Donald Trump apparently thought Canada would be brought to its knees by the tariffs that Washington summarily slapped on its aluminum and steel exports earlier this year. So far, that’s not the way it’s working out.
In fact, Canadian exports rose 2.5 percent in June to a record $37.1 billion, according to data provided Friday by Statistics Canada, widening Ottawa’s trade surplus with the United States.
The increase in exports, the government agency said, was “mainly on higher exports of passenger cars and light trucks…. As a result, Canada’s trade surplus with the United States widened from $3.3 billion in May to $4.1 billion.”
HuffPost Canada reported that analysts had expected a trade deficit of $2.3 billion, citing a poll by Thomson Reuters Eikon.
“We thought steel and aluminum tariffs would be the story of this morning’s trade report, but strong export growth in most other sectors swamped the impact of those new duties,” Josh Nye, senior economist at RBC Economics Research, told the news site.
Benjamin Reitzes, Canadian rates and macro strategist with BMO Capital Markets, told the news agency that, as far as the effect of the tariffs on the economy of America’s northern neighbor, “in the broader scheme of things, the impact thus far appears to be minimal.”
America is Canada’s biggest trading partner, while Canada ranks number two for the United States, right behind China. The two nations also are longtime military and diplomatic allies — although one would not know that from the recent barbed rhetoric between Washington and Ottawa.
After President Trump in June slapped tariffs on Canadian steel and aluminum, Prime Minister Justin Trudeau answered back with an equivalent level of tariffs on U.S. goods that also targeted steel and aluminum, but also whisky, orange juice, ketchup, and other iconically American products.
“We will not escalate, and we will not back down,” Canadian Foreign Minister Chrystia Freeland said announcing tit-for-tat duties in June.
Statistics Canada said the country did feel the impact of the steel tariffs, even if the economy was able to compensate with an uptick in trade in other areas.
“June was the first month in which Canadian exports of steel and aluminum products to the United States were subject to tariffs,” the agency said in its statement. “On a customs basis and unadjusted for seasonality, exports of steel products to the United States that were subject to a 25 percent tariff fell 36 percent. This decrease followed a 40 percent gain from February to May.”
Washington and Ottawa clashed earlier this year at the G7 meetings of top economic powers. The rift deepened and the rhetoric became more heated after White House trade adviser Peter Navarro said there was a “special place in hell” for Canadian Prime Minister Trudeau, whom he accused of “bad faith” in their talks over the future of the North American Free Trade Agreement, as well as bilateral trade.
Trump has threatened to withdraw from NAFTA, a trade deal sealed under President Bill Clinton between the United States, Mexico, and Canada.