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| Canada-US trade: How Trudeau might hit back against Trump | Canada-US trade: How Trudeau might hit back against Trump |
| (about 7 hours later) | |
| Prime Minister Justin Trudeau has vowed Canada won't be "pushed around" by the US on trade. But just how much leverage does Canada - with over 70% of its trade heading south of the border - have against the US? | Prime Minister Justin Trudeau has vowed Canada won't be "pushed around" by the US on trade. But just how much leverage does Canada - with over 70% of its trade heading south of the border - have against the US? |
| US President Donald Trump has warned that Mr Trudeau's tougher talk on trade will cost Canada "a lot of money". | US President Donald Trump has warned that Mr Trudeau's tougher talk on trade will cost Canada "a lot of money". |
| It's the latest jab in a multi-day tirade from the American president against Mr Trudeau and the trade relationship between the two nations. | It's the latest jab in a multi-day tirade from the American president against Mr Trudeau and the trade relationship between the two nations. |
| On Tuesday, Canada's Foreign Minister Chrystia Freeland shrugged off the comments, saying the country "expected moments of drama" when it came to matters of trade with the Trump administration. | On Tuesday, Canada's Foreign Minister Chrystia Freeland shrugged off the comments, saying the country "expected moments of drama" when it came to matters of trade with the Trump administration. |
| "Canada is prepared for any eventuality" and are ready with "a plan B, C, D and F and maybe to the end of the alphabet" if relations continue to sour, she said. | "Canada is prepared for any eventuality" and are ready with "a plan B, C, D and F and maybe to the end of the alphabet" if relations continue to sour, she said. |
| What does a trade dispute with the US mean for Canada? | What does a trade dispute with the US mean for Canada? |
| Former Canadian prime minister Pierre Elliott Trudeau famously described the relationship between Canada and the US as that of a mouse to an elephant. | Former Canadian prime minister Pierre Elliott Trudeau famously described the relationship between Canada and the US as that of a mouse to an elephant. |
| Canada will "no matter how friendly and even-tempered the beast, be affected by every twitch and grunt," he said. | Canada will "no matter how friendly and even-tempered the beast, be affected by every twitch and grunt," he said. |
| Simply put, trade with the US matters more to Canada than the other way around. | Simply put, trade with the US matters more to Canada than the other way around. |
| Toronto-based trade lawyer Jesse Goldman says "it's kind of evident that we don't have nearly as much leverage as the Americans do". | Toronto-based trade lawyer Jesse Goldman says "it's kind of evident that we don't have nearly as much leverage as the Americans do". |
| "The proportionate impact of a bilateral trade war between Canada and the US is much greater on Canada than it would be on the US." | "The proportionate impact of a bilateral trade war between Canada and the US is much greater on Canada than it would be on the US." |
| Canadian officials like to point out that Canada is the number one customer for 35 US states, and that no other country buys more US-made goods. | Canadian officials like to point out that Canada is the number one customer for 35 US states, and that no other country buys more US-made goods. |
| But trade consultant Adam Taylor notes that for the vast majority of those states, less than 10% of their economic growth is driven by trade with Canada. | But trade consultant Adam Taylor notes that for the vast majority of those states, less than 10% of their economic growth is driven by trade with Canada. |
| Canadian provinces are overwhelmingly more dependent on their US trading partners. | Canadian provinces are overwhelmingly more dependent on their US trading partners. |
| "When the US tariffs hit us, it's like a huge wave crashing into our shores, verses the little ripple that our tariffs have as an impact on their economy," Mr Taylor says. | "When the US tariffs hit us, it's like a huge wave crashing into our shores, verses the little ripple that our tariffs have as an impact on their economy," Mr Taylor says. |
| How has Canada retaliated so far? | How has Canada retaliated so far? |
| Canada does still have arrows in its quiver. | Canada does still have arrows in its quiver. |
| Following the Trump team's 25% tax on steel and 10% tax on aluminium from the EU, Mexico and Canada, Canada hit back with its own tariffs. | Following the Trump team's 25% tax on steel and 10% tax on aluminium from the EU, Mexico and Canada, Canada hit back with its own tariffs. |
| Canadian officials announced C$16.6bn ($12.7bn; £9.5bn) in retaliatory measures on goods ranging from iron wire to maple syrup and beer kegs. | Canadian officials announced C$16.6bn ($12.7bn; £9.5bn) in retaliatory measures on goods ranging from iron wire to maple syrup and beer kegs. |
| Mr Taylor says: "It's almost like bullets ricocheting off a tank." | Mr Taylor says: "It's almost like bullets ricocheting off a tank." |
| It won't have a huge impact on the US economy, he says, but "you've got to find the ways you can have your shots land". | It won't have a huge impact on the US economy, he says, but "you've got to find the ways you can have your shots land". |
| Specific tariff targets include gherkins from Wisconsin - House Speaker Paul Ryan's state - Kentucky bourbon from US Senate Majority Leader Mitch McConnell's state, and orange juice from Florida, a state that voted for Mr Trump in 2016. | Specific tariff targets include gherkins from Wisconsin - House Speaker Paul Ryan's state - Kentucky bourbon from US Senate Majority Leader Mitch McConnell's state, and orange juice from Florida, a state that voted for Mr Trump in 2016. |
| The hope is that lawmakers from targeted states will in turn pressure the US administration to resolve the issue. | The hope is that lawmakers from targeted states will in turn pressure the US administration to resolve the issue. |
| "The tariffs are partly economic but they're really intended to send a strong political message," says Mr Goldman. | "The tariffs are partly economic but they're really intended to send a strong political message," says Mr Goldman. |
| Canada has also launched complaints at the World Trade Organisation, though the resolution process can drag on for years. | Canada has also launched complaints at the World Trade Organisation, though the resolution process can drag on for years. |
| Long-term, the country has sought to diversify its trade by signing the Comprehensive Economic and Trade Agreement with the EU and joining the the Trans Pacific-Partnership trade deal. | Long-term, the country has sought to diversify its trade by signing the Comprehensive Economic and Trade Agreement with the EU and joining the the Trans Pacific-Partnership trade deal. |
| What are the current trade issues between both countries? | What are the current trade issues between both countries? |
| There are a handful. | There are a handful. |
| Canada, the US and Mexico are in the middle of renegotiating the 1994 North American free Trade Agreement (Nafta). | Canada, the US and Mexico are in the middle of renegotiating the 1994 North American free Trade Agreement (Nafta). |
| Sticking points remain, 10 months into the talks. | Sticking points remain, 10 months into the talks. |
| Dairy is one that raises the ire of the US president, though it accounts for less than 1% of the Canada-US economic relationship. | Dairy is one that raises the ire of the US president, though it accounts for less than 1% of the Canada-US economic relationship. |
| US negotiators have proposed the dismantling of Canada's 50-year-old dairy supply management system entirely over the course of a decade. | US negotiators have proposed the dismantling of Canada's 50-year-old dairy supply management system entirely over the course of a decade. |
| The long-running - and undeniably protectionist - scheme offers Canadian farmers a guaranteed price for their milk, and puts high tariffs on dairy goods from abroad. | The long-running - and undeniably protectionist - scheme offers Canadian farmers a guaranteed price for their milk, and puts high tariffs on dairy goods from abroad. |
| Supply management has the support of all political parties in Canada, where dairy farmers have a powerful voice. | Supply management has the support of all political parties in Canada, where dairy farmers have a powerful voice. |
| On Tuesday, Mr Trudeau met to reassure anxious dairy farmers about threats to the scheme. | On Tuesday, Mr Trudeau met to reassure anxious dairy farmers about threats to the scheme. |
| The US president is also insisting on including a Nafta sunset clause - an expiry date that would force partners to regularly renew the accord at regular intervals - into the new deal. | The US president is also insisting on including a Nafta sunset clause - an expiry date that would force partners to regularly renew the accord at regular intervals - into the new deal. |
| That's a deal breaker for Canada, which says it would create too much uncertainty for business. | That's a deal breaker for Canada, which says it would create too much uncertainty for business. |
| Mr Trump is also keen on striking separate bilateral deals - something Canada has made clear it doesn't want. | Mr Trump is also keen on striking separate bilateral deals - something Canada has made clear it doesn't want. |
| There are also tariffs on Canadian softwood lumber imports - part of a long-running dispute over the commodity between the two nations. | There are also tariffs on Canadian softwood lumber imports - part of a long-running dispute over the commodity between the two nations. |
| And in June, the US slapped the steel and aluminium levies on key allies including Canada. | And in June, the US slapped the steel and aluminium levies on key allies including Canada. |
| So what's next? | So what's next? |
| The issue of possible automobile tariffs is looming on the horizon. | |
| In May, the US commerce department initiated a Section 232 investigation into auto imports, which will determine whether imports of autos and auto parts into the US threaten national security. | In May, the US commerce department initiated a Section 232 investigation into auto imports, which will determine whether imports of autos and auto parts into the US threaten national security. |
| Mr Goldman calls the potential impact of those tariffs "devastating". | Mr Goldman calls the potential impact of those tariffs "devastating". |
| "It will have a profoundly negative effect on the Canadian economy." | "It will have a profoundly negative effect on the Canadian economy." |
| That's where diplomacy comes in. | That's where diplomacy comes in. |
| Canadian officials will be pushing hard for a Canadian exemption on any potential auto and auto parts tariffs. | Canadian officials will be pushing hard for a Canadian exemption on any potential auto and auto parts tariffs. |
| They will also continue to work with allies south of the border who are also worried about a spiralling trade dispute. | They will also continue to work with allies south of the border who are also worried about a spiralling trade dispute. |
| Mr Goldman says industry is well aware a trade dispute will cause economic pain on both sides of the border, though the US economy can withstand shocks for longer than other nations | Mr Goldman says industry is well aware a trade dispute will cause economic pain on both sides of the border, though the US economy can withstand shocks for longer than other nations |
| "Both countries will suffer significantly," he said. | "Both countries will suffer significantly," he said. |
| Industry and business organisations like the US Chamber of Commerce and the Auto Alliance have been vocal about their concerns over Nafta talks and auto tariffs. | Industry and business organisations like the US Chamber of Commerce and the Auto Alliance have been vocal about their concerns over Nafta talks and auto tariffs. |
| Meanwhile, Trudeau government officials and Trump administration officials are still working to try and move Nafta talks forward. | Meanwhile, Trudeau government officials and Trump administration officials are still working to try and move Nafta talks forward. |
| And on 1 July, Canadian retaliatory tariffs against the metals levies kick in. | And on 1 July, Canadian retaliatory tariffs against the metals levies kick in. |