Canada-US tariff troubles may flare more broadly

Significance

Canada has a temporary exemption, but Trump is calling for North American Free Trade Agreement (NAFTA) renegotiations to be completed speedily. The NAFTA and tariffs issues have, therefore, become fused, raising questions about the outlook for Canada-US foreign relations.

Impacts

• In the short term, Canadian steel companies may benefit from reduced foreign providers’ presence in the United States.
• Canada’s NAFTA negotiators will not respond to the Trump team’s threat to impose tariffs.
• Canadian businesses will begin to migrate south to take advantage of the new and more competitive US tax regime.
• Canada’s efforts to diversify its foreign trade and decrease US dependence will further accelerate, but still face hurdles.