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Trump Plans 35% Tariff Hike on Canada 07/11 06:05
President Donald Trump said in a letter that he will raise taxes on many
imported goods from Canada to 35%, deepening a rift between two North American
countries that have suffered a debilitating blow to their decades-old alliance.
WASHINGTON (AP) -- President Donald Trump said in a letter that he will
raise taxes on many imported goods from Canada to 35%, deepening a rift between
two North American countries that have suffered a debilitating blow to their
decades-old alliance.
The Thursday letter to Canadian Prime Minister Mark Carney is an aggressive
increase to the top 25% tariff rates that Trump first imposed in March after
months of threats. Trump's tariffs were allegedly in an effort to get Canada to
crack down on fentanyl smuggling despite the relatively modest trafficking in
the drug from that country. Trump has also expressed frustration with a trade
deficit with Canada that largely reflects oil purchases by America.
"I must mention that the flow of Fentanyl is hardly the only challenge we
have with Canada, which has many Tariff, and Non-Tariff, Policies and Trade
Barriers," Trump wrote in the letter.
The higher rates would go into effect Aug. 1, creating a tense series of
weeks ahead for the global economy as recent gains in the S&P 500 stock index
suggest many investors think Trump will ultimately back down on the increases.
But stock market futures were down early Friday in a sign that Trump's wave of
tariff letters may be starting to generate concern among investors.
In a social media post, Carney said Canada would continue to work toward a
new trade framework with the U.S. and has made "vital progress to stop the
scourge of fentanyl."
"Through the current trade negotiations with the United States, the Canadian
government has steadfastly defended our workers and business," Carney said.
While multiple countries have received tariff letters this week, Canada --
America's second largest trading partner after Mexico -- has become something
of a foil to Trump. It has imposed retaliatory tariffs on U.S. goods and pushed
back on the president's taunts of making Canada the 51st state. Mexico has also
faced 25% tariffs because of fentanyl, yet it has not faced the same public
pressure from the Republican U.S. president.
Carney was elected prime minister in April on the argument that Canadians
should keep their "elbows up." He has responded by distancing Canada from its
intertwined relationship with the U.S., seeking to strengthen its links with
the European Union and the United Kingdom.
Hours before Trump's letter, Carney posted on X a picture of himself with
British Prime Minister Keir Starmer, saying, "In the face of global trade
challenges, the world is turning to reliable economic partners like Canada."
Implied in his statement was that the U.S. has become unreliable because of
Trump's haphazard tariff regime, which has gone through aggressive threats and
reversals.
When Carney went to the White House in May, the public portion of their
meeting was cordial. But Trump said there was nothing the Canadian leader could
tell him to remove the tariffs, saying, "Just the way it is."
Daniel Beland, a political science professor at McGill University in
Montreal, said Trump's latest move will make it more difficult for Canada and
the U.S. to reach a trade deal, Beland said.
"It doesn't mean a new trade deal between Canada and the United States is
impossible, but it shows how hard it is for the Canadian government to
negotiate with a U.S. president who regularly utters threats and doesn't appear
to be a reliable and truthful interlocutor," he said.
Trump has sent a series of tariff letters to 23 countries. Those form
letters became increasingly personal with Canada as well as a Wednesday note
that put a 50% tariff on Brazil for the ongoing trial of its former President
Jair Bolsonaro for trying to stay in office after his 2022 election loss. Trump
was similarly indicted for his efforts to overturn his 2020 election loss to
Democrat Joe Biden.
Trump administration officials have said that Trump was seeking to isolate
its geopolitical rival China with the tariffs, but the latest tariffs have
undermined that message. Brazil's largest trading partner is China, not the
U.S., and Chinese government officials have framed his import taxes as a form
of bullying.
"Sovereign equality and non-interference in internal affairs are important
principles of the U.N. Charter and basic norms governing international
relations," said Mao Ning, the Chinese Foreign Ministry spokesman. "Tariffs
should not be used as a tool for coercion, bullying and interference in the
internal affairs of other countries."
The letters reflect the inability of Trump to finalize the dozens of trade
frameworks that he claimed would be easy to negotiate. Shortly after unveiling
his April 2 "Liberation Day" tariffs, a financial market selloff caused Trump
to announce a 90-day negotiating period during which a 10% baseline tariff
would be charged on most imported goods.
But Trump has indicated that the 10% tariff rates are largely disappearing
as he resets the rates with his letters.
"We're just going to say all of the remaining countries are going to pay,
whether it's 20% or 15%," Trump said in a phone interview with NBC News.
Trump has announced trade frameworks with the U.K. and Vietnam, as well as a
separate deal with China to enable continued trade talks. Trump jacked up
import taxes on Chinese goods to as much as 145%, but after talks he has said
China faces total tariffs of 55%.
In June, Trump said he was suspending trade talks with Canada over its plans
to continue its digital services tax, which would hit U.S. technology
companies. A few days later, talks resumed when Carney rescinded the tax.
Under the current tariff structure, the 2020 United States Mexico Canada
Agreement has protected eligible goods from Trump's tariffs. But a review of
the pact is scheduled for 2026.
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