A 25% tariff from Canada on certain imports came into effect yesterday. This new tariff came after the US implemented a 25% tariff on all aluminum and steel imports on Tuesday. Trade tensions between the two nations have escalated in recent weeks. A Canadian delegation arrived in Washington yesterday in hopes of easing or removing tariffs. Canada isn’t the only country grappling with trade tensions. The European Union (EU) also announced retaliatory tariffs in recent days, which was followed by another threat of increased tariffs on a key export from the EU.

• The US implemented a 25% tariff on all aluminum and steel imports, with no exception, on Tuesday. Several economies, such as Canada and the EU, announced retaliatory tariffs. Others opted to negotiate rather than fight back with tariffs of their own.
• The US imports about 25% of its steel and aluminum. Canada is the biggest supplier to the US. This tariff will significantly impact these two industries in Canada, weighing on overall economic growth.
• Canada responded by imposing a 25% tariff on approximately $30 billion worth of US goods. This includes aluminum and steel, along with other products such as computers and sporting goods.
• The EU announced it would implement retaliatory tariffs of its own, including on whiskey from the US. In response, US President Donald Trump threatened a 200% tariff on European wine and other alcoholic products if the tariff on American whiskey isn’t removed.

Escalating trade tensions have been the theme of the week. Canada responded with retaliatory tariffs but also sent a delegation to Washington to de-escalate the trade battle. Canadian consumer and business confidence has shattered amid expectations of slower economic growth. The Bank of Canada lowered interest rates Wednesday but expressed concern that it cannot use monetary policy to offset the negative impact of global trade tensions.

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