Whiskey, ketchup, toilet paper: Canada hits US with tariffs

OTTAWA • Canada has hit back at the United States with retaliatory tariffs on American summertime essentials including Florida orange juice, ketchup and Kentucky bourbon in its opening salvo in a trade war with President Donald Trump.

The measures targeting C$16.6 billion (S$17 billion) in US steel, aluminium and consumer goods will take effect today, when Canadians celebrate a national holiday and just days before Americans celebrate Independence Day.

The penalties will add 25 per cent to the cost of US steel, and 10 per cent to aluminium and consumer goods.

The duties are a response to the punishing US steel and aluminium tariffs imposed at the start of last month. Ottawa also unveiled C$2 billion in aid for the two sectors and their 33,500 workers.

Ottawa "had no choice but to announce reciprocal countermeasures to the steel and aluminium tariffs that the United States imposed on June 1, 2018", Canadian Prime Minister Justin Trudeau told Mr Trump in a call on Friday, according to a statement from his office.

"The two leaders agreed to stay in close touch on a way forward," the statement added.

The penalties will add 25 per cent to the cost of US steel, and 10 per cent to aluminium and consumer goods. The duties are a response to the punishing US steel and aluminium tariffs imposed at the start of last month. Ottawa also unveiled C$2 billion in aid for the two sectors and their 33,500 workers.

Canadian Foreign Minister Chrystia Freeland announced the tariffs at a steel facility in Hamilton, Ontario, where she was flanked by workers.

"We will not escalate and we will not back down," she said, noting that this trade action was the strongest Ottawa has taken since World War II.

The list of more than 250 US goods subject to Canadian duties - including Wisconsin toilet paper and North Carolina gherkins, which are labour intensive to produce - is aimed at pressuring Trump supporters in key states in November's US mid-term elections.

Canada and Mexico were initially exempted from the US metal tariffs - as was the European Union - but Mr Trump allowed the duties to take effect on June 1 after talks stalled to revamp the 1994 trilateral North American Free Trade Agreement.

On Friday, steel pipe maker Tenaris SA said it would temporarily lay off 40 workers at its Tenaris Algoma Tubes facility in Sault Ste. Marie, Ontario.

Canada and the US are among the world's two largest trading partners. An estimated US$673.9 billion (S$920 billion) worth of goods and services were exchanged between them last year, with the US scoring a small surplus of US$8.4 billion.

After the EU unveiled similar retaliatory tariffs, US Trade Representative Robert Lighthizer earlier last week lashed out, calling them groundless and illegal.

"These retaliatory tariffs underscore the complete hypocrisy that governs so much of the global trading system," he said in a statement.

Business executives warned lawmakers last week that escalation into an all-out trade war would be devastating to the Canadian economy, which sends about 75 per cent of its exports to the US.

If Mr Trump imposes a 25 per cent tariff on automobiles as threatened, it would lead to "carmageddon", Mr Flavio Volpe of the Automotive Parts Manufacturers Association, told a Commons committee hearing last week.

Canadians, however, are overwhelmingly in favour of retaliation, with hashtags such as #BoycottUSA, and #VacationCanada, urging people not to buy American goods and tour packages.

In Ottawa, officials and others have declined an invitation to the US ambassador's annual Fourth of July bash.

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Sunday Times on July 01, 2018, with the headline 'Whiskey, ketchup, toilet paper: Canada hits US with tariffs'. Print Edition | Subscribe