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Canada-US Trade: Navigating the border for your business

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As the U.S. remains Canada’s biggest trading partner, you may be worried about what recent U.S. policy decisions could mean for your business. While North American Free Trade Agreement (NAFTA) negotiations are still in the works, other trade issues between Canada and the U.S. have arisen surrounding tariffs or duties on softwood lumber, steel, aluminum and a host of other products. We break down some of the main Canada-U.S. trade issues for your business below: 

Steel and Aluminium Tariffs

On June 1, U.S. President Donald Trump imposed steel and aluminium tariffs on Canada, Mexico and the European Union - 25% on steel and 10% on aluminum. In response, the Canadian government announced its own tariffs that were imposed on July 1st on American steel and aluminium, as well as several other products from the U.S. (see full list here). The government says these countermeasures will remain in place until the U.S. withdraws its tariffs on Canadian steel and aluminium products.

On June 29, the government announced that it would provide up to $2 billion in new measures aimed at supporting businesses and workers in the steel, aluminum and manufacturing industries. You can find a description of the available programs, grants and other measures here.
 

NAFTA

The current renegotiations of NAFTA between Canada, the U.S. and Mexico will have a major impact on how we do business. As we have always told the government, uncertainty around NAFTA makes it hard for small businesses like yours to plan for the future.

While a lot of progress has been made over the past months, negotiations are currently stalled. The Canadian team remains committed to finding a renewed agreement which will work for all parties.

Here is what you need to know about NAFTA:
 

Early victory: NAFTA will have dedicated chapter on small biz

As part of the renegotiations, small businesses have scored a big win: the updated agreement will include a chapter focused on small and medium-sized enterprises! This has been one of your top priorities when we talk to the government about NAFTA. We’re thrilled to see that the agreement will help small businesses like yours engage in cross-border trade. Read our press release for more.

Up for review: labour, environment, red tape

On July 17, 2017, the U.S released a list of its objectives for the NAFTA renegotiation. The document lists a wide range of areas up for discussion, including dispute resolution, competition policy, labour and the environment.

In a speech on August 14, Minister of Foreign Affairs Chrystia Freeland outlined key priority areas for Canada, including red tape, strong labour and environmental standards, government procurement, and a focus on gender and Indigenous rights.

It has been reported that the U.S. may be willing to make concessions by dropping their demand that 50% of all auto parts have to be made in the U.S. This is a very contentious issue, so if they are able to resolve it, negotiators will be more optimistic about reaching a deal!

Insight into NAFTA negotiations 

In addition, on July 12, 2017, we hosted a webinar for our members with General Andrew Leslie, the Parliamentary Secretary to the Minister of Foreign Affairs with special responsibilities for Canada-U.S relations. Gen. Leslie provided an overview of the issue and answered business owners’ questions.

Don’t worry if you missed the webinar! 

 

We are focusing on the following recommendations:

  • Movement of labour: Ensure that the free flow of labour remains a part of NAFTA and work to improve labour mobility rules.
  • SME chapter: Include a chapter specifically addressing the needs and challenges faced by small businesses who trade. (Mission accomplished - see above.).
  • Red tape (non-tariff barriers): Reduce the administrative burden for small businesses involved in trade.
  • Transportation issues: Work to let trucks cross the border faster.
  • The importance of duty-free: Keep trade across the borders as free from taxes and tariffs as possible. The current range of duty-free goods should at least stay as it is, but ideally it should grow.
  • Dispute resolution mechanisms: Improve dispute resolution mechanisms to ensure equal treatment of all parties, and guarantee that members will respect final decisions.
  • Participate in the process! Tell the government what you would like to see in a renewed agreement.

Negotiations are on now and we are keeping a close eye on the process and informing you of any change along the way. Tell us about your experience trading with the U.S. and/or Mexico, so we can share your concerns and represent your views on trade with our national leaders.
 

The softwood lumber dispute continues

In November 2017, the US government announced that it would place duties ranging from 3% to 14% on Canadian lumber imports. Although not as penalizing as announced previously, the duties will still weight heavily on the Canadian forestry industry. The federal government immediately released a statement calling the duties "unfair, unwarranted and deeply troubling," and pledging to fight the decision.

For background: On June 1, the government announced $867 million in measures to support forest industry workers and communities affected by U.S. measures targeting softwood lumber. This was later followed with preliminary anti-dumping duties on Canadian softwood lumber on June 23, 2017. See government Backgrounder on Softwood Lumber Action Plan for more information.

How we’re fighting for you

We have been meeting with MPs, Ministers and bureaucrats throughout the federal and provincial governments to discuss your perspective on this important issue. We have also been working closely with Global Affairs Canada, and the Canadian Trade Commissioner Service and sharing your feedback directly with government, including by participating in consultations.

We want to hear from you!

We are keeping a close eye on both the ongoing NAFTA negotiations, as well as the tariffs issue, and informing you of any change along the way. We are working hard to ensure that we continue to represent your views on trade with our southern neighbours. 

If your business imports from or exports to the U.S. and you are concerned about NAFTA negotiations or the tariffs, we want to hear your stories! Call your CFIB counsellor to let us know how Canada-U.S. trade issues are impacting your business. We will sharing your stories and concerns with officials in Canada and the U.S. to urge them to quickly find solutions.  

Have a supplier in the U.S.? Encourage them to contact their Senator or Representative to urge them to help solve the ongoing trade dispute!

As always, CFIB’s business counsellors are available to answer questions and learn how changes in the Canada/U.S. trade relationship impact your business. They have also prepared guides for independent businesses on exporting goods and services, and importing into Canada.