Canada invokes CUSMA retaliation clause with $51 billion tariffs

Canada imposed carbon tariffs Mar. 13, 2025. The rate: CAD 55 per metric tonne of embedded CO2. It mirrors Canada's federal carbon price. U.S. steel, cement, aluminum, and fertilizer face duties. The tariff phases to 100% coverage by 2027. Environment Canada published the timeline. Revenue projections hit CAD 3.2 billion for 2025-26.

Parliament passed Bill C-14 to authorize the tariffs. It amended the Greenhouse Gas Pollution Pricing Act. Part 2.1 creates the carbon-border adjustment. Schedule 1 lists covered sectors. Schedule 4 directs all revenue to provincial climate funds. The legislation passed with Liberal-NDP support. Conservatives opposed unanimously.

U.S. steel comprises 42% of Canada's imports. Statistics Canada confirmed the percentage. American producers face immediate cost increases. The Rhodium Group estimates 5% profit margin losses. Steel-dependent industries will see price hikes. Construction costs will rise. Manufacturing competitiveness drops.

APAlberta Premier Danielle Smith called it 'economic aggression.' She targets federal climate policy constantly. The energy sector faces indirect impacts. ⛰️West Virginia Governor promised WTO challenges within 30 days. He claims unfair treatment of coal exports. Interstate commerce concerns arise. Trade war escalation looms.

Canada aligned with EU carbon border mechanisms. Officials studied the European model closely. Similar sectors face coverage. Implementation timelines match. Verification requirements mirror each other. Global carbon pricing emerges. The U.S. stands increasingly isolated.

The Assembly of First Nations supports the tariff. They want 10% of proceeds for Indigenous projects. Climate resiliency programs need funding. Traditional territories face climate impacts. Revenue sharing becomes contentious. Federal-provincial-Indigenous negotiations continue. Distribution formulas remain unsettled.

Constitutional challenges emerge domestically. Section 121 guarantees inter-provincial free trade. Critics argue tariffs violate this. Ottawa invokes GATT Article XX exemptions. Health and environmental objectives justify measures. Legal battles will take years. Implementation proceeds regardless.