MICHEL MARTIN, HOST:
The latest active front in the Trump administration's trade war is in Canada.
LEILA FADEL, HOST:
Last week, President Trump called off new tariffs less than two hours before a deadline, saying there was the outline of a deal. Talks broke down Friday, and Trump imposed new 50% import taxes on some Canadian products. And Canada is threatening to retaliate.
MARTIN: NPR's Scott Horsley is with us now to tell us more about this. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Michel.
MARTIN: How did this all go south?
HORSLEY: Look, there's been a lot of friction between the U.S. and Canada ever since President Trump returned to the White House. Canada's Prime Minister Mark Carney has been outspoken in warning that the U.S. is no longer a reliable economic partner. He says its signature is often written in pencil. And Carney has broad support from the Canadian public when he vows his country will fight back.
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PRIME MINISTER MARK CARNEY: Canada will match Washington's new tariffs dollar for dollar in order to protect Canadian workers, farmers, families and businesses.
HORSLEY: Now, the immediate economic fallout of these tariffs is fairly limited. They cover a pretty small slice of the vast trade that the U.S. and Canada do with each other. They will raise the cost of Canadian whiskey and hockey sticks. But they don't touch some of Canada's biggest exports, like crude oil and fertilizer. That said, this is another big fault line in what has been for decades a mutually beneficial trade relationship.
MARTIN: Is there a chance that these two neighbors will take a step back from the brink?
HORSLEY: Yeah, there's a chance. Canada's retaliatory tariffs don't take effect for a couple of weeks. And certainly, the business community in the U.S. is hoping the two sides will use that time to reach a negotiated settlement. Both the Chamber of Commerce and the Business Roundtable issued statements this weekend calling on the two sides to get back to the bargaining table. You know, these two economies are tightly interconnected. And a breakup would be really disruptive. For right now, though, U.S. Trade Representative Jamieson Greer said on Fox News over the weekend there's nothing in the works.
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JAMIESON GREER: We don't have new talks planned with the Canadians. We're moving forward with measures that respond to the Canadian retaliation. Remember, as President Trump has introduced a trade policy to reshore American production and protect American jobs, two countries have retaliated against the United States, the People's Republic of China and Canada.
HORSLEY: The administration acts as if it's surprising that Canada doesn't just surrender to the president's trade war, even though retaliation in this case is about as predictable as Iran's decision to close the Strait of Hormuz after the U.S. attacked. And, look, retaliation can work. When China retaliated for Trump's triple-digit tariffs last year, it ultimately led to some de-escalation. So we'll see if something similar happens.
MARTIN: And what is the status of the wider trade war?
HORSLEY: Well, it's had its ups and downs. The average U.S. tariff on imports from around the world is now a little over 11%. That's about four times what it was when Trump returned to the White House last year. Some of the president's tariffs were struck down by the Supreme Court, and the administration has had to pay more than $100 billion in refunds. But they keep adding new tariffs. And as Prime Minister Carney noted this weekend, that means higher costs for U.S. consumers.
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CARNEY: Canadian exports to United States lower costs for American families. In contrast, tariffs are taxes, taxes which are ultimately paid by U.S. consumers.
HORSLEY: The administration has tacitly acknowledged that its trade policies are raising costs for consumers. Last week, the president announced he was temporarily relaxing tariffs on imported ground beef because, of course, the high cost of hamburger and other things are a big concern for U.S. voters as we approach the midterm elections.
MARTIN: That is NPR's Scott Horsley. Scott, thank you.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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