It is widely expected that U.S. tariffs against Canada could come into effect in the coming two weeks. Although the President gave a series of seemingly contradictory answers on Wednesday, February 26th about his tariff plans, the President on Friday clarified via a Truth Social post that the proposed tariffs against Canada and Mexico will take effect on March 4 as planned.
At this moment, it remains unclear whether a negotiated settlement will be reached that forestalls the March 4 tariffs. As it now appears likely that there will be U.S. tariffs placed against Canada soon, businesses should take the necessary steps to prepare for potentially disruptive U.S. trade measures as well as retaliatory measures by Canada.
To support your preparations for these coming measures, please see below updates on:
- Key upcoming U.S. tariffs measures
- The Canadian federal government’s plans for retaliation
- The province of Nova Scotia’s initiatives to date
1) U.S. tariff updates
- Across-the-board tariffs (25%) & energy tariff (10%) – likely taking effect on March 4. It was widely reported on Monday that the President was here referring to the 25% tariffs on Canadian goods & 10% tariffs on Canadian energy, which were delayed until March 4 pending a “final economic deal” after Canada agreed to introduce new security measures related to the border.
However, the White House has clarified that the President was referring to the reciprocal tariffs, which are separate. Whether the 25% tariffs on Canadian goods & 10% tariffs on Canadian energy will take effect on March 4 is reportedly “pending negotiations” according to the White House, although the President has indicated via Truth Social on February 27 that they will be coming into effect as scheduled.
- For additional information and background see the Canadian Chamber’s Business Data Lab’s analysis of the economic implications of a 25% across-the-board import tariff from November 28th 2024: What the Return of the “Tariff Man” Means for the Canadian and U.S. Economies – Business Data Lab
- Steel and aluminum tariffs (25%) – taking effect on March 12. On February 10, President Trump “restored” Section 232 tariffs on steel and aluminum that the U.S. had imposed in 2018, raising the aluminum tariff rate to 25% to match the steel tariff rate. According to the President, the tariffs will go into effect on March 12.
The U.S. Federal register notices for tariffs on steel and aluminum have now also been published. These include extended lists of targeted derivative products. Notably, the scope of products covered is substantially larger than the scope of products covered in the steel and aluminum tariffs from 2018. Even if your exports were not impacted by U.S. tariffs in 2018, it is important to verify whether your businesses might be impacted by the latest tariffs by checking the tariff codes in the federal register notices. Many downstream products likely will be impacted (e.g. auto parts, furniture, gym equipment, etc.)
- Reciprocal tariffs – taking effect after April 1. On February 13, the President issued a Presidential memo calling for reciprocal tariffs on all U.S. trading partners. The stated objective of this policy is to counter “non-reciprocal trading arrangements” that the U.S. views as unfair to its commercial interests. Unfair trading arrangements are here defined very broadly, and the accompanying White House fact sheet specifically identifies Canada’s digital services tax (DST), and value added taxes (VATs) as issues warranting action. The memo does not set out a specific time frame for new tariffs, only that there should be investigations into non-reciprocal arrangements starting as early as April 1.
Finance Canada is looking into sharing similar guidance regarding the U.S. reciprocal tariff policy.
- Potential tariffs on autos, pharmaceuticals, and semiconductors (around 25%): On February 18, President Trump said at a press conference that he intends to impose auto tariffs “in the neighborhood of 25%” and similar duties on semiconductors and pharmaceutical imports. According to the President, the tariffs on autos could take effect as early as April 2, whereas he did not provide dates for other tariffs.
2) Canada’s retaliatory measures & tariff remissions
On February 1, in response to the initial U.S. tariffs targeting Canada, the Canadian Federal government announced its plans to implement a multi-phase retaliatory tariff plan. This plan was paused on February 3 following the U.S. tariffs being delayed until March 4. It will be important to become familiar with the Canadian government’s February 1 retaliatory tariff plan as these measures very likely will be applicable in the event of U.S. tariffs coming into effect next week. The government has also indicated that it may adopt additional non-tariff retaliatory measures, including measures affecting critical minerals, energy, procurement and “other partnerships.”
- Retaliatory tariff plan. The first phase of the tariff response plan announced on February 1 included tariffs on $30 billion in goods imported from the U.S. This list can be viewed here, and includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. The second phase of the plan includes tariffs on an additional list of imported U.S. goods worth $125 billion. A full list of these goods will be made available for a 21-day public comment period prior to implementation and will include products such as passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.
- For more details regarding the mechanism for the implementation of retaliatory tariffs, please review the Customs Notice regarding Canada’s initial set of retaliatory tariffs issued on February 1.
- Tariff remission. Finance Canada outlined a discretionary remission process for Canadian importers that might have been impacted by Canada’s retaliatory tariffs. The webpage for the remissions process has since been taken down but likely will be re-established soon. The remission process applies to the first round of Canada’s retaliatory tariffs and any subsequent rounds.
The Canadian government is considering requests for remission in these two instances:
- Situations where goods used as inputs cannot be sourced domestically, either on a national or regional basis, or reasonably from non-U.S. sources
- To address, on a case-by-case basis, other exceptional circumstances that could have severe adverse impacts on the Canadian economy. In granting a remission order, the Government of Canada will weigh public policy reasons in the factual circumstances against the policy rationale of the retaliatory tariffs.
Questions regarding remission requests can be shared directly with Finance Canada at fin.remissions-remises.fin@canada.ca.
3) Nova Scotia Response to tariffs
- The province of Nova Scotia announced a tariff Hotline on February 6th. There is also a tariff information line at: 1-800-670-4357. If a businessperson calls and needs follow up, a business navigator will contact them. Other Nova Scotians with questions that require follow up should leave their name, email address and phone number. That line is available Monday to Friday, 8:30am to 4:30pm.
- The province is providing a survey for businesses who may be impacted by tariffs. A survey is at https://novascotia.ca/tariffs. Business owners and employees who fill out the online survey will be able to share information about barriers to expanding into interprovincial or international markets. The province will take that information into account as it moves forward with its tariff response.
- The province is also encouraging the purchase of local products through Nova Scotia Loyal. Nova Scotia Loyal is a way for we as Nova Scotians to recognize Nova Scotia products and choose to purchase them. There are now 250 producers, manufacturers or retailers who are participating in this program. Nova Scotia Loyal is seeking new participants and you can learn more or sign up here.
What we need from you:
Share your thoughts with us by sending to tariffs@halifaxchamber.com:
- Will tariffs impact your business?
- How is your business preparing to mitigate these impacts?
I would also encourage you to look at Halifax Chamber members to shop locally and Taste of Nova Scotia members for other great local ideas.
Please reach out if you have any questions or comments, we are here to support you during these uncertain times. The Halifax business community is stronger when we stick together, and we will be communicating with the provincial and federal government often to provide information to our members as it becomes available.
Thank you all.
Sincerely,
Patrick Sullivan