Canada to impose $3.6B in tariffs in response to Trump's move against Canadian aluminum

Posted In: News Date:Aug 8th, 2020

The federal government will spend one month consulting with Canadians about which U.S. metals products to target with retaliatory tariffs as a new trade dispute flares up with the Trump administration.

The government intends to impose $3.6 billion in punitive countermeasures after a 30-day consultation with business leaders and other Canadians about potential targets from a preliminary list.

"Canada will respond swiftly and strongly," Deputy Prime Minister Chrystia Freeland said Friday.

Canada's list of potential targets threatens to hit politically sensitive areas — namely, states critical to U.S. President Donald Trump's re-election.

A disproportionate number of the more than five dozen items on Canada's potential hit-list are from key U.S. election swing states, including paint dyes and aluminum waste, for which Michigan is a top exporter to Canada; refrigerators and bicycles, for which Wisconsin is the lead exporter; and aluminum powders and bars from Pennsylvania.

Canadian officials insisted the list wasn't drawn up with the U.S. election in mind.

They said they were simply targeting products that use aluminum and happen to be produced in those states, under the terms of an agreement last year with the U.S. that sets rules for metals tariffs in North America.

That 2019 pact lifted across-the-board tariffs from the U.S. on Canadian steel and aluminum products, while setting limits on what products can be targeted in the event of a future dispute.

That dispute, it appears, has arrived.

Freeland made the announcement a day after Trump re-imposed tariffs of 10 per cent on certain aluminum products, ending a recent period of calm on the U.S.-Canada trade front.

Canadian products being targeted by the U.S. are used as raw materials in other aluminum-based goods. They comprise slightly more than half of Canadian aluminum exports to the U.S. over the past year.

Freeland said Canada would seek to avoid escalating the dispute, saying the retaliation would be reciprocal and limited in scope.