Advertisement

Canada hits back against U.S. with more tariffs: but what are they and how do they work?

Click to play video: 'Why is President Trump instigating a global trade war?' Why is President Trump instigating a global trade war?
WATCH: Why is President Trump instigating a global trade war? – May 31, 2018

On Friday morning, the United States announced massive tariffs on steel and aluminum imports from many of its allies, including Canada.

Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland responded with another $16.6 billion worth of tariffs against U.S. imports.

READ MORE: Canada retaliates against U.S. steel, aluminum tariffs, announces dollar-for-dollar ‘countermeasures’

Story continues below advertisement

“This is the strongest trade action Canada has taken in the post-war era. This is a very strong response, it is a proportionate response, it is perfectly reciprocal. This is a very strong Canadian action in response to a very bad U.S. decision,” Freeland said.

A full list of the products affected can be found on the Department of Finance website. The U.S. tariffs come into effect Friday, and the Canadian tariffs come into effect July 1.

According to the World Trade Organization, countries are allowed to retaliate against tariffs by imposing an equal dollar value tariff. That means even though the U.S. is only taxing steel and aluminum, since the U.S. market is bigger than the Canadian market, Canada is allowed to tax other exports to the U.S. to match.

That means products including sleeping bags, felt-tipped pens, whiskies and a plethora of other items are now subject to a tariff.

READ MORE: ANALYSIS: There’s no clear strategy behind Trump’s tariffs

But experts explain there’s usually a political reason behind it.

“Usually what happens in situations like this is the governments try to identify products that will have a minimal impact here in Canada. So they try to find things that there might be easy alternative sources of supply or there may be things that we can maybe do without,” said Michael Burt, executive director of Industrial Economic Trends at the Conference Board of Canada.

Story continues below advertisement

“Pens… are a good example of something that we may be able to source from another country, or you know ketchup, maybe something we are able to source domestically.”

Matilde Bombardini, associate professor at the Vancouver School of Economics, said that the products chosen are usually done strategically to hit certain areas – for example, areas where Donald Trump’s base supporters live.

“You know people talk about [tariffs on] Bourbon from the south or you know products from the South like agricultural products from key rural areas that are important for Trump-supporting areas,” Bombardini said.

WATCH : Wilbur Ross on steel tariffs: Countries ‘will get over this in due course’

Click to play video: 'Wilbur Ross on steel tariffs: Countries ‘will get over this in due course’' Wilbur Ross on steel tariffs: Countries ‘will get over this in due course’
Wilbur Ross on steel tariffs: Countries ‘will get over this in due course’ – May 31, 2018

The government is asking Canadians for their input on the tariffs – comments made in support for or in concern with any of the items on the list of products being tariffed can be sent to the International Trade Policy Division. More information on how to contact them can be found here.

Story continues below advertisement

How does this affect Canadian consumers?

Essentially, Canadian consumers can expect to pay a little more for products that are imported from the U.S. that are largely made of steel and aluminum.

That could apply to anything from refrigerators to canned drinks.

READ MORE: Steel tariffs: Canada willing to work with U.S. on steel, aluminum dumping, Bains says

Unifor said the tariffs will have a “devastating” effect on jobs across Canada and will also directly impact the cost of items from cars to canned food.

Other countries react

According to the Prime Minister’s Office, Trudeau is in contact with Mexican President Enrique Pena Nieto, who has also imposed tariffs on the U.S. in retaliation. Their tariffs include pork, lamps and various cheeses.

READ MORE: From pork to jeans — countries threaten tariff retaliation for U.S. steel, aluminum duties

“Mexico has repeatedly indicated that this type of measures under the criterion of national security are not adequate or justified,” a release from the government said (Trump’s administration said the practice of steel dumping was a threat to national security).

A statement from the PMO says that Nieto and Trudeau would remain in close contact as the North American Free Trade Agreement was being negotiated.

Story continues below advertisement

The European Union and the United Kingdom have also both condemned the move, and the E.U. is also banned various items like playing cards, motorcycles and orange juice.

*with files from Katie Dangerfield 

Sponsored content