Just when we thought we were safe, a fresh round of U.S. tariffs is on the way.
What happened: Donald Trump has signed an executive order imposing 25% tariffs on all imports of steel and aluminum. While the Canadian metal industry withstood similar tariffs in 2018-19, it’ll be tougher this time if all those other potential tariffs cause knock-on effects.
Why it matters: Canadian steel is more dependent on the U.S. than a toddler on their iPad, as the U.S. accounts for some 99% of all Canadian steel exports and 80% of Canada’s total production. Any level of tariffs would severely disrupt the ~US$25 billion Canada makes on these exports.
- In addition, the tariffs could soon result in production cuts and layoffs at Canadian steel plants.
Big picture: Unlike other potential Trump tariffs, damages can’t be offset by boosting trade with other countries. Unlike, say, oil, steel is far too heavy to economically transport to other continents. Plus, there’s a surplus in the global market due to excess Chinese production.
Bottom line: Canada will likely respond with counter-tariffs on the U.S. steel and aluminum industry. But unlike in 2019 — when the government withheld signing the newly proposed continental trade deal as leverage — Canada doesn’t appear to have an ace up its sleeve.—QH