The government of Canada announced late Thursday that it will impose more than C$16bn in tariffs on a variety of US-made goods in retaliation against newly implemented US tariffs on steel and aluminium that come into effect today.
The new Canadian countermeasures, scheduled to take effect on July 1, will assess a 10% import duty on a variety of US-made goods including inflatable boats, powerboats and sailboats.
The action comes in response to the Trump administration’s decision Thursday morning to proceed with tariffs of 10% and 25% respectively on aluminium and steel imported from Canada, Mexico and the European Union.
Said to represent the strongest trade action Canada has taken since the Second World War, the retaliatory countermeasures were described by foreign affairs minister Chrystia Freeland as “a very strong Canadian action in response to a very bad US decision."
Inflatable boats, sailboats, and both outboard-powered and inboard-powered motorboats are specifically included in the Canadian government’s extensive list of US-made goods which will be subject to the new tariffs.
The relationship between Canada and the US has been strained since US President Donald Trump first announced the new steel and aluminium duties in March. At that time, the National Marine Manufacturers Association (NMMA) issued a statement in which president Thom Dammrich heavily criticised the president’s direction.
“Today’s decision by the administration to implement new tariffs severely harms the $37bn US recreational boating industry and the 650,000 American workers it supports,” said Dammrich. “The implementation of these aluminium tariffs, in combination with the additional, even larger tariffs on aluminium sheet proposed by the Department of Commerce, will drive up the costs of the aluminium used to manufacture more than 111,000 aluminium boats, such as pontoons and fishing boats, which make up 43% of new powerboat sales each year.”
Canadian Prime Minister Justin Trudeau dismissed President Trump’s justification for aluminium and steel tariffs as representing a national security interest. “We will continue to make arguments based on logic and common sense, and hope that eventually they will prevail against an administration that doesn't always align itself around those principles,” he said.
Mexico has also responded with an extensive list of its own new countermeasure tariffs. As Canada and Mexico plan to implement their own tit-for-tat duties, negotiations with the US on renewing the North American Free Trade Agreement (NAFTA) continue, with many seeing the latest trade moves as little more than posturing for stronger negotiating positions. While the economic integration of the three North American economies is significant, the new Canadian and US tariffs combine to squeeze US boatbuilders on both their supply chain and distribution channels.
Meanwhile, the EU announced it would trigger a dispute settlement case at the WTO and has already hinted at products that would attract retaliatory tariffs. A similar scenario unfolded in 2002, when then US President George W Bush imposed a 30% tariff on imported steel, prompting a swift response from the EU threatening tariffs on multiple US imports, including boats.
Clearly trade will be at the top of the agenda next week when Trudeau, Trump and other G7 leaders meet in La Malbaie, Quebec, for the 44th G7 summit.