In dramatic fashion, the US announced tariffs of 25 percent on Canada (10 percent on energy resources) on February 1st , 2025 to come in force February 4th; by late evening of February 1st Canada announced that it was preparing to retaliate against the US with 25 percent tariffs on an initial list of products on February 4th, with a longer list to come later in the month.
Calls between President Trump and Mexican President Sheinbaum, and later between President Trump and Prime Minister Trudeau on February 3rd , have generated a reprieve of 30 days for both countries as the US considers progress on issues triggering the tariff threat- border security and fentanyl. But what is the value of this reprieve? Is it only to forestall the implementation of the US tariffs that are inevitable? Will the threat of tariffs on Canada be credibly removed, if Canada has satisfied the US concerns?
What other possibilities exist for Canada-US trade relations in 30 days’ time? This advisory note considers what could occur following the month’s reprieve, and how the Canadian agri-food sector could use this time. What are the US Objectives? Without a clear understanding of US objectives relative to tariffs with Canada, the thirty-day reprieve really just places Canada in limbo. The rationale for the reprieve is to examine compliance with, or satisfaction of, US concerns with its northern border.
It is possible that, provided that Canada has demonstrated adequate response and adjustment to US requests, the tariffs could be taken off the table, and removed from further discussion. Or the tariff possibility could remain, pending periodic or ongoing performance monitoring of the border measures.
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