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Canada Imposes Retaliatory Duties on a Range of US Products

Canada on 1 July imposed “reciprocal surtaxes” on a range of U.S. products in retaliation for the higher duties the United States imposed on steel and aluminium products from Canada as of 1 June. Those duties were levied under a U.S. law that allows imports to be restricted if the president determines doing so is necessary to protect U.S. national security, but Canada’s Department of Finance said on 29 June that it is “inconceivable and completely unacceptable to view any trade with Canada as a national security threat to the United States.” A department press release added that the United States has a US$2 billion annual trade surplus in iron and steel products with Canada, which buys 50 percent of all U.S. exports of such products. Canada intends to maintain its reciprocal surtaxes in place until the United States removes its higher duties on Canadian products.

Canada’s reciprocal surtaxes cover two sets of goods. The first set comprises steel products classified under various subheadings in Chapter 72 and will be subject to an additional 25 percent duty, while two other lists comprising aluminium products as well as other goods such as food products, mattresses and bedding products, lawn mowers, dishwashers, boats and various consumer goods will be subject to an additional 10 percent duty. Canada’s surtaxes will only apply to goods that originate in the United States, that is, those eligible to be marked as goods of the United States in accordance with the North American Free Trade Agreement marking rules. The burden of proof that goods are not considered originating in the United States lies with the importer.

Canada also announced that it will make available up to CA$2 billion to “defend and protect the interests of Canadian workers and businesses in the steel, aluminium and manufacturing industries,” including CA$50 million over five years to help Canadian companies diversify their exports to take advantage of new trade agreements such as CETA (with the European Union) and CPTPP (with other Asia-Pacific countries).

Content provided by Picture: HKTDC Research
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