WATCH AND READ: Canada-U.S. Tariffs Loom as Trade Tension Rises

Hamilton Ontario

WATCH AND READ: Canada-U.S. Tariffs Loom as Trade Tension Rises

The Canadian Press/Frank Gunn

UPDATED May 31, 2018 2:44pmET

The United States will formally impose tariffs on aluminum and steel imports from Canada (plus Mexico and the European Union) at midnight.

Here’s the initial reaction from Prime Minister Justin Trudeau:

Canada is proposing countermeasures, including tariffs on U.S. aluminum, steel, and a wide range of food, chemical, and wood products. The list includes:

  • maple syrup and toffee
  • pizza and quiche
  • mayonnaise and whisky
  • playing cards and lawnmowers
  • dishwasher detergent and sleeping bags
  • beer kegs and toilet paper

Trudeau also told reporters he hoped to visit Washington this week to smooth the way for a potential NAFTA agreement, only to be told by U.S. Vice-President Mike Pence that Canadian acceptance of a five-year “sunset clause” was a precondition for meeting Donald Trump.

Here is the Conservative response from Ontario MP Erin O’Toole:

Canada had initially been temporarily spared from U.S. tariffs on steel and aluminium imports, with Trump linking the issue to a renegotiated NAFTA.

Trump’s March proclamations to impose the tariffs also gave temporary exemptions to Australia, Argentina, Brazil, the European Union, Mexico, and South Korea. But they set a May1 deadline for those countries to agree on “satisfactory long-term alternative means to address the threatened impairment to U.S. national security.”

Trump called for 25-per-cent and 10-per-cent duties on certain steel and aluminum imports, respectively.

But the March 8 proclamations offered several reasons for giving special treatment to Canada and Mexico:

Our shared commitment to supporting each other in addressing national security concerns, our shared commitment to addressing global excess capacity … the physical proximity of our respective industrial bases, the robust economic integration between our countries, the export of … articles produced in the United States to Canada and Mexico, and the close relation of the economic welfare of the United States to our national security.

Here are some numbers on the Canada-U.S. cross-border trade in steel and aluminum:

  • In 2017, Canada exported to the United States nearly $17 billion of the steel and aluminum products included in the proposed tariffs. (Statistics Canada)
  • More than $14 billion of steel crossed the Canada-U.S. border in 2017. (Canadian Steel Producers Association)
  • Canada exported $11.1 billion of aluminium and aluminum articles to the United States in 2017 — compared to $3.6 billion of imports from the U.S. (Statistics Canada)
  • Close to 45% of Canada’s steel production is exported to the United States. Michigan, Ohio, Illinois, and New York are leading destinations.
  • Over 50% of American steel exports go to Canada.
  • Canada sent more than $5.6 billion of primary aluminum exports to the United States in 2016, with New York, Kentucky, Michigan, and Pennsylvania the top destinations. (Aluminium Association of Canada)
  • Between 2000 and 2015, Canada’s share of world aluminum production fell from 10% to 5%. For the United States: 15% to 2.7%. And for China? 11% to 55%.
  • U.S. aluminum production fell following the 2008 financial crisis and recession. But 2018 production is up 6.9% compared to this time last year. (The Aluminum Association)
  • But in Canada, primary aluminum production is down 7.6% for the first two months of 2018, compared to January and February 2017.

Here’s what Prime Minister Justin Trudeau told reporters on March 12 in Saguenay, Que.:

That followed the previous week’s announcement by Trump — and his linkage of future tariffs on Canada and Mexico to a renegotiated North American Free Trade Agreement:

-Andrew Thomson