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Safety Net Protects Canadian Automakers From Possible Retaliatory US Tariffs

Canadian suppliers worried about retaliatory tariffs from the U.S. can breathe a sigh of relief, at least those working in the automotive industry. Tariffs on U.S. steel imports have raised costs across the sector; however, according to Reuters, Canadian government customs provisions are in place that could "reduce or refund import duties" to companies in the country as long as suppliers use the material in export products.

Following the U.S. administration's decision in June to impose steel and aluminum tariffs on our neighbors to the north, Canada retaliated with its own tariffs on $12.8 billion worth of U.S. goods. On July 16, Reuters reported Canadian automotive supply contracts for raw materials and parts fall under these programs, which stand to help those operating in the country, including General Motors, Ford, Fiat Chrysler, Toyota and Honda.

Trade Lawyer Jesse Goldman, of Borden Ladner Gervais, said in the article that retaliation would "very significantly and very quickly" hurt Canada's automotive sector.

"Some 85% of vehicles built in Canada in 2016 were exported," the article added, "meaning duty relief programs could refund roughly 85% of retaliatory tariffs paid by automakers." The only concern standing in the way of such benefits is the possibility of additional U.S. tariffs on Canadian-made vehicles because the rebate programs do not cover finished products.

To apply, a company must submit an individual application that details how it uses its imports, John Boscariol, of McCarthy Tetrault's international trade and investment law group, told Reuters.

-Andrew Michaels, editorial associate

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Wednesday, 12 August 2020