The United States will impose a tariff for “essentially the rest of the world” instead of making individual trade deals, U.S. President Donald Trump told reporters Monday.
“We’re going to be setting a tariff essentially for the rest of the world, and that’s what they’re going to pay if they want to do business in the United States, because you can’t sit down and make 200 deals,” Trump said during a joint media event with U.K. Prime Minister Keir Starmer.
Trump’s remark comes a day after he announced a trade deal with the European Union, which will see a 15 per cent tariff imposed on most European goods being exported to the U.S.
The deal with the EU looks very similar to the one Trump announced with Japan, which would have a 15 per cent tariff on most Japanese exports to the U.S.
While Trump has said negotiations with other nations and trading blocs were progressing towards a deal before Aug. 1, he has singled out Canada as a country with which he was not making progress.
Last week, Trump said his administration hasn’t “had a lot of luck with Canada” in its trade negotiations.
He added that there may not be a deal with Canada.
“I think Canada could be one where there’s just a tariff, not really a negotiation,” he told reporters.
“We don’t have a deal with Canada; we haven’t been focused on them,” he said.
Prime Minister Mark Carney on Monday said he would only sign a deal that was “a good deal for Canada.”
“The negotiations are at an intense phase,” Carney told reporters in Prince Edward Island.
Canada and the EU have both similarities and differences when it came to their respective commercial relationships with the U.S., Carney said.
“We have some similarities with the European Union in terms of our commercial relationships with the United States. We’re one of their most important trade partners,” he said.
‘He does not like Canada’
These deals don’t portend well for Canada, said Concordia University economist Moshe Lander, especially considering some recent threats Trump made against Canada’s economy.
“Trump’s getting his way. He’s menacing countries, big and small, and putting the world economy back to the 1930s,” Lander said.
Trump’s statement on Monday seems to indicate that he would rather settle on a flat tariff rate for his trading partners, said Sal Guatieri, director and senior economist at BMO Capital Markets.
“For countries that run a trade surplus with the U.S. goods, they most likely will need to settle for something in that 15 per cent range,” he said.
Earlier this month, Carney said it was “unlikely” that a zero-tariff trade deal could be reached in August.
Carney told reporters there was “not a lot of evidence” for any country to have a tariff-free agreement and it was unlikely Trump would agree to one with Canada.
Where does Canada’s trade stand with U.S.?
Canada’s balance of trade with the U.S. is not like that of the EU.
Excluding oil, gas and energy, Canada runs a trade deficit with its neighbour. However, Guatieri said Trump was likely to only look at the overall balance of trade.
“Unfortunately, I don’t think the White House is making much of a distinction with respect to Canada’s trade with the U.S.,” he said.
“It’s just saying basically in total, Canada is running a surplus with the U.S. and needs to pay a higher tariff. The main message from these six trade deals (that Trump has signed recently) is that basically no country will be unscathed. Everyone will end up with higher tariffs than was the case a year ago under the new White House,” he said.
Trump has been ratcheting up his threats against Canada as the trade talks intensify. Last month, he said Canada was a “a very difficult country to trade with” and threatened to scrap the talks altogether if Canada did not withdraw its Digital Services Tax.
Last month, he raised the stakes of his trade war. In a letter to Carney posted to Truth Social, Trump threatened a 35 per cent tariff on “Canadian products sent into the United States, separate from all Sectoral Tariffs.”
“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 35 per cent that we charge,” the letter adds.
“He does not like Canada,” Lander said.
“Canada is not going to get any sort of favourable treatment in whatever deal comes out,” he added.
Autos, steel, aluminum hardest hit
Those threats come as the steel and aluminum sectors continue to face steep U.S. tariffs.
“Unfortunately, it doesn’t look like any country so far is able to get their 50 per cent duty on steel and aluminum down to a smaller number,” Guatieri said.
He added, “One partial save for Quebec is that the U.S. really does need Canadian aluminum. They have limited capacity to increase their aluminum production or buy foreign-made aluminum from countries other than Canada.”
Both Japan and the EU managed to get their tariff rate on automobiles reduced from 25 per cent to 15 per cent. Guatieri said Canada is likely to get a similar deal on autos.
“We would still be somewhat competitive in selling our vehicles to the U.S., especially when you consider that there is an exemption for U.S. content in Canadian-made vehicles. That would help (but) not fully shield Canada’s auto industry,” he said.
According to BMO, Canada’s effective tariff rate for trade with the U.S. is currently around six per cent. This is because Trump’s tariffs on Canada do not include goods that are CUSMA-complaint.
This would be “manageable” for the broader economy, Guatieri said, but added that the auto, steel and aluminum industries could see some serious pain, including potential layoffs.
“We think most of the rest of the country is somewhat insulated from this trade war, but unfortunately Ontario and Quebec are not,” Guatieri said.