Four things to know about Trump’s big tariff announcement

Article content

U.S. President Donald Trump imposed reciprocal global tariffs on the country’s trading partners after a press conference at his Make America wealth event at White House Rose Garden on Wednesday.

Article content

Article content

He said his latest executive order, the Declaration of Economic Independence, said that these tariffs were retaliation against the tariffs and non-tariff barriers imposed by other countries (friends and enemies).

Article content

Here are the highlights and what it means to Canada and the world:

• The United States imposes a minimum baseline global tariff rate of 10% on all countries
• Tariff rates are as high as 49% in countries with large trade imbalances
• No new tariffs are imposed on Canada and Mexico
• Canada will continue to face a 25% tariff on non-Kusma commodities, while non-carbon potassium and energy tariffs will be 10%
• Qualified products from Kusma are still tax-free
• The United States has added a clause to prevent fentanyl trafficking from certifying the current tariff regime. If this happens, the 25% tariff on non-Kusma goods will be reduced to 12%
• Previous tariff reservations on Canadian steel, aluminum and automobiles
• Gold and copper are one of the commodities exempt from reciprocity tariffs

What did Trump announce?

The Trump administration will issue a 10% minimum tariff on all trading partners, which is scheduled to take effect on Saturday, but on April 9, some countries will implement higher personalized tariff rates.

“These tariffs will remain in effect until President Trump determines that the threat posed by the trade deficit and potential non-registered treatment is met, addressed or mitigated,” the White House profile statement said.

Article content

Article content

In his press conference, Trump held a national chart and its customized mutual tariff rates, such as China and the EU, facing tax rates of 34% and 20% respectively.

Canada and Mexico are not on the list.

The U.S. government also said it will impose a 25% tariff on auto imports on April 3, while the duties of auto parts will be carried out on May 3.

What level of tariffs has Trump imposed on Canada?

The White House profile says Canada’s tariffs will not add a 10% baseline tax.

Goods compliant under the Canadian National-Mexico Agreement (CUSMA) will continue to be tax-free, but non-compliant goods face tariffs of 25% and 10% of energy and potash fertilizer. The 25% tariff on steel and aluminum remains.

But if the existing 25% tariff on Canadian goods (which Trump levied earlier this year because of his claim to concerns over illegal immigration and fentanyl crossing the border) were later ruled, inappropriate goods would only suffer 12% of lovers’ tariffs.

Article content

“It seems this is not a fatal blow, nor an existential threat to the country,” said Fen Osler Hampson, professor of international affairs at Carlton University and co-chair of the Canadian-American Relations Expert Group. “It means Kusler is not dead yet.”

What’s next for Canada?

Liberal leader Mark Carney told reporters that reciprocity tariffs would “fundamentally change the international trading system” but did not provide more details on Wednesday.

The White House said it could increase or expand its mutual tariffs if trading partners retaliate, or if U.S. manufacturing capacity and output deteriorate.

It also said that countries that “non-retrade arrangements and fully aligned with the United States on economic and national security matters” may reduce or limited reciprocal tariffs. ”

But some economists say Canada needs to stand up.

“I still think that when faced with the Zero Sum Force, the pacifist motto is that one has to turn over and resist revenge is wrong,” Derek Holt, vice president of the Nova Scotia Bank and vice president of capital market economy, said in a report Wednesday.

Article content

“The only way to dissuade the U.S. government from such policies and redetermine its own right to self-determination is to work the same way.”

What is the global impact?

Gold often adds to periods of economic uncertainty, soaring to record-breaking prior to Trump’s speech. Futures in the S&P 500, Nasdaq 100 and Dow Jones plunged after the press conference.

Anonymous sources told Bloomberg ahead of the press conference that China has begun suspending registration and approving local companies trying to invest in the U.S., which could be leverage in gaining trade negotiations.

“The question of $64,000 is: How will (these countries) retaliate? If we get into a major tariff war, then we will soon slide into a global recession,” Hampson said. “It’s not just tariffs, but the knock on investment, because no one is going to invest anything in this hostile trade environment.”

Nevertheless, he said he believes other countries will begin trying to negotiate their reciprocal tariffs.

“(Trump administration) will be overwhelmed by a range of countries that want to negotiate exemptions or reduce tariffs, which will overload the circuit.”

slouis@postmedia.com

Article content