Canada’s chief diplomat to the Rocky Mountain region said the U.S. tariffs on Canadian goods are causing angst among Canadians about that country’s economic future. Sylvain Fabi, the Canadian Counsel General based in Denver, said if the trade war accelerates between the countries, Colorado businesses that depend on trade with Canada will suffer.
Fabi, who represented Canada as a treaty negotiator with the U.S., said the two countries’ relationship had always been collaborative and characterized the current situation as unprecedented.
“Since Canada has been an independent country, our relationships have been very stable and mutually beneficial,” Fabi said. “That's why what's happening now creates a lot of angst because we're wondering what led to this and we can't really find an answer to that question.”
Earlier this month, President Donald Trump imposed a 25 percent tariff on steel and aluminum from Canada, the largest supplier of those metals to the U.S. But he paused sweeping 25 percent tariffs on other goods until April.
Colorado imports more than $5 billion in products from Canada, including oil, the state’s largest import. The state also buys Canadian wood and wood products, which Fabi said could increase the cost for home builders and result in higher housing prices.
Colorado Governor Jared Polis has been an outspoken critic of the tariffs and declared Colorado Canada Friendship Day on March 15. He offered a grim prognosis for Colorado businesses in light of the tariffs.
“Any additional tariffs with Canada will make us all worse off,” said Polis. “Canada will lose and the United States will lose and Colorado will lose.”
The Trump administration cited the flow of illicit drugs like fentanyl entering the U.S. from Canada as one reason for the tariffs, though the Canadian government said less than one percent of the fentanyl seized at U.S. borders comes from Canada. The administration has also pointed to the U.S. trade imbalance with Canada.
Canada announced retaliatory tariffs on some U.S. products and threatened to impose others. Colorado’s exports to Canada include meat, optical, medical and precision instruments, and engines and turbines.
On illicit drugs like fentanyl crossing the border from Canada into Mexico:
“We don't see anything that's been advanced by the U.S. administration to justify tariffs on Canada. Fentanyl, in our opinion, is not a significant issue. Let me pause here and tell you that the fentanyl crisis in Canada as a societal problem is as acute as it is in the United States, so we share the pain in the fentanyl crisis. However, Canada is not a significant source of fentanyl going into the U.S. Less than 1 percent of what the U.S. has seized at borders entering the United States [has come] from Canada. This being said, our government listened to the concern issued by the U.S. administration and implemented a $1.3 billion extra investment to deal with border issues related to fentanyl. We named a fentanyl commissioner who will be working exclusively on that issue. We bought extra helicopters [and] drones to patrol the border on our side. So we've put more resources to assuage the concerns of the U.S. administration.”
On the Trump administration’s statements regarding the US trade imbalance with Canada:
“The imbalance is not very large in terms of trade on goods. The U.S. had a more or less $60 billion deficit in its trade with Canada over an overall trade of about a trillion dollars, so it's very small, less than 1 percent. And of course, the U.S. imports a lot of energy from Canada, mostly oil, but also electricity from Canada. And, if you remove energy, which by the way, the oil you import from Canada because Canada's oil is more or less landlocked, you get a better price for your oil per barrel than you would if you bought it anywhere else. But, if you remove oil from the equation, you actually have a surplus with Canada. If you add services to the trade, which is a significant amount of business too, you get an even bigger surplus with Canada. So when you look at it, the surplus or the deficit element of the conversation that we're having with the United States in our opinion is not an issue and certainly does not justify the impositions of tariffs.”
On what Canadians can gain from retaliatory tariffs:
“The reason why a country will implement a tariff in retaliation is just a way to make whichever administration or country imposes a tariff on a country think twice as to whether it's a good idea or not, right? So a country always has the choice to retaliate or not. In our case, the assessment was made that we would in a different way, more targeted [and] on a less wide array of products. [The Canadian Prime Minister] Mark Carney has been in favor of the tariffs that have been imposed. He's been public about it, but he also said that he's concerned about this neverending back and forth on tariffs would be difficult to sustain, difficult to sustain for Canada, but also, at the end of the day, for the United States. So he is open to finding another path, another solution to the situation we're facing, and hopefully that would work.”
On whether Canada can avoid a recession due to tariffs:
“First of all, we've already seen negative impacts in the United States. You only have to look at the stock exchange, but for Canada, we have to find a solution to this. If we can't resolve the tariff issue, the prime minister has already indicated that whatever tariff Canada will collect would be directed at supporting our companies who are facing a difficulty due to these tariffs. There are different methods you can use. [We would] look at the possibilities of trade diversification with other countries. Our prime minister visited France and the United Kingdom. This is part of this thinking that if our trade with a particular market, the most important market for Canada, is being threatened, looking for alternatives is part of a plan to reduce whatever negative impacts these U.S. tariffs would have on Canada. There's been a lot of talk and actions taken to entice Canadians to buy more Canadian goods.”
On the level of anger and frustration in Canada toward the U.S.:
“People are stressed for their jobs, other impacts on the economy, inflation, interest rates, and we just got out of a very high inflation period in Canada too, just like in the United States. So a couple of years out of COVID, people are tired. Yes, there is anger, but there's also big concern and stress about where this situation could go and the negative impacts it likely will have if it's not resolved before."u
