cross-border-us-canada

The federal Liberal government is taking its cross-border trade dispute with the United States up a notch, unveiling an extensive final list of $16.6-billion worth of American imports that will be hit with retaliatory tariffs this weekend.

Ottawa also released details Friday of a financial aid package for industries caught in the crossfire—and it includes up to $2 billion in fresh funding and support for workers in Canada’s steel, aluminum and manufacturing sectors.

Foreign Affairs Minister Chrystia Freeland unveiled the details, including a finished list of U.S. products on Canada’s hit list, which takes effect Sunday, during a news conference at a steel factory in Hamilton.

Aside from reciprocal tariffs on steel and aluminum imports from the U.S., the items to be subject to 10% duties come from a wide range of sectors—from ketchup, to lawn mowers, to playing cards.

It’s all part of Ottawa’s plan to strike back at the U.S. in response to hefty tariffs on steel and aluminum, 25% and 10% respectively, imposed last month by President Donald Trump.

Freeland billed Canada’s response as dollar-for-dollar countermeasures that are part of a perfectly reciprocal retaliation to what she called the “illegal” and “absurd” tariffs imposed by the Trump administration.

“We are perfectly within our rights to respond—I’d also like to point out that Canada has quite intentionally been measured and restrained in its response,” said Freeland, who was joined at the announcement by Trudeau cabinet colleagues Patty Hajdu and Navdeep Bains.

There are fears, however, that Canadian tariffs, some of which target businesses in states that are important to Trump and his supporters, could lead to fresh trade action from the U.S.

Trump himself has already threatened to slap tariffs on the automotive sector, which could prove far worse for the Canadian economy than the steel and aluminum duties.

Freeland, asked whether she feared the U.S. would escalate matters, recalled a public comment she made right before the start of NAFTA negotiations—another tough Canada-U.S. trade file—in which she told Canadians the federal government expected “moments of drama in this process.”

“I think that prediction has been borne out,” she said. “I think all of us, at this point, fully anticipate there will be some moments of drama in the future.”

The Trudeau government’s decision to stand up to Trump with retaliatory measures has attracted wide support in Canada. But domestic businesses, particularly those in the steel sector, have expressed deep concerns about any escalation in the trade battle.

More broadly, the effects of the trade fight are expected to hurt both economies, which includes putting jobs at risk and potentially raising consumer prices on both sides of the border.

The federal support package includes similar measures to those offered by Ottawa last year in response U.S. duties on softwood lumber products from Canada.

For the latest dispute, the government intends to help affected workers by doubling the duration of work-sharing agreements under the employment insurance program to 76 weeks from 38 weeks. The aim is to help businesses retain skilled workers and avoid layoffs during any rough patches ahead.

Ottawa is also promising to boost funding for the provinces and territories to increase job and training programs.

“In terms of job losses, my message is clear: we stand with Canadian workers and we’re prepared to support Canadian workers if and when that happens,” said Hajdu, the federal labour minister.

For companies, Ottawa is promising up to $1.7 billion worth of financing and services for steel and aluminum industries through Business Development Bank of Canada and Export Development Canada.

Through its strategic innovation fund, Ottawa is also offering up to $250 million in support in an effort to reinforce the competitiveness of Canadian manufacturers and strengthen the integration of Canada’s steel and aluminum supply chain.

Bains, the economic development minister, said the support is aimed at helping firms adjust to the difficult circumstances while enabling them to continue to innovate along the way.

The government also plans to invest $50 million over five years to help firms take full advantage of recent trade agreements, including Canada’s deal with the European Union and its membership in the Trans-Pacific Partnership.

The ministers reiterated Friday that Canada has taken steps and introduced safeguards to address concerns about diversion and dumping of products into the Canadian market.

Last week, U.S. Commerce Secretary Wilbur Ross expressed concerns about the world’s overproduction and overcapacity of steel, saying the U.S. tariffs against Canada and other allies are designed to force them into action.

Freeland has long insisted that Canada introduced stronger safeguards on steel well before the U.S. imposed the tariffs.

She said the measures were put in place not only to ensure Canada is a good trading partner, but primarily to protect Canada’s own national interest by keeping Chinese steel and aluminum from being dumped into the market.

U.S. states that will be hardest hit

Here’s a list of some of the states set to be hit hardest by Canada’s tariffs and by how much, based on how much of the targeted consumer products they shipped north in 2017.

Ohio: $1.15 billion

New York: $1.12 billion

Wisconsin: $820 million

Illinois: $780 million

Pennsylvania: $646 million

Washington: $629 million

California: $529 million

Tennessee: $453 million

Michigan: $432 million

Also, here’s a look at the value of 2017 imports from the U.S., for some of the products targeted by Canada’s preliminary tariffs.

Herbicides: $1.13 billion

Motorboats, rowboats, canoes and other pleasure boats: $646 million

Coffee, roasted: $525 million

Mayonnaise, salad dressing, mixed condiments: $522 million

Fungicides: $418 million

Ketchup and other tomato sauces: $264 million

Organic facewash: $229 million

Soups and broths: $204 million

Whiskey: $62 million

Maple sugar and maple syrup: $17 million

Ballpoint pens: $3.5 million

Read: 

Trump backs off imposing China investment limits

Growing trade tensions call for investor vigilance

EU enforcing tariffs on $3.4B of U.S. products

Originally published on Advisor.ca
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