Retaliatory tariff turnaround puts Ottawa in better negotiating spot: LeBlanc
Canada-U.S. Trade Minister Dominic LeBlanc said the decision to drop retaliatory tariffs puts Ottawa in a better position to negotiate changes to U.S. President Donald Trump’s devastating duties on key sectors and eases tensions ahead of a review of a critical continental trade agreement.
“Our responsibility as the government is to get the best deal we can for Canadian businesses and Canadian workers,” LeBlanc told The Canadian Press in an interview from Moncton, N.B. “We have to be prepared to sit constructively at a table with the other side of the table and have that conversation.”
Prime Minister Mark Carney announced Friday that Canada will drop some retaliatory tariffs on U.S. products to match American tariff exemptions for goods covered under the Canada-United States-Mexico Agreement on trade, called CUSMA.
Canada’s counter-tariffs on steel, aluminum and automobiles will remain.
The prime minister spoke to Trump by phone on Thursday and Carney said the president assured him the move would help kick-start trade negotiations.
LeBlanc had been cycling through Washington in July looking for a tariff off-ramp before Trump’s Aug. 1 deadline to make trade deals. LeBlanc said Canada’s retaliatory tariffs were a “significant point of contention” for the Trump administration.
A deal never materialized and Trump increased tariffs on Canadian goods to 35 per cent, with the White House pointing to the flow of fentanyl and retaliatory tariffs as the reasoning behind the boosted levies. Those duties are not applied to goods compliant under CUSMA.
Canadian officials have said that key exemption puts Canada in a better position than most countries, including nations that made a deal with the Trump administration. Trump’s separate tariffs on steel, aluminum, automobiles and copper, however, are hammering Canadian industries.
LeBlanc said he had constant communication with U.S. Commerce Secretary Howard Lutnick in the weeks since Trump increased the duties, including a call Thursday night to update his American counterpart. Canadian Ambassador to the U.S. Kirsten Hillman was also talking with United States Trade Representative Jamieson Greer, LeBlanc added.
Ottawa’s counter tariffs remained a sticking point and American officials have repeatedly pointed out that Canada and China were the only countries to implement retaliatory duties in response to Trump’s trade war.
Ottawa imposed 25 per cent tariffs on a long list of American goods in March, including oranges, alcohol, clothing and shoes, motorcycles and cosmetics.
U.S. Ambassador to Canada Pete Hoekstra told Global News last week that Canada was the country jeopardizing the future CUSMA by targeting American goods compliant with the agreement.
The trilateral trade pact was negotiated during the first Trump administration to replace the North American Free Trade Agreement. It is up for review next year and CUSMA negotiations are expected to start this fall.
Observers have said Trump is indicating he still values the trade agreement by including the CUSMA exemption for his economywide tariffs on Canada and Mexico. In an Oval Office meeting with Carney in May, Trump said CUSMA was very effective, but the president also described it as a “transitional deal” and said he didn’t know “if it’s necessary anymore.”
Trump upended global trade with his massive tariff agenda and Carney and LeBlanc have both cautioned that Canada is unlikely to end up in the same place it was before the president returned to the White House in January.
The continental trade pact is crucial for Canada and LeBlanc said “it would be irresponsible to not be clear-eyed about the importance of preserving the position we are in.”
With the CUSMA review looming, LeBlanc said “it was important to align ourselves with that American decision” to exempt products compliant with the trade pact.
Canadians are hoping conversations with the Trump administration can shift to a bilateral agreement that will bring some reprieve to the sectoral tariffs on specific industries like steel, aluminum and autos before the CUSMA talks start, LeBlanc said.
Trump has appeared unwilling to budge on those duties, even with countries that have struck trade deals. LeBlanc said: “therein lies the challenge.”
LeBlanc said he’s talking to Americans about “a package of stuff” that can include investment opportunities in areas like defence and security. The hope is it could amount to a bilateral arrangement “that would take pressure off the strategic sectors of our economy that are the most integrated with the United States,” he said.
“We have a number of arguments that I hope might put us in a position to get that bilateral arrangement,” LeBlanc said.
“But that’s the work we have to do over the next few weeks, next couple of months before we get into the detailed CUSMA review conversations with them and the Mexicans.”
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