Trump Trade Order Could Have Consequences For Canada

It is being reported by Axios that an upcoming executive order from the Trump Administration could lead to close scrutiny of “unfair product dumping,” by companies located outside the United States.

According to Axios, this could lead to tariffs on a “wide range of products.”

Early reports are that steel & aluminum, along with household appliances, could face tariffs, with the underlying goal of boosting US manufacturers.

Order would seek to correct area in which America has been at a competitive disadvantage.

Often overlooked in discussions of US trade policy, is the lack of a value added tax (VAT), in the United States. Canada has a form of a VAT in the GST of 5%. This means products created in the United States and then sold in Canada face a 5% tariff, whereas Canadian products sold here do not face a similar tariff, since the US does not apply a VAT to them.

This differential creates an advantage for Canada – and many of America’s other trading partners – but is not good for the United States when it comes to export competitiveness. Much of Europe, and most of the industrialized world has some form of a VAT, and American manufacturing has suffered as a result.

That is why Canada must be on the lookout for potential consequences from any Trump executive order on trade. While combating unfair product dumping may not be directly related to Canada, there is no guarantee that we will be exempt from potential changes. After all, at the same time Trump may pursue this new order, he is also pushing to renegotiate NAFTA.

Canada will need to be prepared for tough negotiations with the United States. Furthermore, if we are truly to thrive in a world of tougher trade competition, we must scrap foolish policies such as the carbon tax, which only hurt Canadian consumers and businesses while helping other countries gain an advantage over us.

In today’s economy, we can’t afford to show any weakness.

Spencer Fernando

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