Following the recent new tariff introduced by the United States Government, Canada on Monday requested the World Trade Organization (WTO) for a dispute consultations with the United States concerning US measures imposing a 25 per cent duty on automobiles and automobile parts from Canada.
“The Government of Canada hereby requests consultations with the Government of the United States pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), in conjunction with Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994), with respect to measures adopted by the United States that impose a 25 percent tariff on automobiles, effective April 3, 2025, and a 25 percent tariff on automobile parts, effective on a date to be specified in the Federal Register but not later than May 3, 2025. These tariffs are in addition to any other duties, fees, exactions, and charges imposed by the United States,” reads the dispute document Canada filed.
Reports show that in 2024, Canada is the 4th largest automobiles exporter to the United States selling $28.40 billion worth of vehicles to US customers. In 2024, Mexico, Japan and South Korea respectively exported worth $49.98 billion (22.8%), $40.76 billion (18.6%), and $38.02 billion (17.3%) automobiles to the United States.
The document circulated to WTO member states stated that “the Government of Canada considers that the above measures appear to be inconsistent with the United States’ obligations under the following provisions:
1. Article II:1(a) of GATT 1994, as the measures at issue fail to accord to the commerce of Canada treatment no less favorable than that provided in the United States’ Schedule of Concessions that is annexed to GATT 1994;
2. Article II:1(b) of GATT 1994, as the measures at issue impose duties in excess of the bound rates set forth and provided in the United States’ Schedule of Concessions that is annexed to GATT 1994; and
3. Article VIII:3 of GATT 1994, as the measures impose substantial penalties for minor breaches of customs regulations or procedural requirements.”
Canada also noted that the United States’ measures described above, whether or not they are inconsistent with the GATT 1994, nullify or impair benefits accruing to Canada directly or indirectly under the GATT 1994.
“The Government of Canada reserves the right to address additional measures, as well as any additional factual and legal claims, in the course of consultations and in any future request for panel establishment. The Government of Canada looks forward to receiving the Government of the United States’ reply to this request and to determining a mutually convenient date and place for the consultations,” Canada said in the document.
Over the past ten years trade in goods deficit of the United States with Canada has been widening from about $11 billion in 2016 to over $63 billion in 2024. Likewise, US overall trade in goods deficit with the world has also mounted from $735.3 billion in 2016 to over $1.2 trillion in 2024. The 2024 overall goods trade between the United States and Canada shows that the later exported worth close to $413 billion merchandizes, while the former sold a total of $349.4 billion shipped to the US consumers.