U.S. tariffs put new pressure on NAFTA talks
Trade tensions between North America’s biggest trading partners hit a fever pitch Thursday after the Trump administration announced that Canada, along with Mexico and the European Union, will no longer be exempted from tariffs on imported steel and aluminum as of Friday.
The decision, which came just hours before a midnight deadline, sparked an uproar of reaction about the types of retaliatory measures that Canada and other nations could take against the U.S., along with the impact that this move will have on negotiations for the North American Free Trade Agreement.
Canada responded on Thursday afternoon with up to $16.6 billion in surtaxes on U.S. products.
Here’s a look at how experts on BNN Bloomberg are reacting to the start of trade war between the neigbouring countries.
Andrew McCreath, BNN Bloomberg Commentator
“It’s not good for North American businesses at all. Somebody that wants to buy a car, call it three to six months from now, [they are] going to pay more... And, it obviously does not set a good tone for the potential of getting a NAFTA deal done in a timely fashion. So, right across the board it is bad news …They [The Canadian government] have to fight fire with fire. They can’t just lie down and die. Clearly, Trump is just a bully who just expects to be able to get anything he wants … My two cents worth is that when it comes to the U.S. and China, I think China’s got a bigger bat than the Americans do.”
Art Hogan, managing director and chief market strategist, B. Riley FBR
“I think this is terrible news. It makes the NAFTA negotiation process even harder. So if you look to the markets to react to this, I would expect it to be even more negative, because I think NAFTA is more important than anything in the marketplace right now in terms of trade policy mistakes … The tricky thing around the entire conversation about trade policy is that there are so many different messages that conflict each other coming from the White House and the administration … To keep talking about NAFTA and slapping tariffs on steel and aluminum at the very same time is counterintuitive.”
Laura Dawson, director, Canada Institute, Wilson Center
“Another day, another trade war. It’s always something with that president. In the case of the steel and aluminum, however, I don’t think it’s a bluff. I think the president is doing this for a very real political purpose. We’re coming into the congressional mid-terms and he wants the demonstration effect for his rust belt constituents that he’s doing something. But at the same time, Canada is not in this alone. First of all, it’s a national security exemption, nobody uses that because it’s really dangerous; [because] if you use it, everybody else is going to use it and somebody is going to use food security to block U.S. food products. So, it can’t last very long.”
Jean Simard, president, Aluminum Association of Canada
“This is just an ongoing situation where we’re used as a chess piece on a larger set towards trying to get what the U.S. wants in terms of a NAFTA agreement. So unfortunately, we’re just a part of this bigger game and today’s announcement is something that we were expecting in that form or another. But, we think that unfortunately it’s going to harm the whole industrial value on things between Canada and the U.S., and the U.S. will be the place where it’s hurt most…The American economy consumed 5.5 million tons of aluminum in 2017, they produce 700,000 tons and the three most significant import countries were Canada, Russia and the Middle East. Right now, with the tariffs that is over and above the regional premium that is paid in the U.S.; the U.S. economy is the most expensive place to buy metal in the world.”
Ken Neumann, Canadian director, United Steelworkers
“Our union in Canada and the United States are totally opposed to any tariffs or quotas against Canada, because of the integration of the market. Canada is the not the problem. It’s really disappointing to see the announcement this morning that they decide to slap Canada with the 25 and 10 [per cent tariffs]. We’re one of the best neighbours that the United States has that live by the rules, play by the rules. The fact is that we’re the ones that are going to get punished. It’s going to hurt members on both sides, especially in the auto sector, because of the integration of the market.”
Flavio Volpe, president, Automotive Parts Manufacturer’s Association
“The idea that they would trigger this and stall NAFTA talks is almost nonsensical. The madness in it is the tariffs are imposed on American consumers for imports into that country. So the first people to take that impact are Americans and American production of steel is inelastic. So, the steel production industry isn’t going to be able to respond in the short term to veer those purchases there. It’s almost like the president and the administration need to take a macroeconomic seminar and really try to understand what they’re doing before they go and rattle the cage.”
Phil Levy, senior fellow, Chicago Council on Global Affairs
“This is a reprehensible action and it’s a sad day for U.S.-Canadian relations. I think Canada’s been a true friend of the United States and this is no way to treat a close ally and partner … This took the odds of a quick NAFTA conclusion from very low to nearly impossible. I think it was going to be a very tough sell even with a fairly normal agreement. Even with the one that was done two weeks ago, the Trump administration has missed deadlines in the United States and I don’t think a sunset clause would have been any more popular with the U.S. Congress than with Prime Minister Trudeau.”