Cargo shipping containers on ships at the Port of Los Angeles.PATRICK T. FALLON/AFP/Getty Images
U.S. President Donald Trump will impose tariffs of between 10 and 12.5 per cent on dozens of countries Friday in his latest effort to maintain a baseline levy on nearly all of America’s trading partners.
Canada will face a tariff of 10 per cent. There are exemptions for goods traded under the U.S.-Mexico-Canada Agreement, as well as for all oil and gas, meaning most Canadian and Mexican goods will not be subject to the levy.
The latest round of tariffs is being imposed under Section 301 of the Trade Act of 1974, ostensibly because, according to the U.S., other countries are not taking sufficient action to crack down on goods produced by forced labour.
Reuters
But the measures are part of a continuing quest by Mr. Trump to find legal authorities to construct a wall of protectionist tariffs around the U.S. economy and stop foreign imports from competing with American manufacturers.
Last year, Mr. Trump invoked the International Emergency Economic Powers Act to institute a global baseline tariff. In February, the U.S. Supreme Court ruled that this was illegal as the President did not have such a power under that legislation. Mr. Trump then used another authority to impose temporary tariffs, which are due to expire on Friday. Those levies will now be replaced by the Section 301 tariffs.
The administration had signalled for months that the latest levies were coming, so they landed as no surprise.
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Prime Minister Mark Carney said Section 301 was merely a “different justification” for imposing the same levies Mr. Trump has been trying to put in place since last year.
“It’s not unexpected what’s happening there. It’s part of the bigger puzzle,” he said in Charlottetown, where he was meeting with provincial premiers on Thursday.
The Section 301 tariffs are separate from a suite of sectoral tariffs Mr. Trump imposed last year on autos, steel and aluminum that have hit Canada and Mexico particularly hard. Those were imposed under different legislation, Section 232 of the Trade Expansion Act of 1962.
They are also separate from yet another set of tariffs announced earlier this week by the Trump administration, which will impose 50-per-cent levies starting Aug. 19 on US$20-billion worth of Canadian products – from alcohol to dairy to electronics. Those tariffs, under Section 338 of the Smoot-Hawley Tariff Act of 1930, are meant to punish Canada for retaliating against Mr. Trump’s other tariffs.
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Both the Section 232 and Section 338 tariffs apply to goods traded under the USMCA.
The latest salvos in the President’s global trade war come as his administration, according to U.S. Trade Representative Jamieson Greer, is aiming to conclude interim trade deals with Canada and Mexico this year and renegotiate the USMCA in 2027.
Other trade deals signed in Mr. Trump’s second presidential term have involved U.S. trading partners, including Britain and the European Union, agreeing to punitive trade measures in exchange for the U.S. promising not to punish them even more.
Mr. Trump on Thursday bragged that his protectionist policies were having their intended effect of moving heavy industry out of U.S. trade partners. He pointed to a plan by Toyota to move production of Tacoma pickup trucks from Mexico to the U.S.
“They’re moving into our country from Mexico. They’re going to be, I think, closing up a lot of their operation, maybe all of it, in Mexico,” he said.
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Mr. Greer, in announcing the Section 301 tariffs on Thursday, insisted that they really are about cracking down on forced labour. “Today’s action will begin to correct what is both a human rights abuse and distortive trade practice,” he said in a statement.
Matthew Holmes, chief of public policy at the Canadian Chamber of Commerce, pointed out that Ottawa is already fighting back against forced labour. In a statement, he said the timing of the new tariffs was “suspect,” as they are taking effect right as the previous temporary tariffs expire.
“Canada is a leader of this with a formal prohibition on the importation of goods produced with forced labour,” he said. “Canada should not be targeted here.”
Other U.S. trading partners hit by the Section 301 tariffs include Mexico, Britain, the European Union, Japan and Korea.