Canada to keep using retaliatory tariffs, regardless of election outcome

TORONTO (ICIS)–Canada will continue resorting to retaliatory tariffs against the US – regardless of which party, the incumbent Liberals or the opposition Conservatives, wins the upcoming 28 April federal election.

In an election debate on Thursday evening, Prime Minister Mark Carney and Pierre Poilievre, leader of the Conservatives, both said that retaliatory tariffs were necessary to deter the US tariff threat.

However, Carney said that Canada could not impose full-scale “dollar-for-dollar” counter-tariffs, given that the US economy is more than 10 times larger than Canada’s economy.

Rather, the Liberals would aim at counter-tariffs that have maximum impact on the US, but only minimum impact on Canada.

In opinion polls about the elections, the Liberals are currently on track for their fourth consecutive victory since 2015. Carney took over from former Prime Minister Justin Trudeau on 14 March.

AUTO EXEMPTION
Carney also confirmed that the government will be granting exemptions to its 25% retaliatory tariffs on US autos that took effect on 9 April.

The exemptions will apply to automakers that maintain production and investments in Canada, he said.

According to information on the website of Canada’s finance ministry, a “performance-based remission framework” would allow automakers that continue to manufacture vehicles in Canada to import “a certain number” of US-assembled, USMCA-compliant vehicles into Canada, free of retaliatory tariffs.

The number of tariff-free vehicles a company is permitted to import would be reduced if there are reductions in the automakers’ Canadian production or investments, according to the ministry.

The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle.

The automotive sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA).

Please also visit the ICIS topic pages:
Automotive: Impact on chemicals, and
US tariffs, policy – impact on chemicals and energy

Thumbnail photo of Stellantis’ Canadian auto assembly plant at Windsor, Ontario, where production was suspended because of tariff uncertainties (photo source: Stellantis)