Since the president of the United States, Donald Trump, threatened to place massive tariffs on Canadian goods, the country was involved in a whirlwind from one side to another with his largest commercial partner.
In this context, China has slapped New rates In certain Canadian products, and at least another long -standing commercial dispute has been pushed back into the attention center.
Here is a quick look at how tariffs are established in normal circumstances, why some of them (under certain conditions) can shoot and why New Zealand is unhappy.
How do Canada’s rates work?
Tariffs are governed by the Customs Rate Law, which establishes a 35 percent general rate for goods that enter Canada. This may seem high, but this reference rate is almost never used.
This is because Canada, along with more than 160 countries, is part of the World Trade Organization (WTO), and all WTO members have the “most favored nation” state (MFN) when they are traded with each other.
All Canada’s key commercial partners are WTO members and pay lower MFN rates, which varies from one product to another. The rate can be even lower if the two countries have their own commercial agreement.
“Whether multilateral or bilateral with other WTO members, it is allowed to reduce that MFN rate to something lower, whether it is a lower service rate or a tariff without service,” said Martha Harrison, an international trade lawyer.
For example, the MFN rate for certain railways is 9.5 percent, but Australia and New Zealand pay only two percent, due to separate agreements.
According to the United States-Mexico (Cusma) Mexico agreement, 98 percent of the goods that enter Canada from the US. UU. They have no tariffs, or at least they did not do it before the commercial war.
Many goods can enter Canada without rates under the state of MFN, but Canada imposes rates of greater breach in some products. Our MFN rate for clothing products averages around 18 percent, which is partly to help national producers compete fairly, but also hoping to reduce the amount of products manufactured in deficient working conditions that enter Canadian markets, says Harrison.
But when it comes to the dairy industry, tariffs become a little more complicated.
What about dairy products?
Canada uses “supply management” policies for certain agricultural products to control prices, maintain food safety standards and protect dairy industries, eggs and poultry from foreign competition, policies that have long irritated commercial partners such as the United States and New Zealand, another great dairy producer.
The policies aim to limit how much of each product (butter, cheese, ice cream, eggs, etc.) can be imported. Importers request a percentage of the quota and can bring that amount without tariffs.
Donald Trump is not a fan of the Canada dairy supplies management system, repeatedly attacking him in his first mandate and chasing him again while preparing to return to the White House. Ellen Mauro de CBC meets with Canadian dairy farmers and explains why the system has the elected president of the United States so irritated.
Trump has affirmed that Canada is “tearing [the U.S.] Out “by putting rates of more than 200 percent in dairy products.
But these tariffs are only activated after the United States exceeds the amount that is allowed to sell in Canada without rates, a number negotiated by the Trump administration in 2018 as part of Cusma.
“Unless or until it meets that threshold, it does not pay,” said Harrison, and said that the United States has never reached the quota, that the United States dairy industry recognized earlier this month.
During the negotiation of Cusma, Canada agreed to increase the share of American products that can enter the free market rate.
New Zealand formally challenged this system in 2022, saying that Canada was not maintaining its commitments under the comprehensive and progressive agreement for the transpacific association (CPTPP). The dispute is ongoing.
Why is China annoying?
In October, Canada placed 25 percent on the surface of China’s steel and aluminum products, and 100 percent in Chinese -manufacturing electric vehicles (EV), claiming unfair competition. Tariffs are often collected in the form of a surface, which are additional taxes in addition to existing rates.
China responded with retaliation rates on Canadian agricultural and food products, including canola oil and peas.
At the beginning of that year, USA
“It is not uncommon for Canada to follow the steps of our key business partner related to commercial policy,” said Harrison. “It makes sense from a perspective of the US economy.”
The destabilization of this historical relationship, enshrined in Cusma, is “especially worrying,” he added.
“Our most important commercial partner seems to be less aligned with Canada’s approach in international trade and with Canada’s position within the Cusma agreement.”
