The last movement of the tariff waltz orchestrated by the American president, Donald Trump, goes as follows: Canada would be targeted by customs duties of 35 % from 1is august. The threat was stated in a letter addressed to the Canadian Prime Minister and made public Thursday evening on Truth Social. Mark Carney will hold an emergency meeting with his office on Tuesday to discuss it. We go around this new twist in five questions.
Why now?
The threat of new rates that would come into force the 1is August comes in the process of negotiating a trade agreement. At the G7 summit in Kananaskis, in mid-June, the Canadian and American leaders had nevertheless agreed to arrive at an agreement by July 21.
It is a familiar negotiation tactic in Donald Trump, advances David Haglund, professor in the Department of Political Studies at Queen’s University. “Ask the moon, the sun and the stars, and see what you can get,” he illustrates.
“We are in public and media diplomacy,” says Philippe Bourbeau, co -director of the International Institute of Economic Diplomacy of HEC Montreal. In this context, according to him, “Canadian political power no longer has the right to demonstrate surprise” in the face of such news.
“By negotiating, we put several cards on the table that we want to drop under a compromise,” explains Mr. Bourbeau. Moreover, this increase in customs duties will only come into force in August: “It leaves space for negotiation. »»
Where does the figure of 35 % come from?
Hard to say. David Haglund points to Stephen Miran, a high -level economic advisor by President Trump, according to whom prices around 20 % would be optimal. Thus, the 35 % could result “from a hypothesis of Trump according to which if you can threaten by 35 % and obtain half of it, it would be acceptable,” proposes Mr. Haglund, who specifies that he cannot presume the calculation used by the White House, if necessary.
However, this remains a theory. ” Maybe [que ce niveau de tarif] Comes somewhere, maybe he does not come from somewhere, ”sums up Philippe Bourbeau.
On April 2, Donald Trump announced “reciprocal” customs duties for different countries – postponed later to July 9, then now at 1is August-on the basis of a formula based on the trade deficit of the United States and the amount of exports from other countries in American land. A calculation deemed simplistic, even illogical, by many economists.
What products will be targeted?
In the missive sent on Thursday, we read that the 35 % prices will apply to Canadian products exported to the United States and will be “separated from the sectoral prices” which in particular aim for aluminum and steel.
A White House representative indicated that these new prices would exclude the products targeted by the Canada-United States-Mexico (ACEUM) agreement, depending on what various media have reported, including Bloomberg and the Wall Street Journal.
According to calculations by the Royal Bank made from data from the United States census office, the exemptions granted under ACEUM have enabled around 91 % of Canadian exports to take the United States without being subject to customs duties.
Where are we in terms of prices?
Right now, Canadian products that are not in accordance with ACEUM are subject to 25 % prices – this rate should go to 35 % on 1is august. If Canada were to impose counter-trials aimed at American products, the customs duties imposed on Canadian products would be increased accordingly.
Some products are also subject to specific customs duties. This is the case of energy, critical minerals and Canadian potash, which are subject to 10 %prices. Cars that are not manufactured in the United States have 25 %tariffs. Customs duties of 50 % apply to aluminum and steel, and copper should join this group next month.
Recall that Donald Trump began this week to send letters to leaders around the world to threaten them to impose additional surcharge in the absence of trade agreements by the 1is august.
What should Canada do now?
Canada has abandoned its digital services tax at the end of June, which would have forced American technology giants to pay some $ 2 billion to the Canadian government, but that was not enough to calm the president’s ardor.
The latter said he could consider a pricing “adjustment” if Canada reduced the fentanyl influx to the border. The quantities of fentanyl in the United States from Canada, however, be negligible, according to several organizations.
The contrast between the American and Canadian negotiation approach is striking, underlines Philippe Bourbeau. While the United States gives in the “show”, Canada “sends signals of trust, seriousness, balance and professionalism”.
It remains to be seen what Mark Carney will be able to negotiate. In his letter, Mr. Trump mentions Canadian dairy products, one of his recurring targets. Prime Minister Carney, however, promised to exclude any concession to the supply management system and even adopted a law for this purpose. Without going there from a prediction on this question, “I think that in general, it must be taken for granted that all the issues are on the table,” says Bourbeau.
The Canadian government could “make certain concessions that are not necessarily damaging,” adds David Haglund. He quotes as an example the enhancement of defense expenses or even possible measures to control irregular immigration to the border. According to him, funds allocated in this direction would allow President Trump to scream victory.
Mark Carney said he plans to defend Canadian workers and businesses “tirelessly”. “You will never be disappointed with the United States of America,” concludes Donald Trump at the end of his letter.