The Financial Post brings you the news in the countdown to the tariff deadline
Under Trump’s plan, all imports from Canada and Mexico will face a 25 per cent tariff, with the exception of a 10 per cent levy on Canadian energy. The move, Trump says, will remain in effect until both countries crack down on the flow of deadly fentanyl into the U.S.
“No room left for Mexico or for Canada,” he said when asked if the U.S.’s North American neighbours could reach a deal to put off the duties. “They’re all set. They go into effect tomorrow.”
Some of today’s highlights include:
Here’s a look at what you need to know about Canada’s looming trade war with the U.S.:
What are the March 4 tariffs?
Trump plans to impose 25 per cent tariffs on all imports from Canada and Mexico, with the exception of Canadian energy, which will face a 10 per cent tariff.
China, meanwhile, will face an additional 10 per cent tariff on exports to the U.S.
How would Canada respond?
Prime Minister Justin Trudeau has vowed an immediate response to any U.S. tariffs.
Before Trump decided to delay tariffs by 30 days, Trudeau announced he would slap tariffs on $155 billion worth of U.S. imports, $30 billion of which would be immediate, with the remainder coming after 21 days.
Canada’s retaliatory plan was delayed after the U.S. announced the 30-day extension.
Several provinces have announced their own responses, primarily pledging to pull U.S. liquor from store shelves and to review government contracts with U.S. companies.
What would that do to the economy?
Economists largely believe widespread tariffs would trigger a recession in Canada.
Overall, the bank says U.S. tariffs would lower Canada’s exports, increase inflation, depreciate the loonie, lower business investment and force companies to issue layoffs.
“If Canadian businesses act as the importer of record, they will face higher operational costs, which can squeeze profit margins, reduce cash flow, and limit their ability to reinvest in growth,” the report states. “If increased costs are passed on to Canadians, it may contribute to inflation.”
What will happen to the Canadian dollar?
The loonie is poised for a stretch of weakness if tariffs are introduced.
It hit a three-week low of 69.32 U.S. cents last week as hope for a tariff reprieve dried up.
Before the initial pause, the Canadian dollar fell to 68.48 cents U.S., but quickly rebounded after news of the extension emerged.
Karl Schamotta, chief market strategist at Corpay Inc., previously told The Canadian Press that tariffs could result in the loonie falling two or three per cent and more if indications remain that tariffs could be in place for an extended period.
How likely is an extension?
Trump has developed a reputation for unpredictable decision making, but all signs lead to the tariffs happening on March 4.
Mexican President Claudia Sheinbaum told The Associated Press that she is hopeful her government can still “reach an agreement and on March 4 we can announce something else.”
Canada, meanwhile, is taking a “wait and see” approach, according to Industry minister François-Philippe Champagne.
“One thing we have learned is to take it step by step,” he said.
Tariffs live blog
With files from The Canadian Press and The Associated Press