US President Donald trump must have read this blog! Okay, maybe also heard from a few others …in government, in business, in trade relations … who let him know what a disaster it would be to include Canada in any steel tariffs.
Because RETALIATION would have had to follow!
There was NO WAY Prime Minister Justin Trudeau … still reeling politically and in popularity from his immaturity and silliness in India … could let Trump impose a 25% tariff on Canadian steel … and do NOTHING.
So retaliation would HAVE TO have come … probably hitting US products on the list I included in my previous blog: US-built aircraft (take that, Boeing, Cessna, Gulfstream); American motorcycles; American clothing (like Levis, shoes, boots, sports, fishing, boating and mountaineering gear): American recreational vehicles and other American-built equipment; American plastics, American computers, American agricultural goods that are also abundantly produced in Canada (apples, potatoes, chocolates, candies, canned goods: American wines.”
So the bully backed off! And picked on another potential victim that will huff and puff, but likely NOT retaliate in any major way: China.
China’s trade surplus with the US was a whopping $347 BILLION in 2016. It exported (some say dumped) 2% of its steel production to America … worth a billion dollars in value: however, in the context of its overall trade surplus, not a huge enough amount to trigger a full trade war with Trump.
The European Union, though, will be hurt by the American tariff. EU steel accounts for almost 21% of American steel imports … huge in comparison with China … and will suffer from Trump’s tariff attack. So the EU WILL retaliate , hitting American products … but anyone who has watched Trump knows he’s not a great fan of most European countries/leaders and probably wouldn’t worry about getting into a spitting match with them..
Meanwhile …. without realizing it… Trump’s new tariffs on China’s and the EU’s steel will actually make CANADIAN steel more competitive and more attractive to US importers … who now know the quality, relative proximity and continuing ease of access our steel enjoys in their markets will continue.
American steel production will increase, but the country …especially with its currently growing and expanding economy …will see continued growth in demand for steel … an essential component in virtually all construction but also in almost every product and machinery manufacturing venture.
So China’s and the EU’s LOSS of US market could be Canada’s GAIN!
And all the while, American exporting companies will pay the price from retaliation that is bound to come … especially from Europe … against US products.
There are already calculations that suggest the impact of Trump’s tariffs on higher production costs and foreign retaliation could result in a net LOSS of 146,000 US jobs within a year.
While Canadian steel exports to the US … already almost 18% of the US market, will stay strong … and, with other foreign competition handicapped …could even grow.
And also not to be missed: on the same day Trump caved in on Canada, we were also one of 11 countries that officially signed the Trans Pacific Partnership … that will give Canadian businesses and exporters an extra “in” with countries overseas, now fuming at the increasingly isolationist US/Trump.
All in all … a VERY good week for Canada.
But Shhh! Don’t tell the bully …. or his base.