Canada Warns: US 10% Tariff Hits Could Cost Billions
Canada’s Finance Minister warns US tariffs of 10% could cost billions, straining trade under USMCA and fueling growing US-Canada economic tensions.
Canada's Finance Minister said that baseline tariffs could be the "price" Canada would have to pay to continue shipping goods to the US.
François-Philippe Champagne's remarks came after Donald Trump's State of the Union speech, in which the US President said he wants tariffs to eventually replace income taxes and become America's main revenue source.
Champagne's comments follow US Trade Chief Jamieson Greer's statement that Canada would have to accept "somewhat higher tariffs" if it wanted to do business with the United States.
Following the US Supreme Court's rejection of his previous major tariff policy, Trump last week imposed 10% tariffs worldwide through a never-before-used law called Section 122.
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"I think the world now understands very well that the American administration believes there's a price to pay to access the American market," Champagne told reporters in Ottawa. He was asked if the President's speech would hinder Canada's hopes of tariff removal. He added, "Every country I know in the world is paying the price." "I'm saying Canada is paying the lowest price."
Canada has received tariff exemptions that comply with the Continental Free Trade Agreement, USMCA. It also faces higher tariffs on steel, aluminum, and softwood lumber.
"If Canada agrees that we can impose slightly higher tariffs on them, while they open their market to us in dairy and other products, that would be a helpful conversation."
Due to trade tensions, Canadian Prime Minister Mark Carney has said he wants to double Canada's non-US exports over the next decade, especially in industries like metals and cars.
The US is by far Canada's largest customer, accounting for approximately 75% of Canada's exports.
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Canadians' new stance on US tariffs comes after the US Supreme Court's 6-3 ruling on Friday found that Trump's sweeping tariff policy, implemented last April, was illegal and that the president had abused his powers.
In response to this decision, Trump announced a new 10% global tariff, replacing the tariffs struck down by the Supreme Court.
This new tariff – which came into effect on Tuesday – was imposed under a never-before-used law called Section 122 of the Trade Act of 1974, which gives the president the power to impose tariffs of up to 15% for 150 days, after which Congress must intervene.
"And as time goes on, I believe that tariffs imposed by foreign countries, as they have done before, will replace the current income tax system, thereby alleviating a significant financial burden on my beloved people," the US president said during his annual address to Congress on Tuesday.
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