Mark Carney had warned us and Donald Trump had also clearly mentioned it, it would have been very surprising that Canada could conclude a business agreement with the United States before the deadline of 1is August imposed by the untimely American president. And now, what should we expect, what will be the continuation of this painful commercial psychodrama?
The Prime Minister repeatedly repeated this week that there was no guarantee that a commercial agreement with the United States could intervene before the deadline of 1is August and that it was preferable for Canada not to agree rather than to be imposed on one that would be bad for the country.
For his part, the head of the White House complained of the hardness displayed by Canada in his negotiations with his representatives to finally agree on the night of Wednesday to Thursday that the recognition (under conditions) of a Palestinian State by Canada was going to make the conclusion of a commercial agreement very difficult.
PHOTO LUDOVIC MARIN, ARCHIVES AGENCE FRANCE-PRESSE
Mark Carney and Donald Trump at the G7 meeting last June
We were there Thursday, last day before the cleaver fell at midnight on all negotiations between the United States and the countries that had not yet concluded a commercial agreement with them.
During the day, Washington announced the conclusion of new agreements, in particular with South Korea and India and agreed to extend negotiations with Mexico by 90 days in order to reach an agreement, without the country undergoing an increase in customs duties of 25 to 30 % on products not covered by the Canada-United States-Mexico (ACEUM) agreement.
If the United States has resumed Mexico, it is because American representatives had too much on their arms and that they could not settle all the files of all countries for the 1is august.
“Mexico has collaborated a lot with the United States to seal the border and slow down the entry of Chinese companies into its territory,” observes Rosemarie Bégin, principal economics and politics director at PwC.
“Negotiations with Canada were more complicated with supply or digital tax management files. We should expect negotiations with Canada to continue. »»
A decision with little impact
The worst scenario, according to Mme Begin, Canada and the United States would have been suspending discussions and Donald Trump decides to impose customs duties in new industrial sectors, but it would be necessary to demonstrate that the targeted products represent a security involvement of the United States.
Otherwise, the American president’s decision to increase customs duties on Friday on products not covered by ACEUM from 25 to 35 %-pretending that Canada has not acted convincing in the fight against fentanyl-will not change Canadian economic and commercial reality.
Last May, it was estimated that 90 % of Canadian products exported to the United States were free because they were products covered by ACEUM.
In 2024, before the taxation of the famous 25 % rights of Donald Trump, 93 % of Canadian products exported to Canada were not subject to any customs rights, reminded us of a study of the chair of research in taxation and public finances of the University of Sherbrooke, carried out by Éloïse Bouchard.
This means that the rights of 50 % which were imposed on steel and aluminum and those of 25 % on certain automotive parts represented most of the additional customs duties which have been levied by the United States from Canadian products compared to last year.
In this regard, the latest economic statistics in June confirm that the taxation of American rights has had much less impact than what we could understand on Canadian economic activity.
After having decreased 0.1 % in April and 0.1 % in May, Canadian GDP increased by 0.1 % in June, far beyond the forecasts of the Bank of Canada which expected a decline of 1.5 %, confirming the achievement of an economic withdrawal at 2e quarter.
In June, the highest growth in the last six months and a good increase in retail sales have been recorded in June that compensated for the slight decrease in manufacturing activity.
Since the initial shock of the “Liberation Day” of April 2, when the head of the White House has made its burlesque presentation of the plethora of reciprocal customs duties which he was going to impose on more than 180 countries and territories in the world, the Canadian economy gradually resumed the upper hand, which comes to amply justify the decision of Mark Carney not to give his downstream Trump.
We do not know exactly the sticking points of the negotiation between the two parties, but we can assume that they are still numerous when we know how sickly President Trump seeks to dominate his alleged partners.
We also do not know the Canadian strategic assets on which Mr. Trump wants to get his hands, and there either Canada is not for sale and even less to sell off.
