Canada has generated over $3 billion from U.S. counter-tariffs before eliminating a portion of the levies in September, as reported by the Finance Department. This amount falls short of the $20 billion projected in the Liberals’ spring election platform for this fiscal year. Prime Minister Mark Carney opted to remove most CUSMA-compliant imports to facilitate trade discussions with Washington.
The upcoming budget release by the Liberals is anticipated to reveal a larger deficit compared to the previous fiscal update. Carney justified the tariff removal despite ongoing negotiations with the U.S., citing the diminishing value of retaliations. He noted that Canada was one of two nations with retaliatory tariffs against the U.S., emphasizing the domestic costs associated with such tariffs.
Finance Minister François-Philippe Champagne emphasized the need for adaptation following the removal of a significant portion of counter-tariffs, underscoring the government’s commitment to supporting Canadian industries. While the move may result in a substantial revenue shortfall, Bill Robson of the C.D. Howe Institute cautioned against relying on tariffs as a revenue source due to their potential negative impact on the economy.
President of the Canadian Steel Producers Association, Catherine Cobden, expressed little surprise at the $3 billion figure, attributing it to the exemptions granted. Although certain sectors like steel and aluminum retained retaliatory tariffs, additional exemptions were introduced last month. The Finance Department indicated that these recent exemptions would result in a $78 million loss in tariff revenue, which is redirected back to affected Canadian businesses.
Cobden criticized the government’s approach, advocating for exemptions primarily on products not manufactured in Canada to maximize revenue collection. Champagne defended the exemptions, emphasizing the careful consideration given to granting them. Further details on tariff collections will be disclosed in the upcoming budget, as confirmed by the Finance Department.