Trump tariff ‘time out’ gives businesses breathing room

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United States President Donald Trump promised an “America First” agenda and trade protectionism on his first day in office, but was not expected to impose tariffs on Canada immediately.

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Instead, Trump was reportedly planning to issue a memo directing federal agencies to study “unfair trade practices” committed by Canada, Mexico and China, according to US media.

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The decision represents a departure from Trump’s pledge in November to impose 25 percent tariffs on all Canadian and Mexican goods on Inauguration Day.

Trump initially linked the tariffs to concerns about the border between the United States and Canada, but later blamed the imbalance in trade relations between the United States and Canada. Canada promised a range of countermeasures if Trump carries out his threat.

The memo, among several executive orders Trump plans to sign, reportedly directs federal agencies to review whether Canada and Mexico are adhering to the Canada-United States-Mexico Agreement.

Trump has separately promised to create a Foreign Revenue Service to collect revenue from tariffs.

Despite the apparent pause on tariffs, Trump used his inaugural address to announce his protectionist intentions.

“I will immediately begin reforming our trade system to protect American workers and families,” Trump said. “Instead of imposing taxes on our own citizens to enrich other countries, we will impose tariffs and taxes on foreign countries to enrich our own citizens.”

Canadian business leaders were reluctant to declare victory, as the threat of tariffs remained on the table.

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“Let’s call it what it is, which is a reprieve,” said Goldie Hyder, CEO of the Business Council of Canada. “It’s not the end game and we’ll be back at this in probably six to eight weeks, we don’t know the exact timeline.”

Haider said the decision not to impose tariffs on Monday came until the end of the week, with policymakers around Trump divided over the timing, with the group wanting to see the trade action delayed.

“So we are lucky that this team won today,” Haider said. “We got a little bit of a break.”

Conference Board of Canada Chief Economist Pedro Antunes believes the Trump administration’s 25 per cent tariff threat remains a negotiation tactic, but he still believes the potential threat of tariffs will fuel uncertainty.

“Markets do not really believe these threats, but rather see them as a bargaining chip and a bargaining strategy,” Antonis said. “I think if we see tariffs emerge in the future, it will still be very uncertain because we don’t know how long they will last.”

The trade relationship between Canada and the United States will be worth more than $1 trillion in bilateral trade in 2023, with more than 2.3 million Canadian jobs dependent on Canada’s exports to the United States, and early Canadian Chamber of Commerce estimates show tariffs of that magnitude and the resulting trade. War could result in a -2.6 percent damage to Canada’s GDP and a -1.6 percent damage to the United States’ GDP.

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Catherine Fortin Lefebvre, the chamber’s vice president of strategic policy and global partnerships, says her organization will continue its work and will closely monitor the unveiling of the “America First” trade policy that Trump has made a priority during his presidency. Manage it.

“Today is not over yet, there is always tomorrow,” Fortin Lefebvre said. “We are taking it day by day, we will not be complacent, and we will continue the work we have been doing with the Canadian Chamber team and all of our partners on the ground.”

Randall Bartlett, deputy chief economist at Desjardins Group, said the mere threat of tariffs is enough to discourage companies from investing in Canada.

“You have an uncertain trading system, and Canada is very exposed to trade, especially with the United States, and that creates a disincentive for trade investment when we don’t know what the trading system is going to look like from week to week.” He said.

Bartlett added that the proposed study of Canada’s trade practices would only “put Canada on trial” regarding its trading status.

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Haider said he is already seeing a reallocation of capital from Canada to the United States, which is what Trump intends.

“So we must reciprocate when it comes to Canada’s overall competitiveness, which includes tax policy and regulation, which is, frankly, the biggest issue I hear from my members, is that we are over-regulated,” he said. .

Haider added the need to cancel the proposed emission cap by the federal government and obtain permission for reform to expand major infrastructure projects such as ports, railways and pipelines.

He said: “All of these things are extremely important if we want to compete with the United States, and as I said, I think we owe the president a debt of thanks. He woke us up.”

• Email: jgowling@postmedia.com

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