Trump's latest tariff threat sends trade into fresh state of uncertainty

Michele Cadario, executive vice-president of Rubicon Strategy Inc., says every province has its own trade legislation, and the federal government does not have overall responsibility to oversee their implementation. She tells BC Today guest host Amy Bell that negotiations need to get rid of excess regulation to achieve more unrestricted mobility in trade.

With U.S. trade in such a state, there's been a push to improve internal trade between Canadian provinces.

Carney’s recently elected Liberal government passed a new bill into law as part of its promise to break down the red-tape trade barriers that make it harder to do business within Canada, but experts said that was only the tip of the iceberg.

Bill C-5 is an omnibus bill reducing federal restrictions on interprovincial trade, but it will be hard to figure out exactly how many obstacles are gone. A lot of the details will have to wait until regulations are drafted — a process that will involve consultations with affected industries.

Plus, the bill only affects federal restrictions. Different rules and regulations between provinces can also get in the way of free-flowing Canadian trade, but those are another kettle of fish that the federal government doesn't have jurisdiction to deal with.

During a media availability in Ottawa, Industry Minister Mélanie Joly didn't offer many insights into the state of the trade talks, noting the Canadian stance is to not negotiate in public.

She was asked by a reporter if Canadians were misled on her government's "elbows up" promise.

"I reject that premise," she said. "We're dealing with a very unpredictable U.S. administration."

Flanked by Stéphane Séjourné, a visiting official from the European Commission, Joly stressed Canada is looking to build partnerships with other countries.

"My goal is to create certainty in a world that is very uncertain."

Energy and Natural Resources Minister Tim Hodgson suggested that despite the ups and downs in dealing with Trump, Canada has an edge in the trade negotiations.

“Despite what the president may say, Canada has many important cards in these negotiations,” he told the crowd at the Energy and Mines Ministers' Conference in Charlottetown.

"Many of those cards — the most important ones — are energy and natural resources."

Let’s talk about the elephant (or the dairy cow?) in the room: Supply management.

Trump keeps bringing up Canada’s supply-managed dairy industry, saying that Canada’s tariff rates on U.S. dairy are way too steep. But high tariff rates only apply if exports exceed specific quotas.

He’s putting pressure on Canadian officials to do something about supply management, which the dairy industry argues protects Canadian farmers. Others say it’s an archaic system that stifles competition and raises prices for consumers.

The industry’s main lobby reminded everyone today in a statement that the government has expressed support for supply management in the past.

"The prime minister has restated this commitment repeatedly, and the government reaffirmed its support in the throne speech and with the passage of C-202,” wrote the Dairy Farmers of Canada.

That’s a law that parliament recently passed to take supply management off the trade negotiation table — but not everyone is happy about that. Some are concerned it backs Canada against the wall in trade talks.

Kelly Ann Shaw, a former senior White House trade adviser, said she's not surprised that Trump keeps re-upping supply management as an issue.

She described the Trump administration’s thinking on this: "We're gearing up to renegotiate this deal, so we're identifying things where we don't feel like we're being treated well."

Calling Trump's latest tariff volley "another unjustified attack," Conservative Leader Pierre Poilievre reiterated his party's support for the federal government to ink the "best deal for Canada."

"All Canadians must come together to defend our economy," he wrote on social media on Thursday.

"Our country stands united."

Since the spring election, when Poilievre lost his Ottawa-area seat, he has promised a more conciliatory tone and said his party will support the government if it's for the good of the country.

Alberta Premier Danielle Smith is pushing back hard against the notion of further retaliatory duties, should Canada and the U.S. fail to secure a tariff-free deal by next month.

“Retaliatory tariffs by the federal government to this escalation would constitute a tax on Canadian consumers and businesses and only weaken Canada’s economy further,” she said in a statement Friday.

Smith also called for Carney‘s Liberal government to repeal his predecessor’s “terrible laws” around natural resource development, mainly pipelines.

“The federal government must also immediately drop the Trudeau-era anti-resource development laws holding our economy back and work at all haste to approve multiple pipelines, rail expansions and transmission lines going west, east and north to diversify and grow our export markets around the world,” she wrote.

As Canada tries to sort through the latest tariff pile-on from Trump, the Prime Minister’s Office is adamant negotiations to reach a trade deal are ongoing.

An official told CBC News representatives from the Canadian and U.S. sides met as recently as Thursday afternoon, just hours before Trump posted his letter to Carney about the 35 per cent tariff.

Trump officials told us this morning that the new tariff rate proposed by the U.S. president won’t impact products that comply with the Canada-U.S.-Mexico free trade agreement, known as CUSMA. But how does the CUSMA exception actually work?

For an imported good to qualify for tariff-free treatment under CUSMA, it has to comply with the agreement's "rules of origin" — a set of standards that determine how much of the good should be produced in North America.

Even if the good meets the rules of origin, that doesn't make it automatically exempt from tariffs. The importer still has to produce or obtain a document that certifies the origin of the goods.

There are general rules of origin, and rules of origin that are specific to certain products. Vegetables harvested or minerals mined in Canada are subject to a "wholly obtained" rule of origin.

Others are considered "originating" in North America if they meet product-specific rules.

A finished product might be classified differently under CUSMA than the materials that are used to make the product (for example, a wooden table that is made from oak imported from outside North America).

The Prime Minister’s Office just announced Carney will meet with his cabinet on Tuesday to discuss the ongoing trade negotiations.

He’s also joining the premiers on July 22, his office said, as the premiers (as the Council of the Federation) are already meeting in Huntsville, Ont. for their annual summer gathering.

“Throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended our workers and businesses,” said the PMO statement.

“As the prime minister stated last night, we will continue to do so as we work toward the revised deadline of Aug. 1.”

Saskatchewan Premier Scott Moe called for a measured response.

“Trump is going to continue his tariff threats, as he did again last night,” he wrote Friday morning.

“We need to react but not overreact, keep engaging with US officials and keep expanding our markets to other countries."