Ottawa under pressure as 50% US tariffs draw near

Canadian negotiators are in Washington trying to reach an interim trade deal with the United States before 50 percent tariffs come into effect next week on a wide range of Canadian products.

US President Donald Trump's administration is set to impose the additional tariffs on Canadian goods in more than 500 product categories, including alcohol, dairy, honey and sports equipment, on Wednesday.

"A 50 percent tariff would probably pretty much cease the export of all those goods," Douglas Porter, chief economist at the Bank of Montreal, told Canadian media.

The goods are related to what Trump calls "discrimination" against US products, including boycotts on US alcohol and Canadian restrictions on dairy imports, which the White House has described as "unreasonable, unequal and discriminatory".

The new tariffs would affect about $20 billion worth of goods, representing about 5 percent of Canadian exports to the US, many of which had been protected from tariffs under the US-Mexico-Canada Agreement.

Energy, potash, fish and critical minerals would be exempt from the new tariffs.

On Tuesday, Canada's minister responsible for Canada-US trade, Dominic LeBlanc, and Chief Trade Negotiator Janice Charette met in Washington with US Trade Representative Jamieson Greer — the third time they had met in three weeks.

"Discussions remain ongoing, and we continue to engage at the negotiation table to firmly advance and defend Canadian interests," LeBlanc posted on X after the meeting.

Greer has said he wants an interim deal with Canada before negotiations continue on renewing the USMCA.

However, the Canadian Broadcasting Corporation, citing sources, reported that Canadian negotiators were unhappy with the latest US offer, noting that the proposal would reduce some tariffs, but not as much as the Canadian side wanted.

Members of a Canadian advisory committee on cross-border trade are reportedly on standby for a Monday meeting, when Canadian Prime Minister Mark Carney is expected to return from a vacation in Italy, sources told Canadian media.

"He is in close contact with his team and officials on several priorities, including the ongoing Canada-US trade negotiations," Carney's office said in a release.

Premier Doug Ford of Ontario, Canada's most populous province and the center of its auto industry, said the country needs to respond if the tariffs are imposed next week.

"If these tariffs proceed, Canada should respond tariff for tariff, dollar for dollar," he posted on social media when the potential new tariffs were announced.

The new tariffs would be imposed under Section 338 of the US Tariff Act of 1930, known as the Smoot-Hawley Tariff Act, which grants the president discretion to combat unilateral trade actions against the US and would be in addition to any other tariffs already in effect.

Since this section has not been used in nearly a century, it is not clear how courts would rule on its legality.

Trump refused to automatically extend the USMCA for another 16 years by the July 1 deadline, which means it must now undergo mandatory annual reviews.

He has already placed tariffs under Section 232 of the Trade Expansion Act of 1962 on autos, steel, aluminum and forestry products.

It is estimated that the new tariffs could cut Canada's GDP by up to 0.5 percent, in addition to a 1.5 percentage point drop in GDP estimated by the Bank of Canada as a result of previous tariffs.

Canadian exports to the US dropped by more than 5 percent last year, while they grew by more than 15 percent to other countries, ATB Financial reported.

shiguang@chinadailyusa.com