
U.S. President Donald Trump says he will delay his 50 per cent tariff on imports from the European Union until July 9 after a weekend phone call between Trump and European Commission President Ursula von der Leyen.
Manak said another challenge is Trump isn't facing political consequences for his tariffs right now — and no major economic fallout, either.
"Right now, he's kind of sitting at a point where he feels he can kind of get away with maintaining the pressure that exists. And that pressure is enough to get other countries to the table," she said.
At a White House news conference at the end of June, Trump told reporters the U.S. "can do whatever we want. We could extend [the July 9 deadline]. We could make it shorter. I'd like to make it shorter."
Trump said on Friday he'd signed letters to 12 countries outlining the tariff levels they'd face on goods they export to the United States. He declined to name the countries involved and said they would be made public on Monday.
Is there opportunity for Canada?
Fen Osler Hampson, co-chair of the Expert Group on Canada-U.S. Relations at Carleton University, said Canada could leverage the economic uncertainty from Trump's tariffs and "put the pedal to the metal" to expand trade with European and Asian allies.
Hampson added that Canada already has good trading relationships with those regions through the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
With U.S. tariffs, Hampson said those countries are "going to be looking for other market opportunities, both to sell and buy. I think our challenge is to get serious and to realize the real dividends that can come from those two major regional trading agreements."
WATCH | Trump isn't pleased with taunts of 'chickening out' on trade:
Does Trump 'always chicken out' on tariffs?
1 month ago
Duration 5:34
Investors are poking fun at U.S. President Donald Trump's on-again, off-again tariff threats, calling it 'TACO' trade — which stands for 'Trump Always Chickens Out.' When asked about the term, Trump called it a 'nasty question.' CBC's Katie Simpson reports.
Diversifying Canada's trading partners is one of Prime Minister Mark Carney's top goals — and a key objective for International Trade Minister Maninder Sidhu.
"I think Canada has a lot to offer and we should be screaming that at the top of our lungs," Sidhu told CBC's The House in an interview that aired Saturday.
Canada has already deepened its trade relationships with countries such as Ecuador and the United Arab Emirates since Carney and Sidhu came into office.
But key markets that could make a big dent in easing Canada's reliance on U.S. trade — like the U.K., India and China — are thornier due to fraught diplomatic relationships and other irritants.
Colin Robertson, a former Canadian diplomat and vice-president at the Canadian Global Affairs Institute, agreed that Canada can do more trade with other countries, but added a note of caution: businesses, not governments, are the only ones who can decide which companies they trade with.
"Ultimately, business has to see a business opportunity," Robertson said, adding that the U.S. continues to be the market with the easiest access for Canadian businesses.
On The House, Sidhu told guest host Janyce McGregor that Canadian businesses were indeed comfortable dealing with the U.S., but now they're asking him to help facilitate access to more countries.
Canada-U.S. trade talks
Carney and Trump continue to negotiate a Canada-U.S. trade deal, after setting a deadline of July 21.
Hampson said the deadline helps Canada hold the Americans' attention as the Trump administration negotiates with other countries.
Canada and U.S. restarted negotiations Monday morning, Carney says
6 days ago
Duration 1:15
Prime Minister Mark Carney says he had a 'good' conversation with U.S. President Donald Trump on Sunday, and that the two leaders will keep working to reach a deal by July 21. The federal government scrapped the digital services tax over the weekend after Trump paused all trade talks.
The Americans also have an interest in getting a deal done soon, Robertson said.
"If [the Americans] can't do it with Canada, their ally and their partner, it's much harder to do with Mexico, much harder with China," he said. "We should be the lowest of the hanging fruit from the American perspective."
Trade discussions hit a roadblock in late June when Trump announced he would walk away from the negotiating table over Canada's digital services tax. The federal government scrapped the tax a few days later and discussions got back on track.
Robertson said he's a bit skeptical about how far Canada will get with the U.S. by July 21, but adds that Trump enjoys declaring victory even if the agreement is "only 80 per cent of the way there."
"Would we settle for 80 per cent? Be basically there and leave the rest to be cleaned up? I think so," he said. "Because if Trump's taken his eye off it and says it's basically there, then that's sufficient from where we're coming from."