Trump Announces Increased Tariffs to Canada

It was the hope of all Canadian manufacturers and Chambers of Commerce across Canada that cooler heads would prevail.  Unfortunately, the worst-case scenario has come true and U.S. President Trump has imposed the steel and aluminum tariffs which he previously threatened.  As the U.S. has enacted its Section 232 tariffs (which were created as a national security consideration), Prime Minister Trudeau spoke of how deplorable this situation is, as he highlighted “that Canada could be considered a national security threat to the United States is inconceivable.”  The implementation of these unjust tariffs targets Canada, Mexico and the European Union.

Although not unforeseen (or even expected?), this is detrimental as the United States and Canada have such an interwoven economy and supply chain that the impact of this will affect workers in both countries.  One U.S. analyst estimates that “for every one job gained, eighteen will be lost” in the United States.

Adding these tariffs will result in Canadian manufacturers seeking to lessen their overall dependence upon American product and instead purchase more Canadian product or from other worldwide suppliers.  While this may sound like a positive situation, it will not occur immediately, and, is much harder to achieve than one might think.  Disrupting supply chains on both sides of the border will result in devastating outcomes for many companies.

All efforts were made to avoid this mess as officials from Canada, the U.S and Mexico worked towards finalizing an acceptable solution by re-working an equitable NAFTA.  The United States agreed to meet and finalize this deal however it required Canada to first agree to a “sunshine clause” prior to the meeting.  This would mean after five years NAFTA would expire and would require a re-working (or scrapping of) and Prime Minister Trudeau rejected this outright.

The next step for Canada includes retaliatory measures that will be targeted only towards the United States.  These include a 25% surtax on one list of products and a 10% surtax on another list of products.  End-use goods were considered based upon Canadian manufacturers ability to source products from Canadian sources or other countries (not including the U.S.).  These lists will be refined as feedback is received on the validity of including these products on the two lists and this tariff will come into effect July 1st.  This is a swift and firm response from our government and one which was required. It is also significant as it will equal $16.6 billion worth of goods.  In addition, Canada accounts for roughly half of all the U.S. steel exports so this will hit them hard.

Make no mistake, this is a time of chaos and confusion for many Canadian companies right now.  However, all Canadian interests MUST be protected from coast to coast.  Arguably there has never been a more important time to support Canadian companies, Ontario companies and most importantly companies in your local community.

It is frustrating that the U.S. President does not place his focus on the real issue that affects both Canada and U.S. manufacturers, and it is NOT each other!  Steel dumping is the real issue and it requires a joint calculated effort from both countries.  And the longer it takes President Trump to realize this I would only have one thing to say to him….”You’re Fired.”