For Canadians, the recent U.S. Supreme Court decision to overturn many of President Trump’s tariffs barely moves the needle.
While a 35 percent tariff on most Canadian exports to the U.S. was imposed last year and has now been overturned, its practical effect on Canada was already limited.
This tariff was initially enacted by Mr. Trump under the contentious claim that fentanyl and numerous migrants were flooding into the U.S. from Canada, an assertion largely unsupported by evidence.
However, shortly after its implementation, Mr. Trump rendered the tariff largely inconsequential by exempting goods covered by the United States-Mexico-Canada Agreement (which Canada refers to as CUSMA).
Thanks to this exemption, the Royal Bank of Canada reports that approximately 89 percent of Canadian exports to the U.S. remained tariff-free last month. Even Prime Minister Mark Carney, an economist and former central banker, has calculated the actual tariff rate on Canadian goods entering the American market to be around 5.5 percent, with some estimates putting it as low as 3.1 percent.
That, however, is not as rosy as it appears.
Despite the Supreme Court’s removal of the largely symbolic 35 percent tariff, Mr. Trump’s other significant tariffs, imposed on key Canadian products under national security pretenses, were not part of this legal review and thus remain active.
These persistent tariffs significantly impact crucial Canadian industries, including a 25 percent tariff on cars, trucks, and buses, and a 50 percent tariff on steel and aluminum. Additionally, Mr. Trump intensified existing duties on softwood lumber, which have plagued bilateral trade intermittently since the 1980s.
Moreover, official trade figures don’t fully reflect the true economic impact, as they fail to account for Canadian goods that are no longer exported to the U.S. due to these prohibitive tariffs.
As Dominic LeBlanc, Canada’s lead official for U.S. trade, stated to CBC News on Friday, the real damage to the Canadian economy stems from “sectoral tariffs under a different American law.” He emphasized, “This just reminds us again of the importance of diversifying our trading relationships.”
The court’s decision might offer minor relief to certain Canadian manufacturers, especially in the aerospace sector. These companies often use global components, meaning their exports sometimes don’t meet the “North American” criteria for CUSMA’s duty-free status.
Following the ruling, Mr. Trump expressed defiance, and my colleagues Tony Romm and Ana Swanson have detailed the various legal avenues he might explore to reinstate tariffs.
Just hours after the Supreme Court’s decision, Mr. Trump announced plans to impose a new global 10 percent tariff. However, a subsequent White House statement clarified that the existing CUSMA tariff exemption would extend to these new duties as well.
Furthermore, the court’s ruling leaves unresolved a significant challenge for many Canadian online retailers targeting American customers. Mr. Trump previously revoked a rule that allowed imports valued under $800 to be tariff-free. This change led to smaller retailers, especially those using postal services, being charged 35 percent tariffs on products that should have been exempt under CUSMA.
For many of these small Canadian businesses, the only viable option has been to withdraw from the U.S. market entirely.
Hopes that a trilateral review of the trade pact might address Canada’s concerns appear dim. Our Canada bureau chief, Matina Stevis-Gridneff, along with Ana Swanson and Tyler Pager, recently reported that Canadian officials, speaking anonymously, indicated “expectations in Ottawa for a full renewal of the U.S.M.C.A. were very low.”
In a January interview with The Times, U.S. Trade Representative Jamieson Greer stated there was “no natural reason” for the trade agreement to continue including all three nations. Mr. Trump has also floated the idea of separate bilateral deals with Canada and Mexico, a concept both countries oppose.
The current review of the trade agreement is set to conclude on Canada Day, though the three nations can mutually agree to annual extensions. Any country also retains the right to withdraw from the pact with six months’ notice.
This situation underscores Prime Minister Carney’s strategic initiative to forge alliances with other nations, aiming to lessen Canada’s significant economic reliance on the United States. Next week, I’ll accompany him as he embarks on another such mission, beginning with a visit to India.
Trans Canada
- The Canadian government unveiled a multibillion-dollar plan to buy fewer weapons from the United States while beefing up Canada’s defense industries.
- Matina Stevis-Gridneff and Kenneth P. Vogel broke the news that Matthew Moroun, the billionaire owner of the Ambassador Bridge, donated $1 million to a super PAC devoted to President Trump just one month before Mr. Trump blasted a new bridge connecting Michigan with Canada.
- A fix has been found for a navigational trap in Buffalo that unintentionally sent motorists off across the Peace Bridge to Canada. Mr. Trump’s immigration crackdown meant that a number of wayward drivers, including some with legal resident status, had been detained for weeks pending deportation procedures after trying to turn around.
- From The Athletic: Canada’s women’s hockey team held off the United States for much of the gold medal game at the Winter Olympics but was defeated in overtime. Canada’s men will play the United States for gold on Sunday after a comeback win over Finland. How Canada and Great Britain got to today’s men’s curling final.
- Visitors from Canada, usually the second-largest source of U.S. tourism after Mexico, plunged by 28 percent in January compared with the same month a year earlier.
- In a glimmer of winter’s eventual end, The Times’s guide to sugar shacks includes Quebec, the world’s largest producer of maple syrup.
- Financial constraints mean that Le Patin Libre, an ice skating troupe from Montreal, is not among the artists boycotting the Kennedy Center in Washington
- A group of academics at the University of British Columbia say that some of the institution’s practices, including land acknowledgments and its D.E.I. policies, break a law requiring universities in the province to be “nonpolitical.”
How are we doing?
We’re eager to have your thoughts about this newsletter and events in Canada in general. Please send them to nytcanada@nytimes.com.
Like this email?
Forward it to your friends, and let them know they can sign up here.