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U.S. President Donald Trump announced Thursday his intention to impose hefty taxes on imported steel and aluminum in an effort to protect American producers that could have a ripple effect by igniting a trade war.
During a White House meeting with U.S. steel industry brass, Trump announced he would slap a 25 per cent tariff on steel imports and another 10 per cent on aluminum imports, vowing to help an American industry, he says, that had been treated unfairly by other countries.
Here’s what you need to know about Trump’s plan.
What is Trump’s reason for implementing tariffs?
The U.S. president believes the import taxes will help protect American jobs and will boost the U.S. economy. The Trump administration also cited national security interests for implementing the tariffs, saying the military needs a domestic supply for its tanks and ships.
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“We’re going to build our steel industry back and our aluminum industry back,” Trump said.
The president has yet to formally announce the tariffs, but he’s expected to do so next week.
Which countries supply steel to the U.S.?
In 2017, the U.S. imported over 35 million tonnes of steel. Canada supplied about 16 per cent of that steel, while Brazil supplied 13 per cent, followed by South Korea at about 10 per cent.
As Harvard University’s Lydia Cox points out, China is the biggest player in the steel market, accounting for half of the world’s steel production. With that said, the U.S. only imports roughly two per cent of its steel from China.
The U.S. steel industry
In 2002, then-president George W. Bush and his administration imposed steel import duties which ended up wiping out 200,000 U.S. jobs. As Cox noted, between 2006 and 2016, employment in steel production dropped nearly 10 per cent to about 140,000 U.S. workers. However, steel output increased by 20 per cent due largely in part developing technology and automation.
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“Thus, even if trade protection leads to increased domestic production, increases in employment may be far less than many hope,” Cox noted.
What’s Canada’s reaction?
Prime Minister Justin Trudeau said Friday he had spoken to Trump, telling the president that his decision “makes no sense.”
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“We regard the implication of any new tariffs as absolutely unacceptable,” Trudeau said. “I have spoken a number of times directly with the president on this issue … highlighting and reminding him of the close security cooperation we have and highlighting this is not something that we want to see.”
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Canadian officials, American officials and businesses on both sides of the border have been pushing hard for an exemption that would shield Canada from the new tariff, though Trump gave no indications there will be exemptions of any kind.
The Canadian Steel Producers Association responded to Thursday’s announcement with a tweet touting the “evenly balanced” U.S.-Canada steel trade.
The United Steelworkers union (USW) is urging the U.S. to exclude Canada from the planned tariffs.
“The evidence is clear that Canadian steel and aluminum imports are not part of the problem that the U.S. administration is trying to address through its Section 232 investigation (threat to national security),” USW national director Ken Neumann said in a statement. “The investigation heard extensive evidence that Canada is a key U.S. ally that should be excluded from tariffs. Canada clearly is not one of the ‘bad actors’ that engage in unfair trade and dumping of aluminum and steel into the United States.
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“On the contrary, Canadian steel exports are part of deeply integrated supply chains for U.S. products. Imposing tariffs on Canadian exports risks causing significant economic harm and job losses on both sides of our border,” Neumann said.
What’s does this mean for Canadian consumers?
Essentially, Canadian consumers can expect to pay a little more for products that are imported from the U.S. that are largely made of steel and aluminum.
Walid Hejazi, associate professor of international business at University of Toronto’s Rotman School of Management, suggests that Canadians will likely see a bump in the price of U.S.-made automobiles.
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“So, now what will happen is that cars that are not made in the U.S. will be less expensive,” Hejazi said. “The steel and aluminum industry in the U.S., those people are unbelievably happy. Every other industry that uses steel, they are infuriated.
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So, now everything in the U.S. that uses steel, those prices are going up and that’s going to hurt the car industry,” Hejazi said.
Unifor, which represents Canadian auto industry employees, echoed Hejazi statement about the foreign car industry, warning the tariffs against Canada will hurt the auto industry on both sides of the border resulting in higher costs for consumers.
“The auto supply chain is completely intertwined. A cost increase of this magnitude will drive consumers directly into the arms of Japanese car makers,” Unifor national president Jerry Dias said in a statement.
–with files from Reuters
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Note: “Previously Published on: 2 March 2018 | 6:55 pm, as ‘Donald Trump’s steel, aluminum tariffs: Here’s what you need to know – National’ on GLOBALNEWS CANADA. Here is a source link for the Article’s Image(s) and Content”.