Trump reciprocal tariffs loom for Canada April 2

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The date on April 2 of President Donald Trump to impose reciprocity tariffs on all U.S. trading partners is approaching quickly. But Canada’s expectations for what the president calls “liberation day” are not clear.

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U.S. Treasury Secretary Scott Bessent said last week that the United States will approach a country with a specific number.

“On April 2, every country receives numbers that we think represent their tariffs,” Bessent said in an interview. “For some countries, this may be low, and for some countries, it may be higher.”

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Bessent said the U.S. will also remove areas of its concern with each country, which may include high tariffs and “non-tariff barriers, currency manipulation, unfair funding (and) labor suppression.”

The Wall Street Journal reported on Sunday that individual sector-specific tariffs (for example, 25% tariffs that threaten cars and potential tariffs on wood will be postponed until after April 2.

What are the mutual tariffs on the desktop?

According to the Wall Street Journal, reciprocity tariffs can almost come into effect on April 2.

Joseph Steinberg, associate professor in the Toronto Department of Economics, said that while there is no clear picture of what a reciprocity tariff might be, non-propaganda trade barriers are certainly at work.

“In general, non-advocacy barriers are any economic policies that suppress trade, which are not explicit tariffs,” Steinberg said.

Canada’s Digital Services Tax (DST) may be a fair game, and it was a controversial issue even before the Trump administration occupied this year.

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However, the White House is also considering value-added tax (VAT), including the Canadian Goods and Services Tax (GST). GST is suitable for domestic and foreign goods and is not specific or discriminatory to the United States, but Steinberg said the Trump administration claims it is discriminatory because Canada’s exports to the United States do not have to be paid.

Trump further claimed that Bank of America would not allow business in Canada, which could also justify reciprocal tariffs.

“Bank of America is allowed to operate in Canada,” Steinberg said. “They just chose not to do that because the bank regulations we have are very strict, so it doesn’t seem so profitable for Bank of America to open at least retail.” Canada’s dairy supply management system may also face reciprocity tariffs as Trump announced that Canada charges more than 200% of U.S. dairy products. However, these tariffs only apply to imports that exceed the highest set by the Canadian Country-Mexico Agreement (CUSMA).

For example, under the 2025 Customs Tariff Plan, Canada charges a 7.5% tariff on certain milk and cream products “in the visit commitment”, meaning that these imports are in set quotas. If this quota is exceeded, the tariff will be increased to 241%.

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The bigger point here is that some dairy imports have lower quotas than others, which means tighter restrictions on the U.S. supply at lower tariff levels, Steinberg said.

Higher import quotas are often targeted at “upstream dairy products” that have not been processed, such as native milk. Steinberg believes that American dairy producers hope to gain more market access by increasing their quotas for processed dairy products such as cheese and yogurt.

But Claire Fan, a senior economist at Royal Bank of Canada (RBC), said Canada is currently operating a cow deficit with Southern trading partners.

“Under Kusma’s leadership, that aspect has made concessions,” Van said. “U.S. dairy exports to Canada have grown from C$730 million to about C$1.14 billion.”

Can Canada propose an agreement to avoid reciprocal tariffs?

If Canada and other countries want to curb trade practices that the Trump administration considers “unfair”, Best said reciprocal tariffs will not be reached.

“Entering April 2, some of our worst trading partners have provided President Trump with a big drop in the way they treat us, which is a big drop in the very unfair tariffs,” Bessent said.

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Steinberg said Canada has potential options such as eliminating or reducing DST, which is the most likely situation, or negotiating the price of cork wood. As far as dairy supply management is concerned, Steinberg said Canada could increase its quota for imports or redistribute it to include a wider range of dairy products.

In other cases, it’s not that dry to cut and dry.

“I can’t see how the Canadian government will reduce or eliminate GST because I just can’t see what it will be about to play,” Steinberg said.

How does the United States calculate this number?

The Wall Street Journal reported that the White House had previously considered grouping trading partners into three-tier high, medium and low tariffs, but stayed away from the program and would instead provide each target country with its own custom tariff number.

Steinberg said the U.S. government will conduct a large-scale project to break down how many countries each country owes to determine the weighted average. Mathematics makes mathematics more complicated by adding non-tariff trade barriers to the mix and calculating equivalents like DST or GST.

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Fans predict reciprocity tariffs may be within the low to moderate range in Canada.

Steinberg agreed, noting that Canada should fall into the lower tariff range from a purely economic perspective, but that has become a major target since Trump returned to the White House.

“These reciprocity tariffs could combine cold, hard economics with strategic goals,” Steinberg said. “Canada could be low; it could be moderate. I don’t think Canada is likely to be at the highest (the range of mutual tariffs).”

What are the mutual tariff numbers in Canada?

It is not clear how much tariffs can be reached.

Bloomberg reported on Sunday that other existing tariffs, such as steel, may not be cumulative, which will significantly reduce the impact on these specific sectors. Officials also suggested that blanket tariffs in Canada and Mexico (related to the flow of fentanyl at the border) could be completely cut and replaced by mutual tariffs.

A study by Yale University’s Budget Laboratory shows that Canada could be hit the lightest by reciprocity tariffs compared to other countries, with Canada’s tariff rates estimated to rise by 4.59 percentage points.

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Steinberg had previously told the Financial Post that he could not see the U.S. imposing more than 3% on Canada’s reciprocity tariffs, but now he says that number “can certainly be higher” because it’s clear that the Trump administration is adding non-propaganda trade barriers to the portfolio.

“It’s hard to tell how big the average is (because) at the end of the day, when we retaliate, we tend to retaliate against the dollar,” Fan said. “Essentially, that means you match the overall import and export volume here, not the percentage of itself.”

In this case, Canada is unlikely to face a 200% full tariff, Fan said, as some trade barriers in the United States account for a small part of its overall trade.

Still, Steinberg said that the White House will complete all calculations in time on the April 2 deadline.

He believes that the Trump administration is more likely to provide each country with some preliminary data and start with the collection of mutual tariffs based on each country’s respective taxes. He said that within a month or two, the U.S. could set more tariffs based on other trade barriers.

•Email: slouis@postmedia.com

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