On August 1, US President Donald Trump announced that US tariffs on Canadian exports not under the Canada-United States-Mexico Agreement (CUSMA) would increase from the 25 percent imposed in March to 35 percent.
According to a statement by Prime Minister Mark Carney, the US administration cited the cross-border distribution of the drug fentanyl as the reason for the uptick. Carney pointed out that Canada made up just 1 percent of fentanyl imports to the US.
“The White House fact sheet should be called a fact-less sheet when it comes to basing trade decisions about Canada on the fentanyl emergency. More fact-less tariff turbulence does not advance North American economic security. Businesses — in Canada and the U.S. — urgently need certainty,” said Candace Laing, president and CEO of the Canadian Chamber of Commerce, in a statement.
The continued recognition of CUSMA, described by Carney as “the world’s second-largest free trade agreement by trading volume,” kept the US average tariff rate on Canadian goods low compared to its trading partners. Alberta Premier Danielle Smith noted that most of Alberta’s exports to the US will avoid the tariffs, including its oil and gas and agricultural products.
However, Laing pointed out that not all businesses are shielded by the agreement.
“In the meantime, we have CUSMA, which, at present, is still being honoured, leaving much of our cross-border trade tariff-free. However, not all Canadian businesses have this advantage and the jump to 35% tariffs on non-CUSMA compliant products places an additional load on them,” she said in a statement.
Smith also called for a repeal of legislation that she said limited resource development.
“One thing is abundantly clear: Canada must become economically stronger. The federal government must immediately repeal the Trudeau-era laws that restrict resource development and are holding our economy back, and diversify and grow our export markets. This new Liberal government has yet to do so, and it is costing Canada tens of millions in lost economic activity every single day,” she said in a statement.
Nova Scotia Premier Tim Houston said the provincial government would “not hesitate to implement retaliatory measures again if they are needed.”