U.S. President Donald Trump speaks to reporters at the White House on Friday.Jonathan Ernst/Reuters
Donald Trump’s threatened 35-per-cent tariffs on Canadian goods would most likely only apply to those traded outside the United States-Mexico-Canada Agreement, currently subjected to 25-per-cent tariffs, a U.S. administration official says.
The higher tariffs, set to start on Aug. 1, are not expected to cover goods traded under USMCA or oil, gas and potash traded outside the deal, which have been hit with 10-per-cent tariffs, said the source.
The official, however, cautioned that the President had not yet made a decision and no final paper had been drafted on the subject. The Globe and Mail is not identifying the official as a condition for learning more details of the administration’s tariff planning.
The continuing uncertainty capped a week in which Mr. Trump failed to fulfill his promise of “90 deals in 90 days,” and instead issued a flurry of largely formulaic letters – containing his signature capitalization style and the occasional typo – threatening a range of new tariffs against dozens of countries in his global trade war.
Trump threatens 35% tariffs on Canadian goods starting Aug. 1
The President set Aug. 1 as the new deadline for deals or else the higher tariffs will take effect. The letter to Canada, sent Thursday night and addressed to Prime Minister Mark Carney, landed despite the two countries already being weeks into negotiations and Ottawa making concessions to mollify Mr. Trump.
On Friday morning, the President suggested that he had spoken with someone in the federal government but offered no details.
“It was sent yesterday. They called. I think it was fairly well-received. So, we’ll see what happens,” he said of the letter on the White House lawn before leaving to tour flood damage in Texas.
Asked for his message to countries that he is threatening to tariff, he said: “Oh, I think, just keep working hard,” later adding, “it’s all going to work out.”
On Friday, Mr. Carney’s office said he will hold a cabinet meeting Tuesday morning to discuss the negotiations. He will then meet with provincial and territorial premiers on July 22, in conjunction with a previously scheduled meeting of the Council of the Federation in Huntsville, Ont.
Mr. Carney and Mr. Trump agreed at last month’s G7 summit in Kananaskis, Alta., to negotiate an economic and security deal within 30 days, a deadline later moved to July 21. The Prime Minister said Thursday that the deadline is now Aug. 1.
The President’s letter complains about fentanyl entering the U.S. from Canada, retaliatory tariffs that Ottawa imposed in response to Mr. Trump’s first round of levies earlier this year and the Canadian supply management system for dairy and eggs.
Analysis: Trump tariff threat piles pressure on Canada to expand trade with Asia
“If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” Mr. Trump wrote.
He threatened that, if Canada raises its retaliatory tariffs on the U.S., he will also raise U.S. tariffs by the same number.
Mr. Trump first imposed the 25-per-cent tariffs on non-USMCA goods from Canada and Mexico last winter, ostensibly as punishment for fentanyl entering the U.S. He has also imposed sectoral tariffs on imports of autos, steel and aluminum.
Ottawa has already unveiled a package of changes to toughen the border and crack down on fentanyl smuggling. According to U.S. figures, authorities seized 43 pounds of the drug at the Canadian border last year, 0.2 per cent of the nationwide total of 21,900 pounds.
Mr. Carney also rolled back some of Canada’s retaliatory tariffs on the U.S. this spring and last month cancelled a digital services tax after threats from Mr. Trump.
The President, however, has continued to escalate his trade attacks. He doubled tariffs on steel and aluminum to 50 per cent last month, announced that he will add a 50-per-cent tariff on copper and is also planning hefty tariffs on pharmaceuticals.
Kellie Meiman Hock, a former U.S. trade official and diplomat, said Mr. Trump does not appear to have an overarching plan for landing deals but simply seems to be changing his demands to see what concessions he can extract.
Opinion: The U.S. is not our friend any more. Has anyone told Mark Carney?
“I do think it’s a transactional approach: just keep the bar moving and see if that can get more,” said Ms. Meiman Hock, a Washington-based international business consultant.
Lana Payne, the head of Canada’s largest private-sector union, said Ottawa has repeatedly tried to meet Mr. Trump’s demands but this has not stopped him from stepping up his tariffs and his threats.
She contended that it is time for Canada to put more pressure on the U.S., whether by increasing its retaliatory tariffs or stockpiling key exports such as aluminum and critical minerals that the U.S. needs.
“The only thing this President understands is strength. So we have to get to a point, as a country, where we put our leverage out,” said Ms. Payne, the president of Unifor. “The extortion will continue until the United States is feeling some pain points here.”
Lachlan Wolfers, KPMG’s global head of indirect taxes, said the risk for countries dealing with Mr. Trump was ultimately settling for punitive deals in a bid to stop the “Groundhog Day” of his chaotic announcements. It’s important to remember, he said, that before Mr. Trump returned to office, global tariffs were all in the single digits.
“You can end up feeling like settling for a 10-per-cent or even a 20-per-cent broad-based tariff as being a reasonable and acceptable outcome,” he said.
Industry Minister Mélanie Joly suggested that Canada is reluctant to retaliate against the U.S. for fear of hurting the Canadian economy in the process.
“We want to make sure, while we are putting pressure on the American administration, that at the same time, we are protecting jobs,” she told reporters in Ottawa on Friday.