After last-minute negotiations between the USA and Canada, the two countries’ planned reciprocal import tariffs have been paused for 30 days. On 1 February, US President Donald Trump officially announced that tariffs of 25 per cent would be applied to imports from Canada as of 4 February and Canada promptly retaliated with tariffs of its own. The country said it would introduce 25 per cent retaliatory tariffs on imports from the US with a total value of CAD155bn in two steps, starting on 4 February. However, after talks between Trump and Canadian Prime Minister Justin Trudeau on 3 February, the two countries agreed to postpone the tariffs for one month.
The US government had also announced 25 per cent tariffs on Mexico, which were likewise paused for 30 days after talks between Trump and Mexican President Claudia Sheinbaum. The 10 per cent tariff on imports for China, however, took effect as planned on 4 February, with China immediately introducing retaliatory tariffs of its own.
The USA’s 25 per cent tariffs would have applied on goods from Mexico and Canada including pulp and paper products, while energy imports from Canada were planned to be subject to tariffs of 10 per cent. Trump has cited multiple reasons for introducing the tariffs. Primarly he wants to compel Canada and Mexico into containing the flow of drugs and illegal immigration from these two countries. Moreover, Trump has repeatedly complained about the size of the US trade deficit, which is more than $1 trillion. The tariffs were paused after Canada and Mexico agreed to boost border enforcement.
Associations warn of impacts on pulp and paper industry
The threat of tariffs is also sending shockwaves in the pulp and paper industry, as there is significant trade in forest products between the USA and Canada. In 2023, the USA imported a total of 2.7 million t of pulp and 4 million t of paper and board from Canada. This included 1.4 million t of printing and writing paper and 762,000 t of newsprint. The country also sources a significant amount of corrugated case material from Canada, with imports totalling nearly 1 million t in 2023, primarily testliner.
On 1 February, the American Forest & Paper Association (AF&PA) warned that the tariffs "have the potential to seriously disrupt the US forest products industry’s complex, cross-border supply chains.” It was "imperative” to avoid longer term disruption to US pulp, paper and packaging manufacturing operations, the association said at the time.
Its Canadian counterpart, the Forest Products Association of Canada (FPAC), also expressed disappointment about the decision of the US government on 1 February, saying it would cause hurt on both sides of the border. Americans relied on Canadian forest products for further manufacturing to make everyday household and industrial products such as packaging, diapers, hygiene products, paper towels, toilet paper, magazines, and specialty paper,” it added.
