It has become a common chorus when asked about Canadian politicians about retaliation measures or negotiations in the current commercial war: 85 percent of Canada’s trade with the United States is “Free of Rate.”
Prime Minister Mark Carney said the same on Tuesday and again on Friday, when he was pressed to obtain information about his next save in the dispute with the United States after President Donald Trump imposed 35 percent tariffs on Canadian goods that do not comply with the Canadian-Mexico agreement (Cusma).
“We are in a situation at this time when 85 percent of our trade with the United States is free of tariffs,” Carney told journalists at a press conference in Trenton, Ontario, Friday.
But “85 percent” only describes approximately Canada’s exports to the US. Which have the potential to qualify for exemptions under Cusma, not the proportion of exports that are actually saved from Trump’s rates.
Citing that percentage only underestimate the costs faced by Canadian companies as Trump imposes more tariffs, argues Tyler Meredith, founding partner of the Public Affairs firm based on policies Meredith Boessenkool & Phillips.
The data of the United States Census Office show that last year, only about 38 percent From the United States, Canada imports were negotiated under Cusma provisions.
Data on how many Canadian companies meet Cusma are not easily available. An analysis of the effect of tariffs by Yale’s budget laboratory published on Thursday assumed that 50 percent of Canada’s exports to the US are now certified.
Meredith says that requesting exemptions from Cusma can be a discouraging process for small businesses. But he said that he faced higher rates, may be considering assuming certification costs or looking at the markets beyond the United States
“We are one of the most dependent on the United States in any developed country,” said Meredith, former economic advisor of the Trudeau government.
“If the consequence is that trade in general falls, as we are seeing now in the data, that will be a cost that we have disproportionately in relation to other countries.”
Before Trump’s rates, Canadian exporters could trade with the United States underneath Most favored nation (MFN) state. That allowed them to trade with very low tariffs, or none, without registering for a preferential treatment under Cusma.
All members of the World Trade Organization (WTO), such as Canada, have a state of MFN when trade.
How do Canadian goods obtain a preferential treatment?
The products are certified Cusma compatible If they comply with the rules of origin of the agreement. Its eligibility is determined in case by case, since they must meet the specific requirements of the product.
A certain amount of the product in Canada must be made with Canadian inputs to qualify for an exemption.
Steve Mallia, owner of Starfield Optics, a manufacturer of telescopes and accessories based in Toronto, said that registering his small company for Cusma benefits “was not a priority” until Trump began to threaten the sovereignty and economy of Canada in January.
“We saw our orders dry literally during the night, so we knew we had to make a change,” said Mallia, who directs the business with his wife Natalie.
His only other employees are part -time accounting and public accountant, he said.
In the last eight months, Mallia has been investigating the process to claim a preferential treatment under Cusma, without the same legal resources as a large corporation.
Experience has made him feel that “the little one” is being forgotten by the Canadian government during the commercial war, he said.
“This is the part that requires a lot of time and costs money,” Mallia said.
“The last thing I want is to send something and then, you know, customs get in touch with [the product] And they leave, ‘Do you know what? He did not use the correct color ink. ‘”
Since March, more Canadian exporters reported that they would absorb tariff costs or increase prices to request relief through the Canada Remission Program, according to A report published in July by the Canadian Federation of Independent Business (CFIB). In exceptional circumstances, the Federal Program grants relief from tariff payment companies applied to March 4 on US products or issues reimbursements for already paid rates.
The Federation, which advocates the interests of small businesses, surveyed its members about the actions they have taken to mitigate the risks during the commercial war.
Why not shoot again with more counter-tariffs?
He was asked on Tuesday to Carney if he would retaliate against the United States with a new rate, days after not reaching an agreement before the deadline of August 1.
“We have always said that we will apply tariffs where they had the maximum impact on the United States and the minimum impact on Canada,” he said.
Unlike the majority countries Submitted to Trump rates, Canada has a comprehensive commercial agreement with the United States in Cusma.
On Thursday, more than 60 countries were beaten with the last wave of rates of US President Donald Trump. Despite the global reaction and the signatures that his own economy is receiving a blow, Trump continues to promise even more pronounced rates ahead.
The country is also one of the few to have Repliations against the United States In response to Trump’s economic interruption, a step that Canada took before the United States pointed to its entire global trade.
On Wednesday, Trump threatened to hit goods imported from India with a total of 50 percent tariffs, citing the continuous purchases of Russian oil from New Delhi.
And Trump Tariffs imposed on dozen exports from countries last week through an executive order. Tariffs now vary between 10 percent for the United Kingdom and 41 percent in Syria devastated by war. That same order brought the total rate of Brazil, the largest economy in Latin America, to an amazing 50 percent.
Canada remains the The second largest commercial partner of the United States and its main export marketSo Carney must navigate showing strength restricting the access of US consumers to Canadian goods while preserving a relationship with the country.
