House Call with Carol Hughes

Tariffs aren’t working for anybody and the issue needs to be resolved

When we consider the impact that the American aluminum and steel tariffs have on Canada the producers are first of mind for a good reason, but they are resonating well beyond those industries. What’s less publicized is the fact that the unfair tariffs are forcing small businesses throughout the country to close their doors, leaving workers without a job and driving up the cost of consumer goods at the same time. It is a losing situation and Canada hasn’t been able to do anything to re-solve the problem.

The same can’t be said for Russia which has successfully had tariffs removed on aluminum production giant Rusal. That company is now exempt which is somewhat mind-boggling considering tariffs were applied as a response to Russia’s annexing of Ukraine’s Crimea, accusations of meddling in the US elections, and support of Syria’s government in its civil war. Although there isn’t wide-spread political support for lifting those sanctions in the US, it illustrates how the whimsy of the president affects these decisions.

When the tariffs aimed at Canada were announced last the summer, it was estimated it would cost our economy as much as $3.2 billion a year, but they are costing Americans too. Using aluminum as an example we can see that US producers only supply about a fifth of what is required in that market. Canada supplied nearly half of the imports, but under a tariff of 10 percent those costs have risen and the domestic supply is tapped. The end result is higher prices for companies that rely on aluminum.

The fact that some companies cannot absorb these losses explains why we are starting to see American politicians call for the removal of tariffs. The most recent example of American dissatisfaction came this week when a Republican Senator called on the Trump administration to lift tariffs on steel and aluminum from Canada as a prelude to Congress considering legislation on the new Canada-US-Mexico trade deal.

The increased costs are hitting companies too since any steel or aluminum product imported from the US costs more with tariffs in place. That applies to big ticket items like refrigerators and even smaller goods such as canned drinks. In addition Canada’s counter-veiling tariffs were applied to items such as boats and some agricultural products too. For aluminum boats the costs are rising on two fronts since manufacturers are paying more for aluminum and tariffs are raising prices again at the border.

It’s clear to see that nobody is winning in this dispute that was entirely manufactured by the president who, some argue, doesn’t understand that trade imbalances can’t be worked out so that America wins in every single sector. The challenge for our government is steep but recent events related to the shutdown of the government in the US show that the president eventually backs down when pressure mounts. It is the lack of pressure from Canada that is worrisome. It has been a long time since we have heard the government talk about the tariffs the US has imposed on our aluminum and steel.

Meanwhile Canadian workers continue to pay the price. They see how Russia got results while Canada is somehow unable to remove tariffs that continue to hurt our business and workers. The government needs to act with urgency because jobs are on the line.