Removing aluminum tariffs may be a heavy lift
The state of U.S. politics makes finding support for such a move difficult
WASHINGTON— President Donald Trump announced that he was reimposing a 10 per cent tariff on Canadian aluminum when he visited a Whirlpool factory in Ohio last week. “Canada was taking advantage of us, as usual, and I signed it,” he said.
The workers he addressed manufacture products made with aluminum, meaning his tariffs will make the products they build more expensive. That’s the case for many U.S. workers: according to economist Christine McDaniel of George Mason University, for every American employed in producing aluminum who might arguably benefit from the tariffs, there are 177 people employed in industries that use it. The U.S. Chamber of Commerce and the U.S. Aluminum Association condemned the move. Conservative commentator George Will mocked it as counterproductive. The Wall Street Journal editorial page said it was “Mr. Trump at his policy worst.” Georgetown professor Marc Busch wrote that it marked “a new low in U.S.-Canada trade.”
Canada announced retaliatory tariffs on U.S.-made aluminum products to take effect after a consultation period.
Everyone agrees that the aluminum tariffs are bad for Americans as well as for Canadians. And yet, in a panel discussion Thursday hosted by the Wilson Center’s Canada Institute, trade lawyer Daniel Ujczo of Dickinson Wright in Columbus, Ohio, said “This is a heavy lift, to try to get these tariffs removed.”
To explain why, he conjured up a scenario in which he’d go out for a socially distanced beer with a dozen people from Whirlpool after that announcement.
At that table, he said, he’d remark on Trump pronouncing the name of a Southeast Asian country as “Thighland.” “Four people immediately defend the President, four people immediately call him an idiot and four people sit there quietly,” Ujczo said. “That’s the state of politics in Ohio and, I think, around the country today.”
Then he’d bring up the day’s trade news. “Can you believe the president’s putting tariffs on Canada again?” Ujczo said. “And I guarantee you all 12 people around that table will say, ‘You know, this is crazy. We don’t need tariffs on Canada. Canada’s our ally.’” But. “Four of them will say, ‘Yeah, but it’s the president, at least he’s doing something.’ Four will say ‘Yes, he never gets it right, this is all for show.’ And candidly, the other four, even though they agree, are going to do nothing,” Ujczo said.
“That’s the issue. Right now, there’s no amount of data — we can make all of the cases we want — that’s really going to move the needle on this. In the U.S., it may be pure politics.”
Those workers at the Whirlpool factory will believe that previous Trump tariffs on washers and dryers helped their plant. They’ll remember not feeling much pain from the last round of tariffs on Canadian aluminum. One of them might have a relative across the state line in Kentucky who works at one of the few American aluminum smelting plants.
“So a lot of those people say, ‘Well, hey, look, Canada’s not the problem,’ but we’re not going to be motivated to do too much here,’” Ujczo says. In an election year, legislators might also agree with Canada, “but they’re not making their political decisions on that basis.”
I imagined a similar conversation over drinks with a dozen Canadians on a Toronto patio. There, eight might immediately agree that Trump is a fool doing foolish things. Two might say the problem is that Justin Trudeau’s just too weak. But then one or two might simply ask, “What’s this going to mean to me?”
According to Ujczo, the answer — in the short term, at least — is not much.
“Unless you’re an employee of an aluminum manufacturer, the tariffs on Canadian aluminum don’t necessarily impact your life in a day-to-day way that would be noticeable,” he told me on the phone Friday. “I think once Canada puts on its countermeasures, the retaliation, you may start seeing modest upticks and costs for office furniture and golf clubs, some of the things that were on the list there.”
Even for those who do work in Canadian aluminum plants, Ujczo says it’s unlikely Trump’s move will lead to layoffs (although the COVID-induced recession makes things less certain than usual).
Other than eventual modest changes in the cost of products, the effects are longer-term: investment decisions down the line, production that never ramps up because builders defer or delay a project, people who don’t get hired. Those effects are real, but hard to pinpoint.
Then there’s the effect on the broader trade relationship — the one pointed out by Busch and the Wall Street Journal’s editorial board. Barely a month after Canada and the U.S. made trade peace with a replacement for NAFTA, they’re back in a trade war.
I suggested it might be like your spouse making you sleep on the couch — the actual discomfort of doing so might be less of a problem than what it says about the state of your relationship.
Ujczo laughed. The thing, he said, is that the state of the U.S.Canadian trading relationship is generally very strong — after all, the two countries have continued trading through a pandemic border closure. Ujczo said the path to an eventual deal will likely involve the numbers that led to the (possibly illusory) surge in Canadian aluminum levelling out — the economy may already be taking care of that. And then some clarification in the language of the agreement about what constitutes a surge.
Virtually everyone having a beer after that might feel their position had been vindicated — four will blame Trump, four will give him credit, and four might wonder if it was all that big a deal to begin with.
Today, that’s the state of politics.