What Happened on April 2nd?

President Trump issued sweeping executive orders on April 2nd, declaring foreign trade practices a national emergency. These orders imposed significant tariffs on imports from countries with which the U.S. has trade deficits.

The tariffs will be implemented in two phases:

  • A baseline 10% tariff on all imported goods starting April 5, 2025
  • Additional "reciprocal" tariffs on countries with large trade deficits with the U.S. beginning April 9, 2025
  • The 25% flat tariff on all countries for automobile exports went into effect

How This Impacts Canada

For Canada, the situation is complex. While the executive orders maintain existing CUSMA (formerly known as NAFTA) preferential treatment, several key impacts have emerged:

  • Steel and aluminum: 25% tariffs remain in place
  • Automotive sector: 25% tariffs now apply to Canadian vehicles
  • CUSMA-compliant goods: Most Canadian exports shipped under CUSMA protocols (the vast majority) will continue to receive preferential treatment with 0% tariffs
  • Non-CUSMA compliant goods: Will face either 25% tariffs or 10% for energy and potash products

In essence, the order creates a two-tier system for Canadian exports: those properly registered under CUSMA receive preferential treatment, while others face substantial tariffs. With the exception of automobile tariffs now in effect, Canada is in the same position it was prior to April 2.

CANADA RESPONSE TO TARIFF ANNOUCEMENT

On April 3rd, Canada announced 25% reciprocal tariffs on U.S. automobiles, mirroring the U.S. action in a direct response to protect Canadian interests.

How This Impacts the Travel and Tourism Industry

The travel and tourism sector may face unique challenges from these tariffs:

  • Cross-border travel: Higher prices for goods and potential economic uncertainty could reduce discretionary spending on travel between the two countries
  • Transportation costs: The 25% auto tariffs may eventually impact rental car prices and transportation services on both sides of the border
  • Consumer spending: Economic pressures could reduce overall travel budgets for both Americans and Canadians
  • Business travel: Companies dealing with increased costs may restrict travel budgets
  • Supply chain disruptions: Travel businesses that rely on imported goods for operations may face increased costs

However, it's worth noting that travel agencies and travel advisors themselves aren't directly targeted by the tariffs, buffering some of the immediate impact.

How the Canadian Federal Governments is Financially Supporting Canadians

Canada has responded decisively to these measures. In early March, the federal government announced a financial support package focused primarily on exporters, manufacturers, and agricultural producers. This includes:

  • $5 billion Trade Impact Program through Export Development Canada
  • $1 billion in financing through Farm Credit Canada
  • $500 million in loans via the Business Development Bank of Canada
  • Enhanced EI Work-Sharing Program flexibilities (travel agencies may be eligible)

Read more about these programs here: https://www.acta.ca/canada-us-relations-details.php?id=2 and flexibilities to Employment Insurance here: https://www.acta.ca/canada-us-relations-details.php?id=5

ACTA's Position

ACTA remains cautiously optimistic but vigilant. While CUSMA-compliant goods are protected, the volatile nature of the current administration suggests that conditions could change rapidly.

ACTA notes that most travel businesses, as service providers rather than manufacturers or exporters, will not be eligible for the "tariff-specific" funding programs announced to date, except for EI flexibilities (https://www.acta.ca/canada-us-relations-details.php?id=5). ACTA is actively monitoring developments and advocating for targeted support for travel agencies and independent travel advisors.