Elbows Down, Tariffs Up
by Kerry Turner
While August doesn’t typically come in like a lion, as the old wives’ tale for March often goes, Mark Carney might say otherwise as he hits the ground for damage control as all non-CUSMA products face the impact of the long threatened 35% tariffs that went into effect following the passing of Trump’s August 1st deadline. CUSMA is the Canadian-US-Mexico Agreement on North American trade, negotiated during US President Donald Trump’s first term.
Carney released a statement following the implementation of tariffs, writing to Canadians in a statement: “The United States has justified its most recent trade action on the basis of the cross-border flow of fentanyl, despite the fact that Canada accounts for only 1% of U.S. fentanyl imports and has been working intensively to further reduce these volumes. Canada's government is making historic investments in border security to arrest drug traffickers, take down transnational gangs, and end migrant smuggling. These include thousands of new law enforcement and border security officers, aerial surveillance, intelligence and security operations, and the strongest border legislation in our history. We will continue working with the United States to stop the scourge of fentanyl and save lives in both our countries.”
However, Canadians aren't the only ones apprehensive about the tariffs. Earlier this year, Mitch McConnell, a Republican senator from Kentucky, also railed against Trump’s tariffs. “With so much at stake globally, the last thing we need is to pick fights with the very friends with whom we should be working with to protect against China’s predatory and unfair trade practices,” he said in a statement. He and Sen. Paul, along with Sen. Susan Collins, of Maine, and Sen. Lisa Murkowski, of Alaska, also voted in favour of a resolution to undo Trump’s 25 per cent tariffs back in the spring, warning of impacts on their state economies and border communities. The Senate narrowly approved the joint resolution, 51-48, but it then died in the House.
Not all Americans are as sympathetic – U.S. Ambassador to Canada Pete Hoekstra suggested Mexico secured an extension and Canada did not because of the energy in the room. "I think it's because of the feeling in the room, or the energy in the room, when the negotiators are talking to each other," he said in an interview with CBC's Power & Politics Tuesday. The ambassador also maintained that Canada did not get hit that hard. "Canada's position right now is one that lots of countries around the world would be envious of," he said.
Canadians are eager for trade markets to cool to help battle the increasingly difficult costs of living, in addition to the scorching heat waves. Carney, at least on the surface, appears to gear his retaliatory approach in an effort to balance diplomacy and domestic interests. Carney has not committed to a full rollback of retaliatory tariffs, but is open to a targeted tariff relief plan – specifically by removing certain U.S. tariffs if doing so would benefit Canadian industries affected by the ongoing trade war. The move signals a pragmatic approach to easing economic pressure on sectors like softwood lumber and agriculture, which have been hit hard by U.S. trade policies. "So we don't automatically adjust. We look at what we can do for our industry that's most effective. In some cases that will be to remove tariffs. The prime minister said his government will "look at opportunities to do so because in the end, we're looking at having the best impact in Canada."
Carney was also on damage control by holding virtual meetings in private with his cabinet and the premiers on Wednesday, August 6th. However, previous stands of unity appeared to be showing their cracks – Saskatchewan Premier Scott Moe said Canada should dial down its retaliatory tariffs. “Maybe it’s time for Canada even to at least not add additional counter-tariffs in this space, but to even consider removing some of the counter-tariffs that are harmful to Canadian businesses and Saskatchewan businesses today,” Moe said during a radio interview, adding that Canada is largely “protected” by the CUSMA trade pact.
Meanwhile, Ontario Premier Doug Ford said he was frustrated by the impacts of high U.S. tariffs on his province’s economy and called again for retaliatory tariffs. “You can’t have tariffs on one side and not the other. I still stand by what I say – dollar for dollar, tariff for tariff,” Ford told reporters at a news conference in Thornhill, Ontario. “They understand strength, not weakness, and we should never, ever roll over and be weak.” Ford said he wants to see more done to stimulate the economy. He called on Ottawa to cut taxes and said the Bank of Canada should drop its interest rate. “We have to get the governor of the Bank of Canada to lower those damn interest rates from 2.75,” he said. “Knock ’em down. Build confidence. Let’s work together on getting rid of the HST on homebuyers, and not just first (time) ones. Let’s stimulate the market and we’ll follow suit if the federal government does that.”
At a media appearance in Drumheller, Alberta, Conservative Leader Pierre Poilievre said Carney promised he would deliver a winning trade agreement for Canadians and has so far failed to do so. "Mark Carney has been prime minister for over 140 days and still the tariffs are there and rising," Poilievre said. "We know President Trump is somebody that nobody can control but that's why it was wrong for Mark Carney to promise that he could do so." Poilievre said that since Carney has been in office, "it has been elbows down and tariffs up."
Should Poilievre win a seat next week to return to the House, Canadians will surely be treated to much more banter between the two politicians.