Manufacturers warn of stalled investment while premiers split over energy leverage
Canadian exporters have until August 19 before a US tariff of 50 percent takes hold, and Prime Minister Mark Carney says Ottawa has not ruled out retaliation if it cannot reach a trade deal with Washington before the deadline.
Carney told reporters on Thursday, after meeting the country's 13 premiers in Charlottetown, that "everything is on the table depending on the outcome of the negotiations," according to CBC News.
He declined to spell out any countermeasures, saying it would be counterproductive to signal retaliation while talks continue, though he added that the government has worked through its options.
US President Donald Trump signed the order imposing the duties on July 20, targeting goods such as wine, beer, hockey sticks and cement over what his administration calls discriminatory Canadian trade policies, the Canadian Press reported.
The 50 percent measure is not the only new pressure on cross-border trade. Late on Thursday, as per CTV News, the Trump administration announced separate tariffs on roughly 60 countries, including a 10 percent levy on Canada, citing forced labour in supply chains.
Those duties fall under Section 301 of the Trade Act of 1974, took effect Friday and replaced an expiring 10 percent global tariff, CNBC reported, and the US Trade Representative's office said they cover 99.4 percent of US trade.
BNN Bloomberg reported that goods qualifying under the Canada-United States-Mexico Agreement would not be affected, although the Canadian Press said it was not immediately clear whether such an exemption applied.
Dominic LeBlanc, the Canada-US trade minister, said Ottawa shares Washington's goal of keeping goods made with forced labour out of supply chains, and he pointed to enforcement legislation the government introduced in June, according to CTV News.
For employers and investors, the sharper worry is prolonged uncertainty.
Dennis Darby, president and chief executive of Canadian Manufacturers & Exporters, told BNN Bloomberg that the new measures hit products worth about US$20bn, or $28bn, that had moved tariff-free, and that companies are again raising concerns after being largely exempt for the past year and a half.
Darby said 73 percent of the group's members report that a failure to renew the trade pact would lower their confidence in their company's future, and that firms are holding back on investment, equipment and new plants while the outlook stays unsettled.
The strain reaches health-care supply chains as well.
Jim Keon, president of the Canadian Generic Pharmaceutical Association, warned in a statement that the tariffs would disrupt fragile pharmaceutical supply chains, the Canadian Press reported.
Canada imports US-made generics, including essential hospital drugs, and its manufacturers depend on US active ingredients, packaging and other inputs.
The premiers left Charlottetown divided over how hard to push back.
Ontario Premier Doug Ford, who has said his province has the most to lose, called for a forceful reply.
"We have to hit them back with everything we have until they feel the pain, and we have to protect Canada," Ford said, as reported by CTV News.
Alberta Premier Danielle Smith rejected using energy as leverage, telling CBC's Power & Politics she wanted to prevent Canada "from making a very dumb decision of putting energy on the table."
Smith warned that if Canada cut off exports, the US could shut Line 5, the pipeline that carries about 540,000 barrels a day and supplies Ontario and Quebec.
British Columbia Premier David Eby said affected businesses in his province could draw on a federal emergency fund worth $1.5bn if the tariffs proceed, and that Carney had told him the fund has not been exhausted, the Canadian Press reported.
Behind the August deadline sits the review of the continental trade pact.
Trump declined on July 1 to extend the agreement for another 16 years, leaving it in force but subject to annual reviews, Reuters reported, and Washington is negotiating with Canada and Mexico on separate tracks while saying it has made more progress with Mexico.
Stuart Trew, a trade policy researcher at the Canadian Centre for Policy Alternatives, said the escalating rhetoric signals Canada's turn is coming.
"It's Canada's turn to talk to the Americans about whatever it is they want to talk about," Trew told BNN Bloomberg.
Some analysts argue the calendar may work in Canada's favour.
Michael McAdoo, a partner at Boston Consulting Group's global trade and investment group, told the Canadian Press that US inflationary pressures and the approaching midterm elections give Ottawa reason to take its time.
More retaliation, popular as it is with many Canadians, is not an approach widely endorsed by economists, the New York Times reported.
