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Canada hits US with retaliatory tariffs

June 29, 2018

Canada is the latest country to retaliate against the Trump administration's steel and aluminum tariffs. The Canadian tariffs were designed to cause political pain for Republican-controlled states and districts.

Maple syrup
Image: Imago/Levine-Roberts

Canada imposes tariffs on US goods

Canada announced retaliatory tariffs against the United States on Friday in response to the Trump administration's duties on Canadian steel and aluminum.

"Canada has no choice but to retaliate in a measured, reciprocal, dollar-for-dollar response," Canadian Foreign Affairs Minister Chrystia Freeland said Friday, flanked by workers at a steel manufacturing facility.

The $12.2 billion (CA$16 billion, €10.4 billion) in tariffs will hit US steel and aluminum, as well as more than 250 other goods. They include duties on US maple syrup, whiskey, orange juice, toilet paper, yogurt and ketchup. Starting on July 1, most of the items will be taxed at rates of 10 percent or 25 percent.  

The Canadian government also announced $1.5 billion in subsidies for its steel and aluminum industry.

Many of the goods were chosen to pack a political punch ahead of US midterm elections in November by targeting Republican-held states and congressional districts.

Freeland said there was no reason for the Trump administration to escalate the trade dispute and Canada would not back down in the face of American violations of WTO and NAFTA trade rules.

Explainer: Trade war

She also said Canada was in discussions with Mexico and allies in Europe, which have also retaliated against the US imposition in June of 10 percent tariffs on aluminum and 25 percent on steel.

Read more: EU's retaliatory tariffs on US products come into effect 

The Trump administration imposed the steel and aluminum tariffs citing "national security" provisions of US trade law, drawing a rebuke from allies who have fought alongside American soldiers in multiple wars.

Canada, Europe and Mexico fear that the Trump administration could next follow through on threats to impose tariffs on automobile imports.

Freeland called the idea "absolutely absurd" because the North American automobile industry is highly integrated.

Experts have said such a move would disrupt supply lines, throw the automobile industry into chaos and trigger an economic recession. 

Read more: Why higher US tariffs on car imports would backfire

US automakers warn against tariffs

Major automakers and manufacturers on Friday warned against imposing tariffs, in filings with the US Commerce Department, which President Donald Trump had instructed in May to look into protecting the auto industry.

Auto giant General Motors warned that imposing auto tariffs "risks undermining GM's competitiveness against foreign auto producers," driving up the cost of imported components and reducing sales.

Higher tariffs would "lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less — not more — US jobs," the largest US automaker said.

In a separate filing, Toyota Motor Corp said imposing tariffs on the auto industry imports would "threaten US manufacturing, jobs, exports, and economic prosperity."

In a blow to Trump earlier this week, iconic American motorcycle company Harley-Davidson announced it would move some production overseas to avoid EU tariffs imposed in response to US steel and aluminum duties.

Read more: Trump warns Harley move abroad 'beginning of the end'

After the EU and China, Canada is the United States' largest trading partner.

The two countries traded $673.9 billion worth of goods and services in 2017, with the US running a small $8.4 billion surplus, according to the Office of the US Trade Representative.

cw/sms (AFP, AP, dpa, Reuters)