Mark Carney and the Premiers respond to Trump's tariffs as Liberals lead by 6 points in new CBC poll

Yiannis Damellos

After much anticipation about the implications of Trump's "Liberation Day" for Canada, it appears that little has changed. This lack of change has not brought relief to Canada, as much of the American tariff scheme on the country remains intact, including a blanket 25% tariff on most goods, except those covered under the North American Free Trade Agreement. Energy and potash face a lower 10% tariff, while a 25% levy on Canadian steel and aluminum remains in place. Prime Minister Mark Carney is expected to deliver his response to the duties after meeting virtually with provincial and territorial leaders. A new CBC poll shows that the Liberals are leading the Conservatives by roughly six points nationwide and would be heavily favored to win a majority government if an election were held today. 

OTTAWA —  Prime Minister Mark Carney is meeting with Canada’s premiers today to discuss U.S. President Donald Trump’s latest tariffs. Carney is expected to announce his response to the duties after a virtual meeting with provincial and territorial leaders. Trump revealed a 10 percent baseline tariff on imports from most countries and a detailed list of tariff levels that many will encounter.

A White House fact sheet said goods imported under the Canada-U.S.-Mexico Agreement on trade, known as CUSMA, still do not face tariffs, though imports that fall outside the continental trade pact will be hit with 25 per cent levies.

Trump also says he is going ahead with previously announced 25 per cent tariffs on automobile imports starting today, which will add to existing 25 per cent tariffs on all steel and aluminum imports into the U.S., including from Canada.

Both Canada and Mexico remain under threat of economywide duties the president has linked to the flow of fentanyl across the borders.

In early March, Trump imposed — and then partially paused — 25 per cent across-the-board tariffs on Canada and Mexico, with a lower 10 per cent levy on energy and potash.

Carney says U.S. President Donald Trump’s tariff regime will “fundamentally change the global trading system” and that Canada will fight American tariffs with countermeasures.

New CBC poll

The Liberals are leading the Conservatives by roughly six points nationwide and would be heavily favored to win a majority government if an election were held today. The New Democrats and Bloc Québécois, struggling to make headway in the polls, are on track to suffer significant seat losses.

Mark Carney - Liberal 43.4% –0.1

Pierre Poilievre - Conservative 37.6% +0.2

Jagmeet Singh - New Democrat 8.4%

Yves-François Blanchet - Bloc Québécois 5.5%

Jonathan Pedneault - Green 2.4% –0.1

Maxime Bernier - People's Party 2.0%

Other 0.8%

https://newsinteractives.cbc.ca/elections/poll-tracker/canada/

Carney's response to the tariffs has been seen as a political win for him and his Liberal party, currently leading in national polls. The Conservative Party, led by Pierre Poilievre, trails slightly behind.

As the incumbent, Carney has the advantage of acting as the prime minister while also campaigning for the role. National polls indicate that Canadians trust him more in handling Trump and the Canada-US relationship.

A minor fallback

U.S. President Donald Trump’s sweeping reciprocal tariff plan comes with a “fallback” for free trade partners Canada and Mexico if a national emergency declaration on border controls and fentanyl used in February to justify 25 percent tariffs on them doesn’t hold up. 

While no new tariffs were imposed on Canada and Mexico, the order signed by Trump on Wednesday considered the possibility of the justification being terminated or suspended, resulting in a new 12 percent levy.

"This is the fallback," said William Pellerin, a partner in the international trade practice at law firm McMillan LLP and former deputy director at Global Affairs Canada speaking to Financial News. "If, for any reason, the original 25 percent tariffs based on fentanyl trade are dropped — including due to successful challenges from Canada or other parties — then a new battle would ensue to contest these additional reciprocal tariffs that would take their place."

According to the executive order, the reduced "ad valorem" duty rates would not be applicable to energy, potash, or any article eligible for duty-free treatment under the CUSMA trade agreement that is part of or substantially finished in the United States.

Fen Osler Hampson, co-chair of the expert group on Canada-U.S. relations at Carleton University, stated that the Canadian stance might have been influenced by increasing opposition in the United States, including Virginia Democratic Senator Tim Kaine's challenge to the tariffs on Canada, which has garnered support from Republicans.

"I think they are obviously concerned," Hampson said. "The fact that several Republicans are questioning them indicates that the message is clear that we are not the issue."

The U.S. administration might also choose to lower tariffs on Canada to the 12 percent level. According to economists at Toronto-Dominion Bank, officials would just need to determine that progress has been made on fentanyl/illegal immigration.

Hampson noted that the rhetoric towards Canada seemed diminished on Thursday, despite Trump's direct criticism of the country's protected dairy sector. He mentioned that the U.S. administration seems to be recognizing the interconnectedness of the economies and the potential harm that disrupting it could cause.

"There is acknowledgment that there are intricate connections in this relationship, and any drastic action could lead to negative consequences," he said. "While this message seems to have been received, it does not mean that we won't face challenges."

The Canada-United States-Mexico Agreement also seems to provide some protection against the significant and punitive shift in U.S. trade policy. Trump had previously criticized Canada over its treatment of U.S. imports like lumber and dairy, threatening retaliatory tariffs. However, some of this rhetoric has been toned down as products covered under the three-way North American trade pact, adopted in 2020, were exempted.

Clifford Sosnow, a partner in the international trade and investment group at Fasken Martineau DuMoulin LLP, mentioned that Trump's latest order aims to "safeguard" the CUSMA trade agreement and provide it special treatment under certain circumstances, excluding steel and aluminum.

TD's note indicated that approximately 40 per cent of the value of goods crossing the border are declared CUSMA compliant, with the potential for this figure to rise with the incentive to avoid tariffs.

"The analysts estimated that 80 to 90 per cent of the export value could become CUSMA compliant," the note stated.