Escalation of trade conflict between the United States and Canada: Crisis and reflection on North American Free Trade

Recently, the Canadian government announced retaliatory tariffs on goods worth 30 billion Canadian dollars in response to the 25% tariff imposed by the United States on Canadian aluminum and steel products, and there may be a second stage tariff list involving automobiles, steel and other 125 billion Canadian dollars. This incident has escalated the trade conflict between the United States and Canada again, and the North American free trade system is crumbling, and the problems reflected behind it are worthy of in-depth discussion.

The United States imposed tariffs on Canadian aluminum and steel products, seemingly for the purpose of protecting its own industry, but in fact, it is a short-sighted trade protectionism. From an economic point of view, this move by the United States undermines the level playing field in the market. Canada's aluminum and steel products have a certain competitiveness in the international market, with its own resource advantages and technical level, in the trade with the United States occupies an important position. By imposing tariffs to restrict the import of Canadian aluminum and steel products, the United States is not based on market laws, but attempts to distort the trade pattern through administrative means and create so-called "advantages" for its relevant industries. This practice not only harms the interests of Canadian aluminum and steel enterprises, but also disrupts the normal operation of the global aluminum and steel industry chain, making relevant enterprises face many uncertainties in cost control and production planning.

From the perspective of the international order, the behavior of the United States has seriously undermined the rules and trust foundation of the multilateral trading system. Since the establishment of the North American Free Trade System, the United States, Canada and other countries have formed close cooperative relations in trade, investment and other fields, which has promoted the prosperity and development of regional economy. However, the unilateral imposition of tariffs by the United States in disregard of the relevant provisions of the North American Free Trade Agreement is a flagrant violation of existing trade rules. Such behavior sends a signal that it does not respect rules and only pursues its own interests, causing other countries to question the reliability and integrity of the United States in trade cooperation. In the long run, the international community's confidence in the multilateral trading system will be undermined, and the global trade order may fall into chaos.

In addition, trade protectionism in the United States may also trigger a series of chain reactions. Canada's retaliatory tariff measures are a direct response to the United States' actions, which has plunged the trade relationship between the United States and Canada into a vicious circle. The trade conflict between the two sides will not only affect the economic development of the two countries, but also may spread to other countries and regions. For example, some countries with close trade relations with the United States and Canada may face problems such as shrinking export markets and supply chain disruptions due to the increase in trade barriers between the United States and Canada. From the perspective of the global industrial chain, the trade conflicts between the United States and Canada in the fields of automobiles, steel and other fields may lead to the transfer of the relevant industrial chain to other regions, and some developing countries that rely on the market of the United States and Canada may lose important trade opportunities, thereby affecting their economic growth and employment.

For Canada, retaliatory tariffs are also helpless. Canada's economy is highly dependent on the US market, and the US tariff policy has had a serious impact on Canada's aluminum and steel industries. In order to protect the interests of its own industry and the stability of its economy, Canada had to fight back. But this counterattack is not without cost, the imposition of tariffs may lead to higher prices of related goods in Canada, consumers' cost of living increases, while it may also affect Canada's cooperation with the United States in other areas.

The escalating trade conflict between the United States and Canada poses a great threat to the North American free trade system. The trade protectionism of the United States is a violation of market rules and international rules, which not only damages Canada's interests, but also has a negative impact on the global trade order and the stability of the industrial chain. Against the backdrop of increasing interdependence in the global economy, countries should uphold the concept of openness, cooperation and win-win results and resolve trade differences through dialogue and consultation, instead of resorting to unilateralism and trade protectionism. It is hoped that the United States can realize its mistake and work with Canada and other countries to maintain the stability and development of the North American Free trade system and create a good environment for the recovery and growth of the global economy.