Sane minds needed to counter tariff insanity
With supposed friends like Donald Trump, Canada needs no enemies.
The erratic American president made good on an earlier threat last week when he slapped tariffs of 25 per cent and 10 per cent, respectively, on Canadian steel and aluminum entering his country.
It was an unfair, unjustified blow from our closest neighbour and trading partner. Canadians have every right to feel outrage and alarm over a vindictive policy that could cost their country jobs and damage its living standards at a time when so many question marks – mainly coming from Trump – hover around the global economy.
But before doing anything rash, anything that might exacerbate the situation, we must take careful stock of what Trump has done, what it means and how, in the face of such political insanity, Canada can respond in a sane way. The worst reaction would be overreaction.
It hardly needs saying that Trump’s defence of his tariffs as necessary for national security is bogus.
Canada is the closest ally the Americans have and the president lacks a scintilla of evidence that our aluminum and steel pose a threat of any kind to U.S. military or economic interests.
As far as they concern Canada, Trump’s tariff ultimatums were always about two things: First, they were meant as the arm-twister that would wring concessions out of the Canadians negotiating a new North American Free Trade Agreement with the U.S. and Mexico. That was the crude tactic of a bully and we’re glad it failed.
Second, the tariffs fed the misguided protectionist fantasies of Trump and his core supporters.
Knowing Trump is wrong, however, hardly diminishes the harm his tariffs could inflict.
Canada is the biggest supplier of both steel and aluminum to the U.S., with the value of our shipments around $20 billion each year.
By adding to the cost of these products, Trump’s tariffs could seriously impact the 20,000 people directly employed in Canada’s steel industry as well as the 100,000 indirectly employed by it. Hamilton, Ont., Canada’s steel capital, is particularly vulnerable with 10,000 direct steel production jobs at companies such as Stelco and Arcelormittall Dofasco. But all is far from lost — and what’s called for today is a measured response.
It’s possible Canada can find ways to work around these tariffs. American companies might, in the short term, be bound by contracts to buy Canadian steel and aluminum or simply need those products to keep operating.
Canadian steelmakers might avoid the tariffs by shipping unfinished steel to the U.S. for finishing. And as a port with ocean access, Hamilton may be able to sell its steel to new international markets.
Canadians must also remember that the tariffs announced Thursday also hit Mexico and the European Union. We may find it easier to overturn these tariffs if we enlist Mexican and European allies. This week’s Group of 7 meeting in Quebec, which will have many European participants, offers an ideal opportunity to start doing this.
For Canada, the key is the kind of strong, reasoned response we offered earlier this year when we took a trade quarrel with the U.S. to the World Trade Organization.
Handled poorly, this could all spin out of control and provoke a global trade war that hurts everyone.
Handled with the intelligence so lacking in today’s White House, we might even find common ground with all those Americans who, unlike Trump, remain our friends.