Source : INDIA TODAY NEWS
The United States and Canada have moved deeper into a trade war after talks in Washington broke down, with both sides blaming each other and announcing fresh tariffs that are expected to raise prices in both countries. The dispute marks a sharp deterioration in ties between two long-time allies with one of the world’s closest trading relationships.
The US has imposed 50 per cent tariffs on USD 20 billion worth of Canadian goods, while Canada has said its retaliatory measures will begin on September 8. The breakdown has also cast doubt on the future of the wider North American trade agreement involving the US, Canada and Mexico.
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President Donald Trump’s new import taxes will affect about 5 per cent of Canada’s yearly exports to the US, covering products ranging from hockey sticks to tongue depressors. Prime Minister Mark Carney said Ottawa would respond with targeted tariff protection for sectors exposed to the new US duties, including some steel products, as well as the dairy, appliance, agricultural equipment, pulp and paper, and electronics sectors.
No further talks were planned after negotiations collapsed late on Friday. Carney accused Washington of using “economic integration as a weapon” and said “its signature was written in pencil”. Using the language of conflict, he said Canada had been “attacked” by the new tariffs. “You’re at war when you get attacked,” he said, adding that Canada had the reserves, resilience and plan to respond.
But Jamieson Greer, Trump’s chief trade negotiator, said the US had acted after a year of retaliation by Canada. “We’ve said enough, and so we’ve taken countermeasures. Our interest is in protecting American workers and protecting American supply chains,” the US trade representative told Fox & Friends Weekend.
Carney said Canada had been prepared to remove its remaining retaliatory tariffs on steel, aluminium and autos if the US significantly lowered its own duties, and to encourage provinces to restore US alcohol sales. But he said Washington’s final demands went too far. “They asked too much and offered too little,” Carney said. Greer said the administration had offered to reduce tariffs on steel, autos and lumber, “things that are sensitive for them”, and added, “They’ve always had the best deal, and they still would have an even better deal, but they didn’t want that.” He said, “We’re moving forward with measures that respond to Canadian retaliation.”
According to Carney, the US added last-minute conditions that would have reduced tariff relief for Canadian-made vehicles, limited Canada’s ability to strike trade deals with other countries, and weakened protections for language, culture and sovereignty. He said those demands were “unacceptable”. The collapse came just two days after officials from both sides had sounded optimistic about a compromise.
Ontario Premier Doug Ford backed Carney’s decision to reject the deal, saying it would have hurt Ontario’s auto, steel and manufacturing sectors. He urged Canada to use “every tool in our toolbox” against the US tariffs. Carney said the breakdown was “certainly not good news” for the review of the North American trade pact and that the failed talks had given Canada “a new perspective” on what Washington wants from the broader economic relationship.
The political impact could be larger than the economic fallout. The two countries traded USD 880 billion in goods and services last year. The tariffs had originally been due to take effect at 12.01 am on Wednesday, but Trump extended the deadline by three days to allow negotiations to continue. The US and Canada have long clashed over issues such as Canadian softwood lumber and US access to Canada’s protected dairy market, while still remaining close allies and major trading partners.
That relationship has now come under unusual strain. Canadian troops fought alongside Americans in Afghanistan after 9/11. The 5,525-mile US-Canada border is undefended, and nearly 330,000 people and USD 2 billion worth of goods cross it every day. About 800,000 Canadians live in the US. Trump’s approach has broken with that traditionally cooperative relationship, with tariffs aimed at bringing manufacturing back to the US and repeated remarks about making Canada America’s 51st state. Carney said Canada had recognised that “America has changed” and that the two countries would “not return to our old relationship”.
Public frustration is also rising. In Canada, a petition seeking the expulsion of US Ambassador Pete Hoekstra has gathered nearly 248,000 signatures since July 21. The petition accuses the former Republican congressman of having “normalised” Trump’s talk of annexing Canada, among other things.
There were strong reasons for both sides to reach a deal. Nearly 72 per cent of Canada’s goods exports last year went to the US. The Trump administration may also be wary of new tariffs before the November midterm elections, as US importers bear the cost and often pass it on to consumers. With American voters already unhappy over the cost of living, Ryan Majerus, a partner at King & Spalding and a former US trade official, said, “Both sides will be under immense pressure in the coming days to still find an off-ramp.” Joshua Bolten, chief executive of the Business Roundtable, warned the tariffs and retaliation risk “raising costs for American businesses and families” and disrupting vital supply chains, and urged both governments to resume negotiations.
Tariffs have become central to Trump’s second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, arguing that the long-running US trade deficit was a national emergency. In February, the Supreme Court ruled that he had gone beyond his authority, struck down those trade penalties and opened the way for the federal government to refund importers. After that ruling, the administration turned to other legal powers. In Canada’s case, Trump used Section 338 of the Tariff Act of 1930, a rarely used provision that allows tariffs of up to 50 per cent against countries considered to discriminate against US businesses. The measure is part of the Smoot-Hawley tariff law, which economists and historians have widely blamed for worsening the Great Depression by restricting global trade. Section 338 has never previously been used to impose tariffs.
The row has erupted at a time when the US, Mexico and Canada are trying to renew the trade agreement Trump negotiated in his first term and once described as a success. The US has already begun formal talks with Mexico on revamping the US-Mexico-Canada Agreement, or USMCA, but talks with Canada have not started. With the latest tariffs and retaliation, the dispute has deepened economic tensions, damaged trust and put further pressure on the future of trade ties across North America.
With PTI Inputs
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SOURCE :- TIMES OF INDIA
