The flurry of Trump’s tariffs is about to cross a weird border as Canada’s national sales tax has become the latest target from the Trump administration. According to Commerce Secretary Howard Lutnick, the US plans to retaliate against Canada over its 5% levy on virtually every good and service sold nationwide.
“We’re supposed to have a free trade agreement with Canada, but they have a 5% national tax… They basically cheat around the sides, and then when we don’t act, they stop cheating around the sides. They cheat right down the middle. And the President is sick and tired of it,” Lutnick said in a Fox News interview.
Canada imposes a 5% sales tax on goods and services, generating about $51 billion in the 2023-24 fiscal year.
This follows the earlier threat to impose a “reciprocal tariff” on Canada’s 3% digital-services tax, urging lawmakers to reconsider the levy on big tech revenue.
While Lutnick insists reciprocal tariffs are the only way to create a level playing field, the notion of penalizing a long-standing sales tax comes across as puzzling. These types of tax schemes are quite common internationally and, by design, does not selectively target American products.
Even more confounding is the timing, as the Trump administration prepares to impose the 25% tariff on Canada’s non-energy exports, alongside a 10% duty on energy products, unless Ottawa can prove it has taken sufficient steps to strengthen border security.
Nevertheless, the White House is doubling down, saying action could begin as early as April 2.
“We’ll just see if they did a good job or not. We’ll see,” Lutnick warned.
Information for this briefing was found via Market Watch and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
2 Responses
As far as known to me most US States have as well sales taxes. In Europe countries have sales taxes of about 20%.
A sales tax is not a tariff. It is imposed on all goods if produced domestically or abroad. It does not discriminate imports like a tariff.
Canada please stay hard and switch the off the electricity of the USA.
This tax is on what Canadians buy at home in Canada. It has nothing to do with imports. As usual, like Americans don’t know anything about our geography, they know nothing at all about our taxation system, or really anything about us….even those who should.