5 things to know if Canada hits back against Trump tariffs

The escalating trade tensions between the United States and Canada have reached a critical point, with President Donald Trump threatening to impose a hefty 25 per cent tariff on all imports from Canada. In response, the Canadian government has vowed to retaliate by imposing its own tariffs on U.S. goods entering the country.

Finance Minister Dominic Leblanc emphasized the need for Canada to be prepared for any scenario, as the threat of tariffs looms large. Trump has indicated that these tariffs could go into effect as early as February 1, prompting Canada to consider its options for a retaliatory approach.

One key aspect of this retaliatory strategy involves Canada’s complex system of tariffs, which entails a detailed process for imposing taxes on imports from various countries. The Canada Border Services Agency (CBSA) relies on a comprehensive manual that spans over 1,400 pages to calculate the specific tariffs for different goods.

Under Section 53 of the Customs Tariff Act, the cabinet has the authority to implement tariffs or adjust tariff rates through an order in council, without requiring approval from Parliament for each new tariff. While consultation is not legally mandated, the government typically engages in a consultation process with industry stakeholders and the public before implementing significant tariff changes.

In the event of retaliatory tariffs, the Canadian government is considering targeting $37 billion worth of U.S. goods for immediate tariffs, with additional tariffs on $110 billion worth of goods under review. Past examples, such as the 100 per cent surtax on Chinese electric and hybrid vehicles, have involved consultation periods to gather input from various stakeholders.

Ian Lee, a business professor at Carleton University, underscored the importance of consultations to avoid unintended consequences for Canadian businesses. Changes to tariffs can have significant implications, leading to adjustments in pricing strategies and supply chains for affected businesses.

Once the government decides to impose tariffs, the process can move swiftly, with tariffs taking effect soon after the decision is made. The CBSA plays a crucial role in enforcing tariffs by calculating the amount owed on imported goods and issuing customs notices to importers.

The impact of tariffs on Canadians can vary depending on the product and market dynamics. Some businesses may absorb the cost of tariffs initially, while others may pass on the additional costs to consumers. Ultimately, Canadian consumers could face higher prices for U.S. goods subject to tariffs, highlighting the potential economic repercussions of escalating trade tensions.

As the trade dispute unfolds, it is essential for Canada to navigate the complexities of tariff implementation and consider the broader implications for businesses and consumers. The government’s response to potential U.S. tariffs will shape the future of trade relations between the two countries and have far-reaching consequences for the Canadian economy.