United States President Donald Trump is rapidly escalating the current trade war with Canada which has been in effect since February of this year. This will spike the price of certain Canadian products across the country.
A tariff is a tax that one country charges on goods and services imported from another country. Trump is using them to protect domestic industries and trade imbalances with his America First policies that he has been implementing since his first term in 2016. Trump is also using them to pressure foreign countries on addressing drug trafficking and illegal immigration, key points to his re-election campaign and his second term in office.
Since the start of Trump’s second term last year, he imposed various tariffs, including 25% on auto imports, 10% on timber and lumber, 25% on wooden furniture and others from Canada via executive order.
Canada retaliated against those tariffs by imposing 25% tariffs on U.S. aluminum and steel production and auto parts and with certain provinces completely restricting or banning sales of U.S. alcohol.
In return, the U.S. is banning imports of certain Canadian dairy goods, alcohol and motorbikes,. The two countries have had great ties and have been strong allies for decades; this trade war is creating rips in that partnership.
The Supreme Court in February in Learning Resources, Inc. v. Trump declared that the president does not have the authority to impose broad, open-ended tariffs due to the number of executive orders the president was signing on tariffs. The administration terminated their tariffs that were backed by the International Emergency Economic Powers Act (IEEPA). However, this hasn’t stopped Trump from imposing new tariffs, the administration now relying on other legal pathways to continue the tariffs that aren’t related to the IEEPA.
Taking effect later this month, Trump has signed five proclamations to impose total import bans on certain Canadian products as well as modifying existing 50% tariffs on the country. Trump has also shut Canadian products out of large, long-term government contracts due to the two countries’ trade talks falling apart.
Trump has also lashed out at the country in an interview with commentator Glenn Beck stating, “They [Canada] are one of the worst countries in the world to deal with. They have taken advantage of the United States for many decades, actually.” These claims continue to sour the allied countries, likely for years to come.
With prices already soaring in areas across the country, more tariffs on certain goods aren’t going to help either the American or Canadian consumer. Trump’s war in Iran has also been affecting oil and gas prices globally; more products are going to be more expensive for consumers in the United States and Canada with this trade war.
Small businesses who rely on either country’s imports are going to be hit with higher prices as well, which will lead to further struggles with running a small business. This trade war is more likely to continue to escalate than come to a resolution, leading to rising costs for consumers and small businesses.
