OTTAWA — The federal government has put together a $6.5-billion aid package and is making temporary changes to the employment insurance program to support Canadian businesses and workers through the trade war with the United States.
U.S. President Donald Trump said Friday he may hit Canadian lumber and dairy with "reciprocal" tariffs, which he said could come within days.
Ottawa's new Trade Impact Program earmarks $5 billion over the next two years to help businesses cope with decreased U.S. sales and reach new global markets.
It's also making $500 million available for business loans of between $200,000 and $2 million at preferred interest rates, and another $1 billion for loans specifically for the agricultural sector.
The government is building new flexibility into the employment insurance program to help businesses retain workers by reducing work hours.
"Employees can reduce their hours, spread the work across the same number of employees while compensating those employees through (employment insurance) for lost time or lost wages," Employment Minister Steven MacKinnon told a news conference in Ottawa on Friday.
Earlier in the day, NDP Leader Jagmeet Singh called on the federal government to expand the EI program to cover all workers, including contractors, and to lengthen the amount of time people can claim benefits.
Asked about Singh's recommendations, MacKinnon said Ottawa has "every intention" of customizing its trade war response, depending on what the U.S. does next.
"Should this prove to be an enduring situation, you can absolutely expect that we would come with further measures to protect our workers," he told reporters.
The federal government suspended a planned second wave of retaliatory tariffs after Trump signed an executive order Thursday delaying tariffs on goods that meet the rules-of-origin requirements under the Canada-United States-Mexico Agreement, and lowering levies on potash to 10 per cent, until April 2.
International Trade Minister Mary Ng told reporters Friday those goods account for about 40 per cent of Canadian exports.
Trump complained about Canadian dairy tariffs on Friday, saying they were up to 250 per cent, without providing context on how dairy duties actually work or noting that the U.S. also has industry-related tariffs of its own.
Under the Canada-United States-Mexico Agreement, also called CUSMA, most importers don't actually pay those high tariffs. Canada uses what's called "tariff rate quotas" which place a limit on the quantity of a product that can be imported at a lower rate.
For example, Canada places a tariff of 7.5 per cent on many milk and cream products if they are "within access commitment," meaning the products do not exceed an agreed-upon limit.
If an importer wants to go over the limit, they face a tariff between 241 per cent and almost 300 per cent. Those limits are in place to protect the Canadian dairy industry, which operates under a supply management system.
Preferential tariffs apply to the United States for most products under the CUSMA agreement, which means the United States pays zero tariffs if they remain within the agreed-upon quantity for a particular good.
In 2023, Canada exported $293 million worth of dairy products to the United States, mostly cheese and whey products.
Trump repeated his complaints about Canada on Friday, telling reporters in the Oval Office "they are very difficult to deal with, the Canadian representatives."
Trump has ordered 25 per cent tariffs on all steel and aluminum imports into the United States as of March 12 — tariffs the White House has confirmed would stack on top of the other duties imposed on Canada.
CUSMA was negotiated during the first Trump administration to replace the North American Free Trade Agreement. By and large, it allows tariff-free trade in goods as long as they comply with certain rules regarding the origin of their components.
— With files from Dylan Robertson, Craig Lord and Marissa Birnie.
This report by The Canadian Press was first published March 7, 2025.
Nick Murray and Kelly Geraldine Malone, The Canadian Press
