Reciprocal Tariffs are Not Sectoral Tariffs
While many are celebrating that Trump’s reciprocal tariffs have been found to be illegal by the Supreme Court, for countries like Canada, the issue isn’t actually ‘reciprocal tariffs’, rather they relate to sectoral tariffs.
The Supreme Court’s ruling does nothing to rectify sectoral tariffs. Trump’s use of (IEEPA), the International Emergency Economic Powers Act. Trump has now cited Section 232 of the Trade Expansion Act of 1962 to “impose a 10% global tariff under Section 122, over and above our normal tariffs already being charged.
As noted by Trump, Friday’s ruling does not impact the Section 232 tariffs that Trump has imposed on Canadian steel, aluminum, lumber and the auto sector.
Canada’s trade minister Dominic Leblanc stated the following;
“While this isn’t a cure for tariffs facing Canada in targeted sectors and actually provides more immediate relief to Canada’s competitors in the U.S. that face reciprocal tariffs on all of their exports it is nonetheless an improvement in Canada’s negotiating position in the upcoming (CUSMA) talks, by removing the leverage the U.S. had with its threatened 35 per cent fentanyl tariff,” he said. Approximately half of the 266 million collected by the U.S. have been reciprocal tariffs and the remainder are sectoral tariffs.
The question becomes, how does Canada address the issue of tariffs that have been unfairly levied in relation to sectoral tariffs?
For Canada, it simply means another round of significant negotiations with a disingenuous America. The sectoral tariffs imposed are not rational acts, they are simply meant to force Canada to accept a bad deal.
What took 40 years of negotiations to reach an equitable and fair trade relationship with the U.S. has been completely thrown out by Trump with the aim of damaging Canada economically, which he knows built a relationship that profited both countries.
Trump’s decision to destroy this historical relationship means that Canada will diversify its trade away from the United States, but simple economic gravity means that to do so will take time.
The costs for shipping Canada’s goods offshore to Europe, the ASEAN nations or MERCOSUR will be higher, that is obvious, however, now that Trump has broken the relationship, utterly, Canada will seek new relationships while continuing to:
- Negotiate with the U.S.
- Focus on mutual benefit
- Address Specific Industries with targeted strategies; and,
- Provide support for Canada’s affected sectors; while,
- Utilizing Legal and Economic Arguments within legal frameworks that illustrate through economic data how both countries prosper.
But Canada is building alliances and engaging industry groups to advocate for tariff removal, leveraging their influence on both sides of the border.
The Long Term
Canadians are under no illusions as to why America is damaging, even destroying 80 years of a relationship, which to this day still profits U.S. interests at least as much as Canadian interests.
But what it points to unequivocally, is that Canada cannot, and will not, ever again the United States of America.
It will do damage to Canada’s economy, but as well to the U.S. However, disproportionately to Canada. And because of this willful and malicious act by the U.S., will lead to Canada effectively ending all of its relationships with the United States. Canada has signed fifteen new agreements with other nations in the last year, and its diversification interests are increasing rapidly.
Canada has inked a number of new agreements with the EU and with Korea, Japan and China.
Canadians know that our resources are in demand around the world, and irrespective of America’s actions, Canadians will as quickly as possible disentangle themselves from American influence and control. In the future, it will be America that pays a significant price for stabbing its former allies, friends and trade partners in the back.
Canadians will neither forget nor forgive America for its actions, as these malicious acts will, and have cost Canadians and Canadian corporations a significant amount.
Rather than, as in the past, consider how our resources can meet an allies needs, we will still do so, with those we actually consider to be allies, which of course excludes the United States of America.
The ‘rupture’ in the relationship, as Prime Minister Carney has rightly called it, simply means that what was, is no more. Canadians will continue to sell off American assets, and will sell our strategic minerals, along with oil, gas(es) LPG and CNG, rare earth minerals, fertilizers, timber, aluminum and steel, to our allies.
As for the North American Auto Pact, Canada has invited Chinese EV’s into Canada and is looking to develop Chinese vehicle manufacturing in Canada, just as Honda and Toyota have done. American owned vehicle manufacturers will be the one’s who will find their sales falling appreciably, as Canada has reintroduced the EV vehicle subsidy, and Canadians cannot wait to replace American-made ICE vehicles with EV’s from China.
Canada is rapidly aligning itself with both Europe and the ASEAN nations, particularly in relation to procurement and supply of military weapons, munitions, missiles and all forms of ancillary equipment.
Americans have chosen to damage Canada’s interests and the livelihoods of Canadians.
In turn, we will no longer support America, either economically, militarily or with respect to foreign relations.
What was, is over.
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