‘We will not back down’

Sunday Express - - INTERNATIONAL -

TORONTO — Canada has an­nounced bil­lions of dol­lars in re­tal­ia­tory tar­iffs against the US in a tit-for-tat re­sponse to the Trump ad­min­is­tra­tion’s du­ties on Cana­dian steel and alu­minum.

Justin Trudeau’s govern­ment re­leased the fi­nal list of items that will be tar­geted be­gin­ning 1 July. Some items will be sub­ject to taxes of 10 or 25 per­cent.

“We will not es­ca­late and we will not back down,” the Cana­dian for­eign min­is­ter, Chrys­tia Free­land, said.

The taxes on items in­clud­ing ketchup, lawn­mow­ers and mo­tor­boats amount to $12.6bn.

“This is a per­fectly re­cip­ro­cal ac­tion,” Free­land said. “It is a dol­lar-for-dol­lar re­sponse.”

Free­land said they had no other choice and called the tar­iffs re­gret­table.

Many of the US prod­ucts were cho­sen for their po­lit­i­cal rather than eco­nomic im­pact. For ex­am­ple, Canada im­ports just $3m worth of yo­ghurt from the US an­nu­ally and most of it comes from one plant in Wis­con­sin, the home state of the House speaker, Paul Ryan. The prod­uct will now be hit with a 10 per­cent duty.

Another prod­uct on the list is whiskey, which comes from Ten­nessee and Ken­tucky, the lat­ter of which is the home state of the Re­pub­li­can Senate leader, Mitch McCon­nell.

Free­land also said they are pre­pared if Don­ald Trump, the US pres­i­dent, es­ca­lates the trade war.

“It is ab­so­lutely im­per­a­tive that com­mon sense should pre­vail,” she said. “Hav­ing said that, our ap­proach from day one of the Nafta ne­go­ti­a­tions has been to hope for the best but pre­pare for the worst.”

Trump has ex­plained the steel and alu­minum tar­iffs by say­ing im­ported met­als threat­ened the United States’ na­tional se­cu­rity — a jus­ti­fi­ca­tion that coun­tries rarely use be­cause it can be so eas­ily abused. He is also threat­en­ing to im­pose another na­tional se­cu­rity-based tar­iff on im­ported cars, trucks and auto parts. That threat could be a ne­go­ti­at­ing ploy to restart talks on the North Amer­i­can Free Trade Agree­ment (Nafta).

Free­land said there are no grounds for fur­ther US tar­iffs in re­sponse to Canada’s ac­tions.

Cana­di­ans are par­tic­u­larly wor­ried about auto tar­iffs be­cause the in­dus­try is crit­i­cal to Canada’s econ­omy. Free­land said such tar­iffs would be “ab­surd” be­cause the North Amer­i­can auto in­dus­try is highly in­te­grated and parts made in Canada of­ten go into cars man­u­fac­tured in the US and then sold back to Cana­di­ans. “Any trade ac­tion is dis­rup­tive on both sides of the bor­der,” Free­land said.

Free­land said an “in­ten­sive phase” of Nafta rene­go­ti­a­tions will re­sume quickly af­ter Sun­day’s elec­tions in Mex­ico.

“I don’t think we’ll see any re­ac­tion from the Trump ad­min­is­tra­tion. They are pre­pared for this,” said Dan Ujczo, a trade lawyer in Colum­bus, Ohio. “Can­didly, the Cana­dian re­tal­i­a­tion is a drop in the bucket com­pared to the re­tal­i­a­tion that we’re go­ing to see from China and else­where.”

Ujczo doubts Trump will an­nounce auto tar­iffs be­cause that would be a “red line for the US Congress” be­fore the midterm elec­tions. He said the hear­ings for pos­si­ble auto tar­iffs are in late July.

“I don’t think Congress right now is ex­pected to get en­gaged un­til af­ter the midterm elec­tion. They’ve given the pres­i­dent a long leash and will con­tinue to do so. The auto tar­iffs would dis­rupt that. It would change the cal­cu­lus,” he said.

The Cana­dian govern­ment also an­nounced $1.5bn in sub­si­dies for Canada’s steel and alu­minum in­dus­tries.

— The Guardian

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