Steel tariff threat brings new trade fear

‘I think there’s good reason to be concerned’

WASHINGTON • A new concern about Canada’s relationship with the United States is emerging in the foreground, with threats of global steel and aluminum tariffs now competing with NAFTA uncertainty as a source of economic anxiety.

It was evident during a trip to Washington for the premiers of the two biggest provinces. During their just-concluded visit, Ontario Premier Kathleen Wynne and Quebec Premier Philippe Couillard spoke with multiple state governors and none expressed the view that NAFTA faces imminent termination.

“I feel pretty encouraged by the conversations that I’ve had,” Wynne said. “There are a number of governors who do have a pretty direct relationship (with President Donald Trump). One of the reasons I’m very encouraged is none of them said they thought (NAFTA) was going to get cancelled.”

But there’s a more immediate source of angst.

Trump is weighing options for steel and aluminum tariffs. One would target the entire world, while another would hit a shorter list of countries and spare Canada. The stakes are high for Canada, which is the No. 1 seller of both products to the U.S.

They are particularly high for the premiers who just visited Washington — Ontario is a major supplier of steel and automobiles while Quebec is a key supplier of aluminum.

Canada is not yet exempted from the potential hit-list. A report Friday from Bloomberg said Trump is leaning toward the most punitive action possible, which reportedly would be a 24-per-cent worldwide tariff on steel and an aluminum tariff as high as 10 per cent.

The president has also been complaining about Canada’s trade practices, in public and in private remarks.

Wynne said she spoke with her gubernatorial counterparts about her fear of what such a tariff would do to auto prices, as steel-heavy parts criss-cross the border multiple times before winding up in a finished vehicle.

“I think there’s good reason to be concerned,” Wynne said.

The issue hasn’t received a huge amount of political attention yet. The administration is giving itself until April to decide whether to use a national-security provision in American trade law to argue that foreign metals hurt America’s stability, and are therefore justified targets for an emergency tariff.

Trade works warn that such a move could have a cascading effect, leading other countries to find similar excuses to slap on retaliatory tariffs, and result in an epic clash at the World Trade Organization that threatens the international trading system.

Canada’s view is that it should be spared not just on economic grounds, but on the grounds of national defence.

That view received a highprofile booster last week: U.S. Defence Secretary James Mattis. He released a letter stating his department’s position, which is that any tariffs be targeted to avoid hurting allies. Canada is not only such an ally at NATO, and NORAD — it’s also one of the few countries, along with the U.K. and Australia, that are legally part of the U.S. military-industrial complex.

The history of Canadian aluminum is entwined with the U.S. military, having built its Bagotville air force base to protect the aluminum smelting in Quebec that supplied material to the U.S. military.