US President Donald Trump has threatened to impose a punitive 25% tariff on everything imported into the US from Canada. In return, the Canadian government announced it would impose its own retaliatory tariffs on U.S. goods imported into Canada.
“It’s our job to make sure we’re prepared for all scenarios,” Finance Minister Dominic LeBlanc told CBC News on Monday, when Canada appears to be exempt from tariffs in the short term.
President Trump said Monday night that these tariffs could go into effect on February 1st. Here’s what will happen if Canada takes a retaliatory course.
How does Canada impose tariffs?
Canada has a complex customs system that essentially taxes imports from all over the world. There are so many different tariffs for different products in different countries. manual This document, used by the Canada Border Services Agency (CBSA) for customs duty calculations, is over 1,400 pages long.
Under Article 53: Customs Tariff Law; The Cabinet has the power to pass orders in Parliament to impose tariffs or change tariff rates. Changes are usually proposed by the Minister of Finance and the Minister of Foreign Affairs and require approval by the Treasury Cabinet Committee. The law means Congress does not have to approve each new tariff.
The changes will then be published in the Canada Register.
Do I need consultation?
Legally, no. Actually it is.
The government has reportedly identified potential counter-tariffs on $37 billion worth of goods, which could be imposed quickly and is considering a consultation period of 15 to 30 days.
The government is reportedly considering additional retaliatory tariffs on goods worth $110 billion.
When the government imposes a 100% additional tax on Electric and hybrid cars in China Last year, month-long talks were held on a possible response to China’s unfair trade practices in July 2024. We received 232 applications from industry and labor organizations, businesses, provinces, non-governmental organizations, and individual Canadians.
The U.S. Department of Commerce has proposed banning key Chinese-made software and hardware from connected cars on U.S. roads due to national security concerns. This would effectively keep Chinese-made cars and trucks out of the U.S. market, and would require major U.S. and other automakers to remove key Chinese software and hardware from U.S. vehicles in the coming years. It will force you to delete it.
Ian Lee, a business professor at Carleton University, said changes such as taxes and tariffs could have a big impact on Canadian businesses. That’s why it has long been standard practice for the Treasury Department to consult with Canadians and business organizations when considering tax changes, Lee said.
“That’s to ensure that we don’t create any kind of failures or fraud or problems that would require more effort to fix or fix,” he said.
How long will it take?
If the government decides to impose tariffs, they could come into effect immediately. For example, the federal government adopted an order in parliament on September 20th to impose a surtax on electric and hybrid vehicles produced in China, which was scheduled to come into force on October 1st. effect has been waived.
The CBSA has not yet responded to questions about how long it will take for the government to start imposing tariffs once they are introduced. Companies that import goods will also have to change their systems.
How will they be enforced?
Whether goods arrive in Canada by air, truck, ship, or train, it is the CBSA’s responsibility to calculate how much customs duty will be incurred.
If there is a change in tariff rates, the CBSA customs notification To advise importers.
Importers fill out a form listing the goods they are bringing into Canada, and CBSA officials evaluate the form to determine the amount they must pay.
How will this affect Canadians?
The impact of tariffs can vary widely depending on the product and market within Canada.
Lee said some Canadian companies hit by tariffs on U.S. imports at the border may decide to absorb the cost of the tariffs, at least for a while. Other companies may decide to pass on the cost of tariffs to buyers or end consumers.
Some may decide to source goods from other countries where Canadian tariffs don’t apply, he added.
“There’s no one-size-fits-all approach,” Lee said.
At the end of the day, Lee says, it’s Canadian consumers, not Americans, who are at risk of paying higher prices for U.S. imports hit by Canadian tariffs.
“When all the Canadians were cheering, it was like, ‘Yes, let’s put socks on Americans. Yes, we’re not putting socks on Americans, we’re putting socks on Canadians. .”
