It doesn’t look like the Canada-U.S. trade war will be wrapping up any time soon.
What happened: In the wake of collapsed trade talks and upcoming retaliatory tariffs from Canada, President Donald Trump said he would raise tariffs on Canadian shipments of “all cars, trucks, both large and small, automotive parts, and steel” to 50% starting in January.
Trump has previously used the threat of auto tariffs as a trade cudgel, though implementation would be highly complicated given the interconnectedness of U.S. and Canadian auto manufacturing.
Confusingly, steel already faces a 50% import charge. But would it really be a Trump Truth Social post without a half-baked proclamation?
Why it matters: Obviously, these levies would further brutalize the Canadian economy if enacted. Beyond that, the longer implementation timeline here signals that the White House is ready and willing to drag the trade war into the new year with the same tactics and talking points.
Indeed, the Canadian government reportedly sees a very slim chance of talks restarting before November’s midterm elections (which tariff drama should influence).
Zoom out: More details have emerged about why the trade talks failed, with a source telling the Globe and Mail that a major factor in talks falling apart was a last-minute demand to axe rules requiring U.S. streamers like Netflix to promote Canadian content on their platforms.
These include requirements to promote French-language content. Canadian and Quebec French-language laws have frequently been cited as a U.S. trade irritant.
What’s next: The feds are expected to detail tariff relief plans later this week that will likely tap the Business Development Bank of Canada for funding. Desjardins’ deputy chief economist estimated that upwards of $1 billion could be set aside for the programs.—QH
