Trump redux with threat of aluminum tariff
WASHINGTON— With U.S. economy struggling, Canada and other countries risk being collateral damage as President Donald Trump swings wildly to show his supporters that he’s trying to spur an economic comeback.
That’s been apparent twice this week, on issues that seem custom-designed to signal to Trump’s supporters he’s playing his greatest hits: on immigration Monday, with an executive order temporarily suspending certain types of new work visas, and then on trade Tuesday, with reports the U.S. might reimpose tariffs on Canadian aluminum.
“The only policies that Trump has been consistent on are supporting higher tariffs and lower immigration. This is something he actually believes,” says Alex Conant, a Republican strategist who has worked for Sen. Marco Rubio. “He’s less than five months from an election and currently losing. He needs to shore up his base after a couple of really tough weeks.” The ban announced Monday on certain work visas will have a dramatic impact on many skilled workers and executives. In the lead-up to the announcement and immediately following it, thousands of Canadians were concerned about being barred, though some immigration lawyers are now saying they interpret the new order as leaving Canadians essentially unaffected. A request for clarification from U.S. border and immigration authorities went unreturned Wednesday.
Tariffs on aluminum, however, target Canadians directly. U.S. Trade Representative Robert Lighthizer raised the subject Friday with Canada’s ambassador to the U.S., Kirsten Hillman, and a Bloomberg reported Tuesday that the tariffs could be imposed by July 1, just as the new trade deal to replace NAFTA is due to come into effect.
Although some American aluminum companies are lobbying to reimpose tariffs, U.S. Chamber of Commerce senior vice-president Neil Harrington said their return would be like “a bad horror movie” and “most of the U.S. aluminum sector opposes them, and they’ll hurt
American manufacturers who use aluminum as an input.” Experts say an apparent “surge” in Canadian aluminum exports is a byproduct of the coronavirus-related shutdown of auto and other sectors that use aluminum. Smelters cannot easily or safely shut down their production facilities, so they’ve changed to making a different, easily warehoused product sold in futures contracts. The resulting spike in exports doesn’t meaningfully impact the actual trade picture.
“It’s the wrong thing, the wrong way, at the wrong time, for the wrong reasons,” says Jean Simard of the Aluminum Association of Canada, who notes that tariffs would not only hurt the Canadian industry, but also the U.S. consumers who would ultimately pay them.
Simard and other industry leaders suggest that if the U.S. does impose tariffs, Canada would likely retaliate. But Canadian authorities aren’t engaging in any sabre-rattling yet. Spokespeople for the Canadian Embassy in Washington and Deputy Prime Minister Chrystia Freeland sent identical statements, saying “We will always defend Canada’s aluminum sector and its workers,” and, “We firmly believe that our aluminum exports do not harm the U.S. market. We are emphasizing this in our ongoing conversations with our American partners.”
Some experts I spoke with suggested tariffs may not even come back, despite headlines this week. Lighthizer will report to the White House, and then the president will decide what to do.
“In my view, there’s still a lot of runway to go before we would see the tariff plane take off here,” says trade lawyer Dan Ucjzo of Dickinson Wright, who doesn’t sense a strong appetite among the industry or the public for a return to tariffs. “These would have a negative impact on an economy that is much more fragile than it was a year ago, with a Congress that would be more willing to take on a president, who is much more fragile than he was.”
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers Association, agreed, saying it’s a purely political move that won’t pay off. “I think it’s more likely than not that they formally trigger something this week,” he says, “and then, having triggered it, it’s more likely than not they’re gonna back off.”
Conant says moves like this aren’t a good sign for the Trump campaign, which needs to broaden its support. “If I was advising him, I’d say, “Look, your base might like the crackdowns on immigration and more tariffs, but that’s not working with independent voters — and that is the more urgent concern right now.’”
Conant says political headwinds might see the issue go away. “He’s got a lot of problems in front of him, ranging from the economy, coronavirus, police issues, plus his own political problems — this would be picking another fight that he really doesn’t need at this moment.”
But that doesn’t mean Canadians can relax. “Anything is possible with Trump,” Conant says, “which is all the more reason why Canadians should be concerned when they when they hear these sorts of policy balloons being floated.”