Canada's retaliatory tariffs on US goods are now in effect
What's the story
Canada imposed retaliatory tariffs on US goods today after trade negotiations broke down last month. The new duties, covering $20 billion worth of American products, range from 15% to 50% and cover everything from steel to electronics. This move escalates an 18-month-long trade dispute between the two countries and raises questions about the future of the larger United States-Mexico-Canada free trade agreement.
Sectoral impact
Tariffs affect steel, furniture, clothing, and electronics
The retaliatory tariffs by Canada affect a wide range of US goods, including steel, furniture, clothing, and electronics.
This move comes as a response to the US imposing tariffs on Canadian wine, furniture, dairy products, among others, last month.
These US tariffs impacted sectors such as cement and fishing rods too and covered $20 billion worth or 5% of Canadian exports to the US.
Uncertainty
Future of USMCA uncertain
The future of the United States-Mexico-Canada Agreement (USMCA) is uncertain, with concerns over investment and growth.
Canada has sent nearly 68% of its total exports to the US this year, with around 80% going duty-free owing to exemptions under the USMCA pact.
However, these new tariffs imposed under a Depression-era US law do not allow Ottawa to exercise these exemptions.
Public opinion
Support for Carney remains strong
Despite the ongoing trade war with an economy 13 times its size, polls show broad support for Prime Minister Mark Carney from Canadians.
However, political analysts warn this could change in months as the effects of the trade war become more apparent.
Notably, only 20% of Americans approved Trump's tariffs on Canadian goods according to a Reuters/Ipsos poll.