President Trump lashed out at Canadian Prime Minister Justin Trudeau and the country’s trade relationship with the U.S. Sunday accusing Canada of “charging massive Tariffs” to U.S. businesses. In a tweet sent Sunday while en route to Singapore, Trump pointed specifically to Canada’s 270% tariff on dairy the origin of his frustrations with Canada.
Trump’s stinging critique — while technically accurate — obscures the larger trade relationship between the two countries. Canada does indeed impose a 270% tariff on dairy that has kept many U.S. dairy products from making their way from the U.S. to Canada. And many other countries rely on similar measures to protect select domestic industries.
But trade policy experts say Canada’s trade relationship with the U.S. is key to our domestic economy. Canada is the top U.S. export market, with the country buying more than $340 billion in American goods and services in 2017, according to data from the U.S. Trade Representative. And, overall, the U.S. has an $8.4 billion surplus with Canada. The U.S. has a significant deficit if only goods are included due to the service-sector-centered nature of the U.S. economy.
Protective measures like Canada’s dairy tariff are common around the world. The U.S. uses tariffs to protect a variety of industries from a 350% tariff on tobacco to more 160% on shelled peanuts. In other cases, such as sugar, the U.S. has crafted a complex program to protect domestic industry by limiting imports.
Officially, the Trump administration used national security grounds to justify the tariffs, but Trump’s clash with Canada may have more to do with a perceived personal slight than the facts of the bilateral relationship. On Twitter, Trump complained that Trudeau had criticized U.S. trade policy — specifically U.S. tariffs on Canadian metals — after the Canadian premier had “acted so meek and mild” in their one-on-one meeting. Trump said that he withdrew the U.S. from the G-7’s joint statement because of that slight.
There were other foreign policy considerations as well. Trump advisers described Trudeau’s statements as a slight that threatened to make the U.S. look weak right as the president was leaving for a summit with North Korean dictator Kim Jong Un.
“Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique,” Trump wrote.
More broadly, Trump officials have repeatedly said that the U.S. has the lowest trade barriers in the world to bolster their argument for imposing tariffs on other countries. “What we have is a country here in the United States, which has the lowest tariffs in the world, lowest non-tariff barriers in the world,” said Peter Navarro, a White House trade adviser, on CNN in March.
The U.S. does maintain some of the lowest tariffs in the world — if not the lowest — with an average levy of 2.8% on all goods, according to a ranking from the World Trade Organization.
Three spots ahead on the list? Canada.
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