U.S. President Donald Trump’s trade czar on Wednesday defended the plan to impose new 50 per cent tariffs on Canada, claiming the goal is to “improve our trading relationship,” with work ongoing to develop “options” on renewing the Canada-U.S. Mexico Agreement on free trade (CUSMA).
Speaking at a U.S. Senate finance committee hearing, U.S. Trade Representative Jamieson Greer said he’s hopeful those options, which he called “interim arrangements” to address outstanding issues with the trade pact, will be presented to the leaders of all three countries before the end of this year.
“I’m hopeful that before the end of the year we can have at least options for President Trump and the leaders of Canada and Mexico to consider potential interim arrangements for things that Canada can do on the one hand and Mexico can do on the other hand to strengthen enforcement, to improve their commitments toward us and to make sure that we’re managing all of the trade issues,” Greer said.
Those issues include labour and environmental enforcement, as well as rules of origin for products like autos produced in North America to prevent other countries from importing components into the continent tariff-free. The Trump administration wants to increase the amount of American-made components necessary for a product to qualify under CUSMA free trade provisions.
“We want to improve our trading relationship with Canada and Mexico,” Greer said.
At the start of July, Greer said the U.S. would not renew CUSMA for another 16-year term despite calls from Canada and Mexico to do so.
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That decision triggered annual rolling reviews that could continue for up to a decade, after which the agreement would expire unless all three countries agree to an extension.
In a statement Tuesday after meeting with the federal advisory committee on Canada-U.S. economic relations, Canada-U.S. Trade Minister Dominic LeBlanc said Canada “has put forward detailed and comprehensive proposals to resolve trade disputes and modernize CUSMA.”
LeBlanc told the panel that talks with the U.S. are expected to “continue and deepen” in the coming weeks.
Uncertainty about the future of the trade agreement has caused anxiety in business communities in all three countries even as negotiations continue.
The talks were further thrown into question Monday, when Trump announced he would impose 50 per cent tariffs on a swath of Canadian goods in one-month’s time.
The move was made in response to retaliatory measures Canada has taken over Trump’s trade war, including reciprocal auto tariffs, provincial and territorial boycotts on U.S. alcohol, and Canada’s supply management system for dairy.
Those tariffs were the focus of several questions from Democratic senators who urged the administration to reconsider, warning of higher prices for American consumers and harm to businesses.
Greer acknowledged under questioning from Sen. Ron Wyden of Oregon that “a small handful” of Canadian products will be tariffed higher than China when the new 50 per cent tariffs come into effect.
Yet he said the move was merely an effort to rebalance trade with Canada and was not intended to cut off access in either direction.
“We’re keeping the market access in Canada and Mexico,” he told the committee.
“We’re trying to balance this relationship, have as much trade, liberal trade in North America as possible while protecting our producers. It’s not going to happen overnight. We didn’t get this problem overnight. It won’t be fixed overnight.”
Prime Minister Mark Carney said Tuesday that Canada was weighing “all options” to respond if the new tariffs go ahead on Aug. 19. Some political leaders like Ontario Premier Doug Ford have called for “dollar for dollar” reciprocal tariffs in retaliation.
Greer, however, said he hasn’t heard of any plans to retaliate.
“I talked with my Canadian counterpart yesterday, they did not say they’re going to retaliate on what they’re doing,” he said.
Republicans on the committee, meanwhile, expressed ongoing anger and confusion with the Canadian boycotts on U.S. alcohol, without mentioning they were done in response to Trump’s initial tariffs on Canada over a declared fentanyl “emergency” last year.
Premiers gathering for a meeting in Charlottetown this week have vowed to maintain the alcohol boycotts despite the new tariff threat.
“We’re so frustrated by the actions the Canadians took to pull U.S. distilled spirits from the shelves,” said Sen. Marsha Blackburn of Tennessee, a major whiskey-producing state.
“How do we get the Canadians to put Jack Daniel’s back on their shelves rather than allowing them to continue talking this thing and not reaching a resolution?”
Other administration officials on Wednesday defended Trump’s tariff threat against Canada.
In an op-ed published in the National Post, White House trade advisor Peter Navarro said the lists of products affected by the proposed tariffs would offset the “burden” and “damage” to American commerce caused by Canada’s retaliatory actions.
“This is reciprocal trade enforcement, not economic aggression,” he wrote.
“Ottawa will argue that these actions retaliated against American tariffs. That misses the law and economics. American Section 232 auto tariffs operate under a national-security framework and credit American content. Canada’s system singles out U.S. commerce while treating competing foreign commerce more favorably.”
Navarro added that Section 338 of the U.S. Trade Act of 1930, the statute Trump is using to impose the new tariffs, “was written for such conduct.”
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