Carney Says Canada Is Preparing Reprisals if Tariff Talks With Trump Fail
Canadian Prime Minister Mark Carney has announced that his government is preparing for further retaliation measures if negotiations with the United States to end the recently doubled tariffs on steel and aluminum fail. The move to double levies on steel and aluminum imports, bringing them up to 50%, is deemed “illogical” and “unjustified.”
Ontario Premier Doug Ford has expressed his support for the federal government to impose another 25% on their steel, stating that the situation is “bad for American workers, bad for American industry, and, of course, for Canadian industry as well.”
Carney said the government is focused on ongoing “intensive discussions” with the United States and called the latest round of tariffs “bad for American workers, bad for American industry, and, of course, for Canadian industry as well.” He noted that the American action is global action and will take some time, but not more.
Ford suggested that the two countries are close to a deal after Canada-U.S. Trade Minister Dominic LeBlanc visited Washington earlier this week, but senior officials downplayed those comments. Canada’s envoy to Washington, Ambassador Kirsten Hillman, said it is “too soon to say we are close” to a deal.
Ontario is considering its own retaliation, suggesting “everything is on the table.” Industry Minister Mélanie Joly said she has been on the phone with steel and aluminum sector CEOs and knows many Canadians are anxious for Ottawa’s next moves. She said they are looking at different scenarios right now and will take a decision, but they need a bit more time right now.
Canadian steel and aluminum industries say doubling the tariffs will have a devastating impact, as the industries are already dealing with job losses and a drop in shipments, as Canada is the top exporter of those metals to the U.S. Finance Minister François-Philippe Champagne said that the steel and aluminum industry is key to Canada’s prosperity, and they will be there fighting.
The Conservatives pushed for an emergency debate in the House of Commons on Trump’s 50% tariffs, but the request was denied. Conservative deputy leader Melissa Lantsman on social media said that the “elbows up” prime minister promised Canadians he was the “man with a plan’ to stop U.S. tariffs on Canadian industry. Interim NDP Leader Don Davies said he is a bit surprised that Carney needs more time.
Source: CBC
Source: Globe and Mail
Source: MSN
Source: Financial Post
Source: Bloomberg
Trump Administration Seeks Pause After Losing Second Tariff Case, Says Decision Jeopardizes Trade Negotiations
The Trump administration has requested a US appeals court to halt a second court ruling that found the president had exceeded his authority by imposing sweeping tariffs on imports, arguing that the decision jeopardizes trade negotiations with other nations.
Trump’s tariffs were first declared illegal by the Manhattan-based U.S. Court of International Trade on May 28. A federal court in Washington, D.C. followed with a second ruling the next day, which also found that the tariffs exceeded the president’s authority under the International Emergency Economic Powers Act, a law intended to address “unusual and extraordinary” threats during national emergencies.
The lawsuits leading to those rulings challenged Trump’s use of the law to justify the so-called “Liberation Day” tariffs on imports imposed in early April on most U.S trading partners, as well as a separate set of tariffs levied on China, Mexico, and Canada in February.
The Trump administration has already won a temporary pause of the first court loss, allowing it to reinstate tariffs during the early stages of the appeal. The court is expected to rule on the Trump administration’s request for a longer-term pause later this month.
Source: Globe and Mail
Source: Reuters
Evidence Builds That Tariffs Are Chewing Into Canada’s Economy
Canadian companies are facing a significant impact from US President Donald Trump’s tariffs, according to warnings from executives at major retailers and real-time economic data. Loblaw Cos. Ltd., the grocery giant, has been able to limit the hit from tariffs to about 1,000 of its 80,000 items, but it is expected to rise above 3,000 in the next week or two as inventory runs out and potentially tops 6,000. More product categories will be affected, including natural foods, pantry items, and beauty products. Walmart Inc.’s chief financial officer, John David Rainey, said that tariff-induced price increases are imminent.
While progress with UK and China were encouraging, optimism about those agreements has already started to unravel. Some are casting doubt on the value of the deal between the US and the UK, which left the former still stuck with a 10% tariff on exports. Despite the U.S.-China trade war pause, Chinese products destined for America still face import taxes of nearly 50% when previous duties are accounted for.
The effect of the tariff policies is starting to show up in economic data as well. In Canada, manufacturing sales fell 1.4% in March, the second consecutive decline, with sales contracting in 13 of the 21 sub-sectors. The outlook for manufacturing this year remains bleak. Sales of primary metals, including steel and aluminum, fell 6.5% month over month in March and motor vehicle sales contracted 1.1%. With auto and steel tariffs still in force, it is expected that sales in these sub-sectors are likely to remain weak.
Canadian jobs data for April revealed that employment in the trade-sensitive manufacturing and wholesale and retail sectors fell, while the jobless rate climbed to 6.9% from 6.7% in March. US retail sales data also showed tariffs are finally catching up and overtaking the economic narrative. Headline retail sales in April rose 0.1%, down significantly from 1.7% in March as “tariff front-running” came to a halt.
Source: Financial Post
Importers Warn New Duty Payment System Will Cause Delays on Top of Tariffs
Fresh rules came into force on May 20th, requiring businesses importing products into Canada to post a security deposit, among other financial commitments. Only about 30% of the country’s more than 190,000 active importers had registered with federal authorities to do so. The new RPP rules require a cash deposit or a guarantee known as a surety bond to secure release. Ushered in under a new online portal for border tax and tariff collection, the stricter regime known as CARM aims to make sure the government can collect even if the shipper fails to come up with the cash, such as in bankruptcy cases.
The deposit comes on top of tariffs facing many shippers for the first time this year after U.S. President Donald Trump set off a trade war. One importer recently found she owed $32,000 in duties on a $150,000 shipment of light fixtures. Others who ship in clothing, beauty products, and air conditioners have also been hit hard. The higher tariff can mean bigger customs bonds or cash deposits under the new payment system, since the tallies are calculated based on the monthly taxes and fees owing on shipments.
Importers who fail to enrol will have to show up in person and pay duties and taxes on the spot. Corinne Pohlmann, head of advocacy at the Canadian Federation of Independent Business, said that we are already seeing disruptions to supply chains and cross-border trade. Smaller importers, especially those importing only once or twice a year, would rather have an option of paying with a credit card on file than provide a cash deposit or buy a yearly security bond.
The federal government’s digital platform for paying duties, called the Canada Border Services Agency Assessment Revenue Management project (CARM), marks a broader effort to streamline the old, paper-based process that customs officials relied on for decades.
Source: Financial Post
More Businesses Weigh Tariff Surcharges as Trade Wars Drag On
US President Donald Trump’s tariffs have caused companies to pass some of the pain on to their customers, putting corporate America on a collision course with the White House. Walmart Inc. warned it would have to increase prices last month due to high tariffs, and Trump lashed out at the retail giant, demanding it “eat the tariffs” instead of raising prices.
An analysis of corporate calls with investors and analysts using data service AlphaSense shows Walmart isn’t alone in looking for ways to share the burden. The number of global public company calls mentioning tariff surcharges has skyrocketed since Trump’s “Liberation Day” on April 2, with U.S. companies accounting for roughly two-thirds of all those discussing the surcharges.
Economists are bracing for prices to rise as businesses deplete their stockpiles of pre-tariff inventories and run out of other ways to dodge tariffs. Walmart released a statement after coming under attack from Trump, stating they will keep prices as low as possible for as long as possible.
Source: Globe and Mail
Tariffs Are Causing Rising Uncertainty in Canadian Businesses
Canada’s business sector is experiencing increased uncertainty due to the threats and imposition of U.S. tariffs on Canadian goods, according to a quarterly survey by Statistics Canada. The survey, conducted from April to early May, found that 70% of businesses are either very or somewhat optimistic about their outlook over the next 12 months. Over one quarter of businesses expect to raise their goods and services prices over the next three months. High operational costs were the primary factor limiting business growth for 26% of companies, while 15.5% cited workforce skill shortages as the main limiting factor.
The survey also revealed that nearly one-fifth of all companies anticipate that U.S. tariffs on Canadian goods will have a high level of impact on their business, whether they are engaged in trade or not. Transportation and warehousing businesses were most likely to indicate a high level of impact. Over 27.9% of businesses expect no impact, 17.5% expect a low level, and 16.4% expect a medium level of impact.
Nearly one-fifth of businesses anticipate that Canada’s retaliatory tariffs on imports from the United States will also have a high level of impact on their business. A high level of impact is anticipated by 37.1% of businesses in wholesale trade, 32.4% in manufacturing, and 32.1% in retail trade.
Source: Financial Post
