Quebec entered a perilous new phase of the trade war Saturday after Prime Minister Mark Carney walked away from talks with the United States over what he described as last-minute demands that included weakening protections for the French language and culture.
The collapse in talks have triggered new 50 per cent U.S. tariffs on about $28 billion in Canadian exports, with Quebec expected to bear much of the economic pain. Premier Christine Fréchette noted Washington had sought concessions specifically affecting Quebec’s French-language rules for appliances and instruction manuals, as well as legislation promoting the visibility of French-language cultural content.
“Our culture, our language, is central to our identity, and it is important to exclude that from the negotiating table,” Fréchette told reporters Saturday. “Even though we are threatened with different tariffs, it won’t change. We will stay the way we are.”
Carney: ‘They asked too much’
Hours before the midnight deadline Friday, U.S. President Donald Trump said he believed an agreement could still be reached. He had initially set the deadline for Wednesday before postponing it Tuesday, saying the two countries had a deal aside from several outstanding details.
But Carney suspended negotiations shortly before midnight over new terms he said were “unfair, uneconomic, and called into question the reliability of any deal.”Carney said Washington wanted to narrow proposed auto provisions covering Canadian parts, steel and other content, while excluding some truck production. The Americans also sought to restrict Canada’s ability to strike trade agreements with other countries and weaken its protections for language and culture, he said.
“In short, they asked too much, and they offered too little,” Carney said Saturday.
On the table from the Canadian side, Carney said they had offered to remove retaliatory tariffs on steel, aluminum and automobiles — if Washington lowered its duties enough to keep Canadian exports economically viable — and were also prepared to make administrative changes related to supply management without altering the system, U.S. import quotas or applicable tariffs.
U.S. Trade Representative Jamieson Greer offered a different account, according to U.S. media reports, telling reporters Canada had walked away from terms agreed to earlier in the week.
Trump had not commented on the breakdown as of Saturday afternoon.
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Fréchette said she was surprised the U.S. had raised French-language protections — a “red line” — only hours before the deadline.
“I would have thought that this subject would have been taken off the table right from the beginning,” she said.
Quebec braces for ‘worst-case scenario’
The new duties came into effect at 12:01 a.m. Saturday and come on top of existing U.S. tariffs on steel, aluminum, automobiles and softwood lumber. About $7.7 billion in Quebec exports will be affected, according to Fréchette.
The Quebec Federation of Chambers of Commerce (FCCQ) called the measures the “worst-case scenario” for the province’s businesses.
“Quebec, in fact, has been the most affected by these tariffs since the very beginning of this trade war,” Fréchette said. “In all our regions, businesses risk losing contracts. In fact, it has already begun.”
Goods in Quebec already face an average effective U.S. tariff rate of seven per cent, the highest in Canada, according to economists at the National Bank. The new measures are expected to push it to about 11 per cent.
RBC economists said the tariffs would fall heavily on plastic products, electrical machinery, furniture and wood products, concentrating much of the economic impact in Quebec, British Columbia and Ontario. Quebec’s goods exports to the U.S. fell 7.6 per cent to $40 billion over the past 12 months, according to Statistics Canada.
Tariffs answered with tariffs
Canada will now match the new U.S. tariffs “dollar for dollar,” focusing its response on steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, Carney said.
The details, Carney added, will be taking effect on the Tuesday after Labour Day. More details will be released in the coming days, he said.
Fréchette said U.S. alcohol, which has becoming a growing sticking point from the American side, would remain off Société des alcools du Québec shelves while the trade war continued. Quebec will also continue to penalize U.S. companies bidding on public contracts.
“As long as the Americans continue to wage this tariff war against our businesses, against our workers, I will not put American alcoholic products back on the shelves of the SAQ,” she said.
Quebec has not considered restricting electricity exports to the United States, Fréchette said, although she would not rule it out if the dispute escalated.
Relief loans available Monday
Quebec will also offer loans and other relief to affected businesses beginning as early as Monday, said Quebec’s Economy minister, Bernard Drainville, who flanked the premier along with a handful of others Saturday.
One program will be administered through regional county municipalities and provide favourable loans to exporting businesses with annual revenue of between $1 million and $2 million, as well as suppliers to exporters. Businesses with more than $2 million in revenue can apply separately through Investissement Québec, he said.
“We have to save the maximum number of businesses, the maximum number of jobs,” Drainville said.
Business community demands a say
An FCCQ survey found 68.3 per cent of respondents favoured an agreement with the U.S., even if it required Canada to make significant concessions in other sectors. More than half said their businesses were already subject to at least one U.S. tariff.
Affected companies reported average losses of $2.07 million, a figure expected to rise to $6.09 million within six months. The average number of jobs eliminated at those companies was expected to climb from 10 to 38 over the same period, the FCCQ said.
Véronique Proulx, president and CEO of the FCCQ, urged Ottawa to consult businesses before choosing its retaliatory measures. She warned tariffs intended to punish the U.S. could also hurt Quebec companies.
The Quebec Employers Council said in a statement the suspension of talks is a major setback for companies seeking greater certainty in their dealings with Canada’s largest trading partner.
“This is a major setback for Quebec businesses that were hoping to finally regain some predictability in their trade with our main trading partner. This suspension further weakens our economy, with effects that are being felt beyond the sectors directly affected,” said Michelle Lambías Meunier, CEO of the council.
Caroline Senneville, president of the Confédération des syndicats nationaux, Quebec’s largest union, said in a statement it would examine the assistance plans expected from Carney and Fréchette.
The union, she added, “will make every effort to defend and protect workers affected by these new tariffs.”
What do you think about the trade dispute? Write to me at hnorth@postmedia.com
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