U.S. trade actions have raised questions about validity of USMCA, Carney says - The Globe and Mail

Concerns Regarding USMCA

Prime Minister Mark Carney voiced concerns about the USMCA's validity due to the Trump administration's tariffs. He suggested a broader conversation with the U.S. about commercial and security relations.

Trump's Rationale

Carney acknowledged Trump's goals: addressing the fentanyl crisis, creating high-paying American jobs, attracting investments, and reshoring industries. However, he noted that US trade actions have raised concerns about the USMCA's validity.

Tariffs and Retaliation

The article details Trump's tariffs on steel, aluminum, and other imports from Canada and Mexico, and Canada's retaliatory tariffs.

• Trump imposed a 25% tariff on steel and aluminum imports.
• A 25% tariff (with lower rates for energy, etc.) on imports from Canada and Mexico, partly lifted later.
• Canada retaliated with its own 25% tariffs on approximately $60 billion worth of U.S. goods.

International Trade Lawyer's Perspective

International trade lawyer Lawrence Herman agreed, stating that Trump's unilateral tariffs violated the USMCA's principles and damaged the trade and security relationship between the countries.

Future Trade Relations

The USMCA is up for renewal in 2026, but negotiations may start sooner. The U.S. has grievances about Canada's dairy sector, digital services tax, and auto production content rules. The article discusses the uncertainty surrounding upcoming reciprocal tariffs.

• The U.S. plans to impose reciprocal tariffs on April 2.
• Treasury Secretary Scott Bessent hinted at a country-specific tariff rate based on various factors.
• The method for calculating and applying these tariffs is uncertain.

Economic Impact

The article presents data on effective tariffs and customs duties, demonstrating relatively low average tariffs from both sides. However, the U.S. might consider non-tariff barriers, like Canada's supply-managed dairy sector and value-added taxes (GST), in addition to tariffs. This is particularly highlighted as a point of possible contention and misunderstanding.