Canada to impose $3.6B in tariffs in response to Trump's move against Canadian aluminum

The federal government will spend one month consulting with Canadians about which U.S. metals products to target with retaliatory tariffs as a new trade dispute flares up with the Trump administration.

The government intends to impose $3.6 billion in punitive countermeasures after a 30-day consultation with business leaders and other Canadians about potential targets from a preliminary list.

"Canada will respond swiftly and strongly," Deputy Prime Minister Chrystia Freeland said Friday.

Canada's list of potential targets threatens to hit politically sensitive areas — namely, states critical to U.S. President Donald Trump's re-election.

A disproportionate number of the more than five dozen items on Canada's potential hit-list are from key U.S. election swing states, including paint dyes and aluminum waste, for which Michigan is a top exporter to Canada; refrigerators and bicycles, for which Wisconsin is the lead exporter; and aluminum powders and bars from Pennsylvania.

Canadian officials insisted the list wasn't drawn up with the U.S. election in mind.

They said they were simply targeting products that use aluminum and happen to be produced in those states, under the terms of an agreement last year with the U.S. that sets rules for metals tariffs in North America.

That 2019 pact lifted across-the-board tariffs from the U.S. on Canadian steel and aluminum products, while setting limits on what products can be targeted in the event of a future dispute.

That dispute, it appears, has arrived.

Freeland made the announcement a day after Trump re-imposed tariffs of 10 per cent on certain aluminum products, ending a recent period of calm on the U.S.-Canada trade front.

Canadian products being targeted by the U.S. are used as raw materials in other aluminum-based goods. They comprise slightly more than half of Canadian aluminum exports to the U.S. over the past year.

Freeland said Canada would seek to avoid escalating the dispute, saying the retaliation would be reciprocal and limited in scope.

She did, however, blast the Trump administration — calling it the most protectionist in U.S. history. She called its rationale for new tariffs "ludicrous" and "absurd."

She also said Americans would suffer more than anyone else. For example, she predicted a price increase on the very washing machines made at the Ohio plant where Trump announced the tariffs.

"The United States has taken the absurd decision to harm its own people at a time when its economy is suffering its deepest crisis since the Great Depression," she said.

"Any American who buys a can of beer or a soda or a car or a bike will suffer. In fact, the washing machines Trump stood in front of yesterday will get more expensive."

She called the tariffs "unnecessary, unwarranted and entirely unacceptable," and said "a trade dispute is the last thing anyone needs" during an economic crisis.

The business community also lambasted Trump.

"Here we go again," said Maryscott Greenwood of the Canadian American Business Council, saying this is an especially bad time to trigger a trade war.

'Bad idea'

"Poor timing, bad idea. I don't know what else to say."

In the U.S., a Wall Street Journal editorial accused Trump of retreating to his favourite political play — tariffs — in the hope of salvaging his struggling re-election bid.

"[This is] Mr. Trump at his policy worst," said the paper, whose conservative editorial board usually supports Trump, but frequently criticizes him on trade policy.

Canada's premiers are pressing Ottawa to punch back.

Ontario's Doug Ford began a news conference Friday by raising the issue, unprompted. He said he feared steel tariffs might also be imminent, and expressed his annoyance with Trump.

WATCH | Ontario Premier Doug Ford reacts to Trump's tariff announcement:

"I just have to say how disappointed I am with President Trump right now," Ford said.

"Who would do this [now, in difficult economic times]? Well, President Trump did this.... And I encouraged the deputy prime minister to put retaliatory tariffs as close as possible."

Quebec Premier François Legault, whose province is an aluminum-producing hub, echoed the sentiment. He tweeted that he'd asked Prime Minister Justin Trudeau to impose counter-tariffs.

One Canada-U.S. trade insider said Canadian trade officials are usually quite tactical in trade disputes with the U.S., picking targets that cause political pain.

But he suspects any counter-tariffs now won't sway Trump.

"Unfortunately, I do not believe that retaliation [will] be successful in today's environment," said Dan Ujczo, of the U.S.-based Dickinson Wright law firm.

He said the U.S. Congress is now too busy dealing with COVID-19 issues to fight Trump over these tariffs, at least until after the Nov. 3 American election.