By Ben Meyer / www.americanshipper.com / July 2nd, 2018
Canadian government calls reciprocal taxes on $12.6 billion in U.S. exports a “direct, measured and proportional response” to U.S. metals tariffs.
Canada on Sunday officially entered into force a long list of tariffs on goods produced in the United States in response to the Trump administration’s import tariffs on steel and aluminum.
The duties, which the Canadian government called a “direct, measured and proportional response” to the U.S. metals tariffs, will target a list of products worth $16.6 billion Canadian (U.S. $12.6 billion) in 2017. In addition to steel and aluminum products, the list includes goods ranging from agricultural food stuffs like coffee, ketchup and whiskey to household appliances like refrigerators and dishwashers.
In a press release announcing the official adoption of the retaliatory tariffs, the Department of Finance Canada reiterated that it is seeking to recoup the expected revenue that will be lost upon imposition of the U.S. tariffs of 25 percent on steel and 10 percent on aluminum, adding that the reciprocal countermeasures “will remain in place until the U.S. eliminates trade-restrictive measures against Canadian steel and aluminum products.”
Chrystia Freeland, Canada’s minister of foreign affairs, said, “Canada has always been a safe, secure and reliable source of steel and aluminum for the U.S. market. The tariffs introduced by the United States on Canadian steel and aluminum are protectionist and illegal under WTO and NAFTA rules — the very rules that the United States helped to write.
“It is with regret that we take these countermeasures, but the U.S. tariffs leave Canada no choice but to defend our industries, our workers and our communities, and we will remain firm in doing so,” she added. “The real solution to this unfortunate and unprecedented dispute is for the United States to rescind its tariffs on our steel and aluminum.”
Much like the European Union, which recently adopted its own raft of retaliatory tariffs on U.S. goods worth 2.8 billion euros (U.S. $3.27 billion), has been consistent in its opposition to the U.S. tariffs since President Donald Trump announced them in early March. Initially, it looked as if both would be exempted, but Trump dropped the exemptions following unsuccessful negotiations on deals that would likely have replaced those tariffs with quotas.
Tensions over the tariffs reached a boiling point in early June, when Trump rejected a joint statement signed by the six other world leaders who participated in the G7 summit in Charlevoix, Quebec, including Canadian Prime Minister Justin Trudeau.
At a news conference following the multilateral gathering, Trudeau reiterated that Canada would move forward with plans to place retaliatory tariffs on a wide range of U.S. goods starting on July 1, a move Trump called “dishonest” and “weak."
Canada’s argument against the U.S. tariffs on imports of steel and aluminum stems primarily from the fact that they are being imposed pursuant to a determination by the Department of Commerce that such imports pose a threat to U.S. national security.
“Canada’s steel and aluminum industries have made North American steel and aluminum more competitive around the world,” the Canadian government said in its announcement on Friday. “It is inconceivable and completely unacceptable to view any trade with Canada as a national security threat to the United States.
“The U.S. has a $2 billion annual trade surplus on iron and steel products with Canada,” it added. “Canada buys more American steel than any other country in the world, accounting for 50 percent of U.S. exports. Canadian steel is used in American tanks, and Canadian aluminum in American planes. Indeed, Canada is recognized in U.S. law as part of the U.S. National Technology and Industrial Base related to National Defense.”
The government said it would continue to “work towards full and permanent removal of these unjustified and illegal U.S. tariffs.”
In addition to the tariff countermeasures, the Canadian government said it will provide as much as C$2 billion in subsidies to “defend and protect the interests of Canadian workers and businesses in the steel, aluminum and manufacturing industries.”
More specifically, Canada said it plans to extend the duration of work-share agreements in an effort to limit job losses during “challenging times,” increase funding for regional job training programs, provide liquidity to support businesses affected by the U.S. tariffs, offer C$250 million to better integrate Canadian steel and aluminum supply chains, and invest C$50 million over the next five years to help Canadian companies diversify exports to take advantage of new trade agreements like Comprehensive Economic and Trade Agreement (CETA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
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