Canada to hit US with retaliatory tariffs in response to Trump's steel tariffs
Thu., May 31, 2018
WASHINGTONâ"Canada will impose tariffs on dozens of U.S. products in response to President Donald Trumpâs tariffs on Canadian steel and aluminum, Prime Minister Justin Trudeau announced Thursday.
Trudeau described the U.S. tariffs, which Trumpâs administration announced earlier on Thursday, as âtotally unacceptableâ and âan affrontâ to a country whose soldiers have fought with American soldiers for decades.
âWe have to believe at some point common sense will prevail. But we see no sign of that in the U.S. action today,â Trudeau said.
Canadaâs Foreign Affairs Minister Chrystia Freeland said the Canadian tariffs would amount to $16.6 billion, the value of Canadian steel and aluminum exports affected by the U.S. tariffs. They will hit not only steel and aluminum products but dozens of others, from soup to boats to toilet paper to playing cards. Freeland said the list was carefully considered and has been in the works for some time, signalling that Canada was anticipating Washington's actions.
The tariffs will take effect July 1 and remain in place until the U.S. removes its own tariffs on Canadian products, Freeland said.Article Continued Below
Trump announced Thursd ay morning that he was imposing the tariffs on Canada, Mexico and the European Union, all of which he had previously exempted. The move will damage Canadian companies, complicate NAFTA talks and trigger a round of retaliation that is likely to raise prices on a variety of consumer goods.
Mexico and the E.U. immediately announced plans to retaliate with tariffs of their own.
The official justification for the tariffs is national security. The Trump administration, however, made it clear Thursday that the president is actually acting because the talks over the North American Free Trade Agreement have stalled.
âThose talks are taking longer than we had hoped. There is no longer a very precise date when they may be concluded, and therefore they were added into the list of those who will bear tariffs,â Commerce Secretary Wilbur Ross told reporters.
In this depressed Pennsylvania steel town, Trumpâs tariffs meet deep skeptic ism â" and almost no one wants to hit Canada
Canada hints at retaliation if U.S. imposes steel and aluminum tariffsArticle Continued Below
Ottawa readying its options as NAFTA and tariff talks stall with U.S.
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Trump had given Canada, Mexico and the European Union two temporary exemptions from the tariffs. The second exemption was set to expire on Friday. Though his allies had pleaded for more time, Ross announced that the administration would now impose tariffs on all three at midnight.
Ken Neumann, national director of Canadaâs United Steelworkers union, said Trumpâs decision is based on ânothing more than being a bully.â He speculated that Washington is using the tariffs to pressure Canada at the NAFTA negotiating table.
âIt will be up to our government to take a stand that weâre not going to tolerate this. . . . You just c anât sit back and do nothing,â Neumann said.
The tariffs are 25 per cent on steel, 10 per cent on aluminum. They have the effect of making Canadian products more expensive for American customers, in theory compelling them to use American products instead.
But some are likely to continue to use many Canadian products even at higher prices. Analysts said U.S. producers cannot meet all the domestic demand.
âIn the broad, it should not be terribly damaging to Canada. Because the United States does rely on Canada for substantial steel and aluminum imports, and that canât be replaced quickly, if at all. But for specific firms and for specific steel and aluminum products, the immediate impact could be significant,â said Scotiabank deputy chief economist Brett House.
The Canadian steel industry is concentrated in Ontario, the aluminum industry in Quebec. The tariffs could have a disproportionate impact in Hamilton and Sault Ste. Marie.
âThis decis ion by the Trump administration is a significant threat to the livelihoods of the 22,000 Canadians who work in Canadian steel,â said Joseph Galimberti, president of the Canadian Steel Producers Association. âOf those 22,000 Canadians I mentioned, obviously there are major employment centres in Hamilton and Sault Ste. Marie.â
Chuck Bradford, a U.S.-based metals analyst, said there would be âno effectâ on Canadian steel producers, who will âjust charge more for the steel.â
Their U.S. customers, he said, âmay not have any choice: there may not be any steel available of the grades they need.â And even if there is, Bradford said, they may be most comfortable sticking with their previous supplier.
âEven steel of the same theoretical design or same type may not be the same fr om different mills even though itâs generically the same. You may call it hot-roll coil, but hot-roll coil from one mill might operate differently on an auto blanking line than hot-roll coil from a different mill. And if youâre an automaker...youâd like the supplier that you have, because you know your equipment works well with their type of steel,â he said.
Jean Simard, president of the Aluminum Association of Canada, said it is âimpossibleâ for American aluminum producers to step in and fill the demand. He said the tariffs would harm the manufacturers that require aluminum.
âSteel and aluminum are used everywhere in the economy. Itâs not just the soda can thatâs going to go up in price, itâs the automobile, itâs the flashlight, itâs everything, and it accelerates inflation in the economy,â Simard said. âItâs a big sleeper; itâs the kind of thing that happens, you donât feel it and at some point in time you look at the statistics and yo uâve destroyed hundreds of thousands of jobs.â
The U.S. is the destination for about 90 per cent of Canadaâs steel exports, more than $5 billion worth per year. Canada is the source of 17 per cent of all steel the U.S. brings in from abroad, making it the number-one source of imports.
The politics of the tariffs are complicated for Trump. He has vowed to bring back lost jobs at U.S. steel producers, and tariffs on foreign products can help. Some of his voters favour a hard line on trade.
But big businesses that rely on imported steel and aluminum are opposed to the tariffs, and they say the higher prices will force them into job cuts. Farmers, meanwhile, are worried they will be hurt by retaliatory tariffs from other countries. And average consumers could pay more for a variety of products.
Mexico said it would impose retaliatory tariffs on steel, pork, apples, grapes, cheeses, and other U.S. products. The European Union has vowed to hit back on numerou s products, floating possible retaliatory tariffs on dozens of U.S. products made in politically important states, many of them agricultural products. They include rice, beans, orange juice, cranberries, bourbon, jeans, motor boats, shoes, makeup and cigarettes, plus various steel products.
âThe level of tariffs to be applied will reflect the damage caused by the new U.S. trade restrictions on EU products,â the European Commission said in a statement. President European Jean-Claude Juncker called Trumpâs move as âprotectionism, pure and simpleâ and announced a World Trade Organization challenge.
Conservative foreign affairs critic Erin OâToole said Trudeau failed to make an effective anti-tariffs case to Trump.
âToday this is a defeat for Justin Trudeau,â OâToole said.
In an apparent last-ditch bid to influence Trump, the Canadian government announced late Wednesday that it would make policy changes to prevent low-cost foreign steel, such as Chinese steel, to be âtransshippedâ through Canada to the U.S.
Trudeau said he reminded U.S. Vice-President Mike Pence on Tuesday that there is Canadian aluminum âin American jetsâ and Canadian steel âin American armoured vehicles,â and he argued that tariffs would hurt âAmerican workers, American jobs and American consumers who would pay more for, for various products.â
The tariffs quickly became an issue in the Ontario provincial election. Premier and Liberal leader Kathleen Wynne said she phoned Trudeau on Wednesday to urge him to take âthe strongest retaliation possible.â
âI think that weâve all had just about enough of Donald Trump. This is a president who rules by tweet. Heâs a man who doesnât seem to get that his bluster and his bullying are costing people real jobs,â she said.Read more about: TOP STORIES, DELIVERED TO YOUR INBOX.NEW NEWSLETTERHEADLINESSIGN UPSource: Google News