Aaron Fowler, a Deputy Chief Trade Commissioner with Global Affairs Canada, told hundreds of business leaders concerned about the United States (US) tariff threat that Canada requires an economic diversification strategy in a video call yesterday.
Fowler clarified that tariffs only affect physical goods crossing the border, and do not apply to digital services such as subscriptions.
Fowler has worked in the Canada-US trade space at Global Affairs Canada for nearly 20 years, with experience acting as Canada’s chief negotiator for the dairy provisions of The Canada-United States-Mexico Agreement (CUSMA) and as the executive director of tariffs when the first Trump administration hit Canada with duties on steel and aluminum.
The conversation took place on a call organized by the Council of Canadian Innovators (CCI) a day after Prime Minister Justin Trudeau announced the US had agreed to a 30-day pause of its threatened tariff measures. Fowler provided insight into Canada’s tariff preparation, clarified their impact, and spoke to how Canada could improve its economic resilience.
“I don’t think that we are going to get through the woods on this for the duration of this administration,” Fowler said, “because of the nature of how they like to operate, which is to create a certain amount of chaos and instability in otherwise stable systems, and see what fruit they can shake out of the trees.”
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Fowler said a lot of work is happening to mitigate the impacts of the trade crisis by creating a business-friendly operating environment in Canada and re-evaluating whether certain programs need to be expanded or adapted. He also said the next 30 days need to be spent wisely on concocting a diversification strategy that makes Canada less reliant on the US, both as a market and as a source of supply.
“Canada enjoys amongst the greatest access to global markets of any country in the world,” Fowler claimed. “We have a suite of 15 [free trade agreements] with 50 countries that are not the United States, representing about 1.5 billion consumers around the world and countries with GDP that accounts for about two-thirds of the world’s total economic output.”
When answering attendee questions, Fowler clarified that tariffs only affect physical goods crossing the border, not digital services such as subscriptions. However, Fowler added the caveat that how tariffs apply is an administrative decision of the United States.
While speaking of ways Canada can reduce its historic reliance on the US, Fowler said it will be a challenge for Canada to persuade international investors that the country continues to have an “excellent value proposition.” He pointed to the country’s stable operating environment, low political risk, highly educated workforce, and duty-free access to 50 countries as selling points.
The federal government also has a strong suite of supports that help Canadian business reach into international markets, which up to this point have been very focused on the US, Fowler said. Now that the world is “a bit of a different place,” he explained that Canada will analyze whether its resources are allocated effectively or if they are adequately capitalized to provide the level of support Canadian business will need.
When asked if Canada should reassess the reliability of the US as a stable trading partner, Fowler said that the Government of Canada is “not presently advising Canadian companies not to do business in the United States.”
“[CCI] members can read the newspaper,” Fowler said. “They understand that these are very fluid times, and they will have to reach their own conclusions as to whether they want to maintain the exposure to the United States that they currently have, or if they want to find ways of diversifying their own operations.”
Feature image courtesy Government of Canada.