For Canadians, the United States Supreme Court ruling on Friday striking down many of President Trump’s tariffs changes very little.
[Read: Justices Strike Down Trump’s Tariffs]
A 35 percent tariff on most Canadian exports to the United States was put in place last year, and that tariff has now been struck down.
It was brought in because Mr. Trump claimed, all evidence to the contrary, that vast quantities of fentanyl and large numbers of migrants were crossing into the United States from Canada.
But almost as quickly as he imposed it, Mr. Trump made that tariff mostly irrelevant by excluding anything that qualified under the United States-Mexico-Canada Agreement trade pact. (Canada abbreviates the agreement as CUSMA, using its preferred sequence for the countries.)
Because of that exemption, the Royal Bank of Canada estimates that 89 percent of Canadian exports to the United States last month still went in tariff-free. And Prime Minister Mark Carney, who is an economist and a former central banker, has estimated that the effective tariff rate for goods entering the American market from Canada is 5.5 percent. Others have calculated that it has now fallen as low as 3.1 percent.
That, however, is not as rosy as it appears.
While the court struck down the phantom 35 percent tariff, Mr. Trump used a different flavor of tariffs to tax several products from Canada in the name of national security. And because they were not reviewed in the case heard by the Supreme Court, they remain in place.
Those tariffs strike at key job-creating sectors of Canada’s economy. Cars, trucks and buses are subject to a 25 percent tariff. Steel and aluminum are at 50 percent, and Mr. Trump larded an additional tariff on top of the already steep duties on softwood lumber that have been in effect, on and off, since the 1980s.
[Read: The Latest Trump Tariffs on Countries and Products]
And the trade statistics don’t capture goods that simply no longer leave Canada for the United States because of tariffs.
“What’s hurting the Canadian economy are the sectoral tariffs under a different American law,” Dominic LeBlanc, the government’s point man on trade with the United States, told CBC News on Friday. “This just reminds us again of the importance of diversifying our trading relationships.”
There may be a small amount of relief for some companies because of the court decision. Some Canadian manufacturers, particularly in aerospace, often combine parts from around the world. As a result, their exports are not deemed sufficiently North American to move duty-free under CUSMA.
Mr. Trump was defiant after the court decision. My colleagues Tony Romm and Ana Swanson have outlined the other measures he may use in an attempt to reimpose tariffs.
[Read: The Trade Statutes Trump Will Use to Keep Imposing Tariffs]
Hours after the decision, Mr. Trump said he was imposing a global 10 percent tariff. In a note released later on Friday, the White House said that the CUSMA tariff exemption would continue to apply to any new tariffs.
In addition, the court ruling does not resolve an issue that has affected a large number of Canadian retailers selling online to American shoppers. Mr. Trump eliminated a rule that had exempted imports worth $800 or less from all tariffs. Compounding the problem, small retailers that rely on the post office for shipping were required to pay the 35 percent tariffs on products that should have been duty-free under CUSMA when they shipped those products to the United States.
The solution for many of those retailers, many of which are small businesses, is to abandon the U.S. market.
It was once hoped that a review of the trade pact by its three member countries might be the forum for sorting out Canada’s issues. But Matina Stevis-Gridneff, our Canada bureau chief, and Ana Swanson and Tyler Pager reported this week that “two Canadian officials involved in the U.S. trade discussions, who spoke anonymously to frankly convey their impressions of the state of the talks, said expectations in Ottawa for a full renewal of the U.S.M.C.A. were very low.”
[Read: Trump Mulls a North American Trade Pact Without Canada]
In an interview with The Times in January, Jamieson Greer, the U.S. trade representative, said that there was no “natural reason” that the trade pact should continue to include all three countries. Mr. Trump has suggested that the United States might strike separate deals with Canada and Mexico, an idea opposed by both countries.
That review is scheduled to end on Canada Day, although the three countries can agree to extend the agreement on a year-by-year basis. Any of the countries may also quit the pact with six months’ notice.
Thus Mr. Carney’s plan to ally with other nations to reduce Canada’s overwhelming economic dependence on the United States. Next week, I’ll be joining him as he heads out on another mission to forge new alliances. First stop: India.
Trans Canada
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The Canadian government unveiled a multibillion-dollar plan to buy fewer weapons from the United States while beefing up Canada’s defense industries.
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Matina Stevis-Gridneff and Kenneth P. Vogel broke the news that Matthew Moroun, the billionaire owner of the Ambassador Bridge, donated $1 million to a super PAC devoted to President Trump just one month before Mr. Trump blasted a new bridge connecting Michigan with Canada.
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A fix has been found for a navigational trap in Buffalo that unintentionally sent motorists off across the Peace Bridge to Canada. Mr. Trump’s immigration crackdown meant that a number of wayward drivers, including some with legal resident status, had been detained for weeks pending deportation procedures after trying to turn around.
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From The Athletic: Canada’s women’s hockey team held off the United States for much of the gold medal game at the Winter Olympics but was defeated in overtime. Canada’s men will play the United States for gold on Sunday after a comeback win over Finland. How Canada and Great Britain got to today’s men’s curling final.
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Visitors from Canada, usually the second-largest source of U.S. tourism after Mexico, plunged by 28 percent in January compared with the same month a year earlier.
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In a glimmer of winter’s eventual end, The Times’s guide to sugar shacks includes Quebec, the world’s largest producer of maple syrup.
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Financial constraints mean that Le Patin Libre, an ice skating troupe from Montreal, is not among the artists boycotting the Kennedy Center in Washington
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A group of academics at the University of British Columbia say that some of the institution’s practices, including land acknowledgments and its D.E.I. policies, break a law requiring universities in the province to be “nonpolitical.”
Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at [email protected].
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Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at [email protected].
The post The Ruling Striking Down Trump’s Tariffs Changes Little for Canada appeared first on New York Times.
