Trump's growing trade war could hit Bay State hard
An escalating trade dispute between the U.S. and three key allies could hit Bay State businesses dependent on steel and aluminium — as well as those trying to expand their global footprint — as significant international partners for Massachusetts threaten higher tariffs.
Following the U.S. announcement that it would go ahead with increased taxes on imported steel and aluminium, Mexico, Canada and the European Union all said they would impose their own retaliatory tariffs on U.S. goods.
Mexico’s list of proposed tariffs includes cranberries.
“The industry remains greatly concerned about these potential tariffs,” said Brian Wick, executive director of the Cape Cod Cranberry Growers Association. “We’re trying to grow these markets and it’s bad timing for all of this to occur.”
Wick said Massachusetts cranberry growers export more than 30 percent of their crop, much of which goes to Europe, Mexico and Canada.
Mexico and Canada are the state’s two biggest trading partners. Last year, Bay State businesses exported nearly $3 billion in goods to Canada and another $2.5 billion to Mexico.
Commerce Secretary Wilbur Ross said the tariffs — 25 percent on imported steel and 10 percent on aluminum — would take effect today.
President Trump had announced the tariffs in March, saying they were necessary to protect the United States from unfair competition and bolster national security. The administration said foreign production of steel and aluminum has driven down prices and hurt U.S. producers, creating what the Commerce Department has called a national security threat.
The European Commission’s president, Jean-Claude Juncke, said Trump’s action amounted to trade protectionism and Europe would respond.
Canadian Prime Minister Justin Trudeau said, “These tariffs are totally unacceptable,” and that Canada would pursue retaliatory penalties. Mexico said it would penalize U.S. imports including pork bellies, apples, grapes, cheeses and flat steel, as well as cranberries.
For Massachusetts, which has many businesses that rely on raw materials but few — if any — steel and aluminium producers, the measures meant to protect the American economy could hurt.
“The Massachusetts economy has a lot of companies that buy steel and aluminium,” said Chris Geehern of Associated Industries of Massachusetts. “The rising raw material prices is the biggest concern.”
The swift reaction from Canada and Mexico raises the possibility of a trade war between close allies. The tariffs, experts said, have become intertwined with efforts to renegotiate NAFTA.
Robert Fisher, who served under former Presidents Ronald Reagan and George H.W. Bush, and helped negotiate NAFTA, said, “I don’t think it’s an effective negotiating tactic, and it’s an unwarranted negotiating tactic with countries that are supposed to be allies. If Mexico and Canada do indeed impose retaliatory tariffs, that makes getting across the goal line even more challenging.”