Canada announces billions in retaliatory tariffs against US

Taxes on items including ketchup, lawnmowers and motor boats amount to $12.6b

Canada announced billions of dollars in retaliatory tariffs against the United States on Friday in a tit-for-tat response to the Trump administration’s duties on Canadian steel and aluminium.

Prime Minister Justin Trudeau’s government released the final list of items that will be targeted beginning today. Some items will be subject to taxes of 10 or 25 per cent.

Trudeau and US President Donald Trump spoke late Friday. “As he has said in past conversations and in public, the prime minister conveyed that Canada has had no choice but to announce reciprocal countermeasures to the steel and aluminium tariffs that the United States imposed on June 1, 2018,” Trudeau’s office said in a statement. “The two leaders agreed to stay in close touch on a way forward.”

It may have been their first direct conversation since Trump tweeted that Trudeau was “weak” and “dishonest” after leaving the G7 meetings in Quebec last month.

Trudeau also spoke to Mexican President Enrique Pena Neito and updated him on Canada’s response to the US tariffs. The taxes on items including ketchup, lawnmowers and motor boats amount to $12.6 billion (Dh46.24 billion). “We will not escalate and we will not back down,” Canadian Foreign Minister Chrystia Freeland said.

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 $3 million worth of yoghurt from the US annually and most of it comes from one plant in Wisconsin, the home state of House Speaker Paul Ryan. The product will now be hit with a 10 per cent duty. “This is a perfectly reciprocal action,” Freeland said.

Freeland also said they are prepared if Trump 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 aluminium tariffs by saying imported metals threatened US national security — a justification that countries rarely use because it can be so easily abused.

General Motors Co issued a stern warning to the Trump administration that it could shrink US operations and cut jobs if tariffs are broadly applied to imported vehicles and auto parts.

“Increased import tariffs could lead to a smaller GM, a reduced presence at home and risk less — not more — US jobs,” the nation’s largest automaker said in comments submitted Friday to the Commerce Department.

That such a blunt statement came from GM — a company run by a CEO, Mary Barra, whose normal tack is to avoid the political fray and let trade groups address the president’s policies — was surprising to industry observers. And it underscored how high she, and many industrial leaders, believe the stakes are as the president sinks the US into tit-for-tat trade squabbles across the globe. GM’s public pronouncement follows similar moves by Harley-Davidson Inc, Toyota Motor Corp and Daimler AG.

The “comment suggests how severe the impact would be to GM, its employees and consumers,” said Michelle Krebs, analyst with AutoTrader.com. “There is a lot at stake for GM, the auto industry and the overall economy.”

President Donald Trump ordered an investigation of whether auto imports pose national security risks last month under a section of the same 1960s trade law used to impose levies on steel and aluminium. The administration is said to be considering auto tariffs of as much as 25 per cent.

Trade statute

Trump told reporters aboard Air Force One on Friday afternoon that he expected the Commerce Department to complete the investigation “in three or four weeks.”

Under the trade statute, Commerce Secretary Wilbur Ross has until February to conclude the inquiry. But people familiar with the matter said Trump wants the investigation to be finished before the midterm elections in November so he can use the tariffs to his political advantage.

The probe has raised alarm among manufacturers, parts suppliers and auto retailers because all major carmakers — including GM and Ford Motor Co — import a substantial share of the vehicles they sell in the US from other countries. Levies on parts also would have major implications for top models like the Ford F-150 pickup and Toyota Camry sedan by boosting prices by thousands of dollars.

GM fell 2.8 per cent — to $39.40 (Dh144) — in New York, and has now posted three straight weekly declines, the longest such streak since March.

The White House didn’t immediately comment on GM’s remarks.

GM’s message came as a surprise because the company has kept close contact with the Trump administration, James Albertine, analyst with Consumer’s Edge Research told Bloomberg TV.

“So this came as a little bit of a shock to us,” he said, “as we thought they were working more along the lines of making sure the administration knows the severity of the impact tariffs would have.”

Barra had earlier tried to stay on good terms with Trump.