Netizen 24 CAN: Canada to hit US with retaliatory tariffs in response to Trump's steel tariffs

Posted by On 12:13 PM

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 Trump’s tariffs on Canadian steel and aluminum, Prime Minister Justin Trudeau announced Thursday.

Trudeau described the U.S. tariffs, which Trump’s administration announced earlier on Thursday, as “totally unacceptable” and “an affront” to a country whose soldiers have fought with American soldiers for decades.

U.S. President Donald Trump had given Canada, Mexico and the European Union two temporary exemptions from the tariffs but those are now set to expire at midnight.U.S. President Donald Trump had given Canada, Mexico and the European Union two temporary exemptions from the tariffs but those are now set to expire at midnight.

“We have to believe at some point common sense will prevail. But we see no sign of that in the U.S. action today,” Trudeau said.

Canada’s 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.

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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.

“Those 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,” Commerce Secretary Wilbur Ross told reporters.

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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 Canada’s United Steelworkers union, said Trump’s decision is based on “nothing more than being a bully.” He speculated that Washington is using the tariffs to pressure Canada at the NAFTA negotiating table.

“It will be up to our government to take a stand that we’re not going to tolerate this. . . . You just c an’t sit back and do nothing,” 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.

“In 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 can’t be replaced quickly, if at all. But for specific firms and for specific steel and aluminum products, the immediate impact could be significant,” 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.

“This decis ion by the Trump administration is a significant threat to the livelihoods of the 22,000 Canadians who work in Canadian steel,” said Joseph Galimberti, president of the Canadian Steel Producers Association. “Of those 22,000 Canadians I mentioned, obviously there are major employment centres in Hamilton and Sault Ste. Marie.”

Chuck Bradford, a U.S.-based metals analyst, said there would be “no effect” on Canadian steel producers, who will “just charge more for the steel.”

U.S. Commerce Secretary Wilbur Ross said the decision was based on the lack of progress in the ongoing NAFTA talks. (The Canadian Press)

Their U.S. customers, he said, “may not have any choice: there may not be any steel available of the grades they need.” And even if there is, Bradford said, they may be most comfortable sticking with their previous supplier.

“Even steel of the same theoretical design or same type may not be the same fr om different mills even though it’s 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 you’re an automaker...you’d like the supplier that you have, because you know your equipment works well with their type of steel,” he said.

Jean Simard, president of the Aluminum Association of Canada, said it is “impossible” for American aluminum producers to step in and fill the demand. He said the tariffs would harm the manufacturers that require aluminum.

“Steel and aluminum are used everywhere in the economy. It’s not just the soda can that’s going to go up in price, it’s the automobile, it’s the flashlight, it’s everything, and it accelerates inflation in the economy,” Simard said. “It’s a big sleeper; it’s the kind of thing that happens, you don’t feel it and at some point in time you look at the statistics and yo u’ve destroyed hundreds of thousands of jobs.”

The U.S. is the destination for about 90 per cent of Canada’s 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.

“The level of tariffs to be applied will reflect the damage caused by the new U.S. trade restrictions on EU products,” the European Commission said in a statement. President European Jean-Claude Juncker called Trump’s move as “protectionism, pure and simple” and announced a World Trade Organization challenge.

Conservative foreign affairs critic Erin O’Toole said Trudeau failed to make an effective anti-tariffs case to Trump.

“Today this is a defeat for Justin Trudeau,” O’Toole 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 “transshipped” through Canada to the U.S.

Trudeau said he reminded U.S. Vice-President Mike Pence on Tuesday that there is Canadian aluminum “in American jets” and Canadian steel “in American armoured vehicles,” and he argued that tariffs would hurt “American workers, American jobs and American consumers who would pay more for, for various products.”

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 “the strongest retaliation possible.”

“I think that we’ve all had just about enough of Donald Trump. This is a president who rules by tweet. He’s a man who doesn’t seem to get that his bluster and his bullying are costing people real jobs,” she said.

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