Canada Extends Trade Talks and Delay Countertariffs as Trump's Advisor Floats Exemptions from New 35% Tariffs

TMTPOST -- Canada seems gearing up for prolonged trade talks after U.S. President Donald Trump on Thursday issued threat of new tariffs and suggested a new deadline for tariffs.

Credit：Xinhua News Agency

Canada will push back its plans to impose further retaliatory tariffs on U.S. steel and aluminum as Trump’s recent letter dictating higher tariffs extended the deadline for trade negotiations between the two North American neighbors, the Politico reported on Friday.

The Canadian government previously planned to double its countertariffs on U.S. steel and aluminum exports, from 25% to 50%, and now it will not further the retaliation on July 21, the previous deadline for the talks, after Ottawa and Washington agreed to extend the deadline to August 1, the report cited two senior government officials.

August 1 is the effective date of a 35% tariff that Trump in his letter to Canadian Prime Minister Mark Carney announced. It is also the new deadline of trade talks that Carney revealed following the letter.

Starting August 1, the United States will charge Canada a tariff of 35% of all Canadian imports, separating from all sectoral tariffs, according to screenshots of a letter Trump posted on Thursday.

Trump in the letter claimed the new tariffs resulted from Ottawa’s retaliation. “As you will recall, the United States imposed Tariffs on Canada to deal with our Nation’s Fentanyl crisis, which is caused, in part, by Canada’s failure to stop the drugs from pouring our Country. Instead of working with the United States, Canada retaliated with its own tariffs” Trump wrote.

Trump in the letter also described the trade deficit as “a major threat ” to U.S. economy and national security, which was caused by Canada’s tariffs and other trade barriers.

Carney late Thursday said Canada will continue the trade talks with the U.S. towards “the revised deadline of August 1.” Carney said on his social media that throughout the current trade negotiations with the United States, the Canadian government has steadfastly defended the workers and businesses.

Canada has made vital progress to stop the scourge of fentanyl in North America, Carney said, affirming Canada's commitment to continuing to work with the United States to save lives and protect communities in both countries.

Trump on Friday claimed he had shared the proposal with Canadian officials a day before. “They called, I think it was fairly well received, but we have what we need, so, we’ll see what happens,” Trump said while departing the White House en route to flood ravaged Texas, not clarifying whether or which Canadian imports would receive exemptions from the upcoming 35% tariffs.

“We’ve been taken advantage of for many, many years by countries both both friend and foe,” Trump said before boarding Marine One. “And frankly, the friends have been worse than the foes in many cases. So I would say just keep working. It’s all going to work out.”

Trump’s threatened 35% tariffs on Canada would most likely only apply to those traded outside the U.S.-Mexico-Canada Agreement (USMCA), the Globe and Mail cited a U.S. government official later Friday. And the new tariffs are also not expected to cover oil, gas and potash traded outside the USMCA, which now face 10% tariffs, according to the official.

The Politico learned from a White House official that the Trump administration plans to impose the 35% tariffs only on goods that do not comply with the USMCA, though decition of the ultimate details will be up to Trump.

Later Friday, White House trade adviser Peter Navarro also floated certain exemptions for good under the USMCA. Navarro in an interview with Bloomberg said the tariffs did not cover goods imported under the agreement, and the 35% rate would be an increase from the current 25% tariff on imports from Canada.

Navarro encouraged Canada to continue negotiating with the U.S. to lower trade barriers and cast the Northern neighbour as a challenging negotiator. He said "the Canadians were very, very difficult, and they've always been very difficult" in comparison to Mexico, which he described as "pure joy to deal with" during trade talks.

USMCA is a trade agreement that Trump's first administration negotiated to replace the decades-old North American Free Trade Agreement. The United States has put in place a 25% tariff on all goods, and 10% on energy and potash that isn't covered by USMCA. There's another 50% levy on Canadian steel and aluminum, and 25% on automobiles that aren't covered by USMCA.