(Central News Agency, Montreal, Comprehensive Foreign News Report on the 22nd) U.S. President Trump began to impose 50% tariffs on some Canadian goods today. Bilateral trade has been hit again. The efforts of the Ottawa authorities to reduce dependence on the southern neighbor the United States have once again become the focus of external attention.
Agence France-Presse reported that Canadian Prime Minister Mark Carney's strategy includes exploring new markets, focusing on domestic trade and launching major projects.
●The markets of the two countries are closely connected
The economies of Canada and the United States are highly interconnected, with up to about 70% of Canada's exports going to the United States. Trump's previous tariffs on automobiles, steel, aluminum and lumber have severely damaged the Canadian economy, resulting in job losses and stunted growth. Canada's economy has shrunk for two consecutive quarters this year, falling into a technical recession.
The latest round of 50% tariffs, which took effect after days of negotiations broke down, affects about $20 billion worth of Canadian goods, accounting for about 5.5% of Canada's total exports to the United States, and covers a variety of products from hockey sticks to cement. Carney said on the 21st that Canada would respond "dollar for dollar" to protect Canadian workers and businesses.
●Breakthrough protective umbrella
Products affected by U.S. tariffs include items originally protected by the North American trade agreement, the United States-Mexico-Canada Agreement (USMCA).
Richard Ouellet, a professor of international economic law at Laval University in Quebec, said that at first glance, it is "pretty scary." "Previously, the US-Mexico-Canada Agreement was like a protective umbrella, and now the United States has opened a gap."
Trump refused to renew the USMCA on July 1, switching the agreement to an annual review system. Trump’s abandonment of USMCA tariff exemptions may indicate that more extreme measures will be used in the future. However, Royal Bank of Canada (RBC), Canada's largest bank, predicts that the first wave of 50% tariffs will not have a significant impact on Canada's overall economic growth.
RBC pointed out last month that although the new tariffs are not small, they will only impact a small part of the overall trade. About 80% of Canadian goods can still enter the United States tariff-free.
●Diversified economic partners
Since taking office in March last year, Carney has actively promoted the diversification of economic partners and reduced dependence on the U.S. market. "Canada has what the world wants. We will not let any country determine our future," he said after the talks collapsed.
Carney has visited China, India and Saudi Arabia, as well as several European cities to seek cooperation agreements to expand Canada's foreign economic relations. He signed a preliminary agreement with China in January to import Chinese electric vehicles. At the same time, Canada’s relationship with Europe has become closer. In July, it was announced that Germany’s ThyssenKrupp Maritime Systems (TKMS) would be selected to build a new generation of submarines.
The Bank of Canada noted last month that the economy "is showing signs of improvement" as some companies actively develop new overseas customers and adjust strategies to cope with U.S. protectionism. The International Trade Minister's report also pointed out that exports to markets outside the United States jumped 11% last year, once reaching 33%, setting a record in more than 40 years.
●Boost domestic demand
Refocusing on domestic trade is another strategy to mitigate the impact of Trump's tariffs. One of Carney's first major policies after taking office was to promote federal legislation to lower interprovincial trade barriers. Although provinces still have reservations about lifting their own restrictions, Wei Lei, a professor of international economic law at Laval University, said that overall, "the Canadian market has regained its vitality and domestic trade has increased."
Carney established the "Major Projects Office" to reduce bureaucratic delays and speed up the approval of specific large-scale infrastructure projects in an attempt to invigorate domestic economic activity. Commitments include expanding the ports of Montreal and Vancouver, building new mines to extract critical minerals and supporting plans to build an oil pipeline from Alberta to the Pacific Ocean.
