Trudeau said on Thursday that Ottawa will remain in a trade war with Washington for “the foreseeable future” even if there are “breaks for certain sectors”.
“Our goal remains to get these tariffs, all tariffs, removed,” Trudeau added.
Global markets tumbled after Trump’s 25% tariffs on US imports from Canada and Mexico took effect on Tuesday and economists say Americans are likely to face broad-based price rises.
The United States’ expanded reprieve for Mexico came a day after the White House also gave carmakers temporary relief from the levies that hit everything from lumber to avocado imports.
Record deficit
Since taking office in January, Trump has made tariff threats on allies and adversaries alike, declaring trade wars will be a key part of his foreign policy.
Trump justified the tariffs on the United States’ two giant neighbours and vital trade partners, with China, as a way to stop illegal immigration and trafficking of the deadly drug fentanyl.
However, Canada contributes less than 1% of fentanyl to the United States’ illicit supply, according to Canadian and US government data. It is also a relatively minor source of illegal immigration, compared to flows across the Mexican border.
China, meanwhile, has pushed back on US allegations of its role in the fentanyl supply chain, calling this a domestic issue that tariffs will not resolve.
Trump has said tariffs should become a major source of US government revenue, while remedying trade imbalances and practices Washington deems unfair.
The US trade deficit surged to a new record in January according to government data Thursday, as imports spiked while tariff worries flared in the month of Trump’s inauguration.
The overall trade gap of the world’s biggest economy ballooned 34% to US$131.4 billion, on the back of a 10% jump in imports for the month, said the Commerce Department.
This was the widest deficit for a month on record, dating back to 1992, and the expansion was more than analysts anticipated.
Tariff jitters
Analysts say the US deficit was likely bolstered by gold imports.
But “stripping out this impact, all other imports rose 5.5%, indicating front-loading of shipments was in full swing”, said Oxford Economics senior economist Matthew Martin.
This refers to a tendency for businesses to try to get ahead of additional costs from potential tariffs, and possible supply chain disruptions.
Economists at Pantheon Macroeconomics said of the surge in gold imports: “Tariff threats are reportedly prompting a mass repatriation of gold holdings to the US from elsewhere, mostly via Switzerland.”
US deficits were a key focus of Trump’s first administration, and at the time he waged a bruising tariffs war with China in particular.
Since returning to office, Trump has launched plans for “reciprocal tariffs” tailored to each US trading partner, to tackle trade practices deemed unfair by Washington.
He has also threatened tariffs on other imports, ranging from semiconductors to autos.
– Agence France-Presse
