Canada seeks to avert new US tariffs as deadline looms

Washington is bracing for the potential impact of fresh US tariffs on Canadian exports, set to take effect at midnight Tuesday. Canadian officials are scrambling to secure a deal to avert the 50% duties imposed by President Donald Trump. The White House claims "discriminatory treatment" against American products such as alcohol, automobiles, and dairy from its neighbor to the north.

These tariffs are estimated to affect around 5.5% of Canada's exports to the United States, totaling approximately $20 billion, according to Oxford Economics. While the overall economic risk is deemed modest, the duties could disproportionately impact central Canada's manufacturing sector. Canadian Prime Minister Mark Carney had a phone conversation with Trump on Monday, indicating that the negotiations to avert the tariffs were in an "intense and delicate" stage.

Canada has reportedly offered concessions, including urging provinces to reopen markets for US alcohol and wine, but a deal seems elusive. Former US commerce official Christopher Padilla expects that the US administration leveraged the threat of new tariffs to secure early concessions from Canada as they negotiate over renewing the USMCA trade agreement.

However, he cautions that even an acceptable trade deal could be rejected by Trump, who has a history of retaliating against allies over other political issues. Oxford Economics anticipates that manufacturers in the cement, paper, printing, wood, clothing, and electronics equipment sectors would be most affected by the new tariffs.