The hike in U.S. tariffs to 35% will harm small businesses on both sides of the border and the fentanyl rationale is even more ridiculous than the decision itself, says the Canadian Federation of Independent Business (CFIB).
“While it is good news that most Canadian exports will remain tariff free due to the CUSMA/USMCA exemption, the uncertainty alone will continue to take a toll on Canada’s small businesses,” said Dan Kelly, President of the CFIB.
“CFIB supports the view that no deal is better than a bad deal, but the lack of resolution means small firms will not be able to plan for the future or continue to put off difficult choices. Many businesses have been holding off layoffs or downsizing, hoping for a deal to be reached. Without immediate support, many small businesses will be forced to scale back operations.
“CFIB is calling on government to release the billions that have been collected by Canada’s retaliatory tariffs, as promised by the Prime Minister during the election campaign. We’ve suggested several options to do so, including setting the small business tax rate temporarily at zero or a tariff rebate designed on earlier models.
“The worst outcome for Canada is a bad deal. But the second worst outcome is ongoing uncertainty over Canada-U.S. trade. This is what small business owners now face.”
In a statement released Friday, Canadian Prime Minister Mark Carney said: “President Trump has announced that the United States will increase its tariffs to 35% on those Canadian exports that are not covered under the Canada-United States-Mexico Agreement, or CUSMA. While the Canadian government is disappointed by this action, we remain committed to CUSMA, which is the world’s second-largest free trade agreement by trading volume.
“The U.S. application of CUSMA means that the U.S. average tariff rate on Canadian goods remains one of its lowest for all of its trading partners. Other sectors of our economy – including lumber, steel, aluminum, and automobiles – are, however, heavily impacted by U.S. duties and tariffs. For such sectors, the Canadian government will act to protect Canadian jobs, invest in our industrial competitiveness, buy Canadian, and diversify our export markets.
“The United States has justified its most recent trade action on the basis of the cross-border flow of fentanyl, despite the fact that Canada accounts for only 1% of U.S. fentanyl imports and has been working intensively to further reduce these volumes. Canada’s government is making historic investments in border security to arrest drug traffickers, take down transnational gangs, and end migrant smuggling. These include thousands of new law enforcement and border security officers, aerial surveillance, intelligence and security operations, and the strongest border legislation in our history. We will continue working with the United States to stop the scourge of fentanyl and save lives in both our countries.
“While we will continue to negotiate with the United States on our trading relationship, the Canadian government is laser focused on what we can control: building Canada strong. The federal government, provinces, and territories are working together to cut down trade barriers to build one Canadian economy. We are developing a series of major nation-building projects with provincial, territorial, and Indigenous partners. Together, these initiatives have the potential to catalyse over half a trillion dollars of new investments in Canada.
“Canadians will be our own best customer, creating more well-paying careers at home, as we strengthen and diversify our trading partnerships throughout the world. We can give ourselves more than any foreign government can ever take away by building with Canadian workers and by using Canadian resources to benefit all Canadians.”
Candace Laing, President and CEO, Canadian Chamber of Commerce said: “The White House fact sheet should be called a fact-less sheet when it comes to basing trade decisions about Canada on the fentanyl emergency. More fact-less tariff turbulence does not advance North American economic security. Businesses — in Canada and the U.S. — urgently need certainty.
“The Carney government is right to prioritize a strong, future-focused deal over a rushed one. A little more time now can deliver lasting benefits for an integrated North American economy — and that’s well worth the wait.
“In the meantime, we have CUSMA, which, at present, is still being honoured, leaving much of our cross-border trade tariff-free. However, not all Canadian businesses have this advantage and the jump to 35% tariffs on non-CUSMA compliant products places an additional load on them.”
In a LinkedIn post, Alberta Premier Danielle Smith said: “We are pleased to see that CUSMA compliant goods remain tariff free, including the vast majority of goods Alberta sells to the US such as all oil and gas and agricultural products.
“That said, it’s also disappointing to see tariffs on other Canadian goods increase to 35%. These tariffs hurt both Canadian and American businesses and workers, and they weaken one of the most important trade and security alliances in the world.
“In recent months, I’ve met with dozens of governors, senators, members of Congress, and allies of the current administration. I remain convinced that the path to a positive resolution with our U.S. partners lies in strong, consistent diplomacy and a commitment to working in good faith toward shared priorities.
“One thing is abundantly clear: Canada must become economically stronger. The federal government must immediately repeal the Trudeau-era laws that restrict resource development and are holding our economy back, and diversify and grow our export markets. This new Liberal government has yet to do so, and it is costing Canada tens of millions in lost economic activity every single day.
“I urge the federal government to continue negotiating to resolve these tariff issues and restore a free and fair trade agreement with the United States, while diversifying and strengthening the Canadian economy by unleashing our world class natural resource sector.”
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