Breaking Down Canada’s Retaliatory Tariffs On The United States – The Organization for World Peace

Canadian Prime Minister Mark Carney has imposed retaliatory tariffs that came into effect at midnight on Tuesday, claiming that retaliation was necessary after President Trump imposed tariffs of up to 50 percent last month. Carney targeted $20 billion of U.S. exports — the same level of Canadian imports as Trump’s tariffs — with Canadian tariffs of 15, 20, and 50 percent depending on the product. According to the New York Times, polls show that Prime Minister Carney’s decision has garnered unusually widespread support from across Canada’s many regions.

In a video address to Canadian citizens, Prime Minister Carney announced that “they [the United States] wanted dependency, not a true economic partnership. In the spring of last year, I warned that America is trying to break us so they can own us. And I promised that will never, ever happen.” He added, “as has been the case for the last 18 months, our first priority remains on protecting and supporting Canadian workers, farmers, families, and businesses from these unjustified actions.”

Trump responded Tuesday evening by adding additional products to the list of goods that were to receive a 50-percent tariff, as well as an immediate ban on Canadian beer, wine, and liquor, and a later ban that will go into effect on September 29th on three-wheeled motorcycles manufactured by Montreal-based Bombardier Recreational Products (B.R.P.) — a backtracking from his initial threat to ban business jets by Bombardier. The B.R.P. motorcycle ban by the U.S. seems to be a counter to Canada’s 50-percent tariff imposition on Harley-Davidson motorcycles. 

While Carney’s recent actions have drawn in favorable opinions from Canadian citizens, the prime minister himself is not as keen on imposing retaliatory tariffs, stating: “I don’t believe in escalating the conflict; that’s not constructive.” However, Canadian opinion seems to favor retaliation over restraint, the latter of which could strain political opinion and draw in questions about Carney’s ability to stand his ground. This poses a difficult conundrum: did his decision stem from a need for positive public opinion, or was it what he truly thought was best for Canadian citizens?

The answer is complicated. According to the New York Times, Assistant Professor Andrew McDougall from the University of Toronto and Professor Wendong Zhang at Cornell University both agree that Carney’s actions were necessary for political support, which he especially needs during his term as prime minister. Zhang stated that according to his model of the trade war’s effects, retaliation would cause more economic harm than good, but he still expects further action from Canada, as “it’s politically suicidal to not have a reaction.” Carney has also expressed doubts about progressing the trade war, but stated that it was less costly to commit to action than stand still. Regardless, it would be ideal for both countries to do a mutual rollback of recent tariff impositions, although it seems more likely that Canada will diversify its trade and supply chain partnerships to other countries rather than tend to its brittle relationship with the United States.