Trump’s tariffs will be more painful for Canada than U.S.: economist


TORONTO — The United States is far better equipped than Canada to withstand the use of tariffs as a “sledge hammer” in trade negotiations, even though Americans will also feel some of the pain, CIBC chief economist Avery Shenfeld said Tuesday.

Some Americans will face higher costs on imported goods from Canada but U.S. producers will be at a smaller risk because their home market is so much bigger than ours, Shenfeld said during a panel discussion about NAFTA in Toronto.

He added that even the threat of 25 per cent tariffs on imported vehicles and auto parts — in addition to the tariffs on steel and aluminum that have already been imposed — puts a cloud over one of Canada’s biggest industries.

David Adams, president of a Canadian automotive manufacturing association, agreed that “the uncertainty effectively does the job of . . . driving more investment into the United States as the safe harbour.”

If tariffs add $6,000, $10,000 or more to the cost of a vehicle it’s going to make them uncompetitive in the U.S. market, he said.

The Trump administration has used Section 232 of the National Security Act to justify imposing tariffs on imported steel and aluminum, including from Canada. Trump also ordered the Commerce Department to investigate whether imported cars, trucks and automotive parts were a threat to national security under the same act.

However, U.S. Commerce Secretary Wilbur Ross suggested to a U.S. Senate committee last week that the tariffs on Canada and Mexico had more to do with NAFTA negotiations than national security.

“Our objective is to have a revitalized NAFTA, a NAFTA that helps America and, as part of that, the 232s would logically go away, both as it relates to Canada and as to Mexico,” Ross testified on June 20.

Ross also announced that his department’s Bureau of Industry and Security had begun processing requests for exclusions to the steel tariffs, for products that aren’t available domestically and aren’t deemed a threat to national security.

At the time, requests from seven companies with a total of 42 products had been granted exemptions while the department had denied requests from 11 companies that submitted 56 products for review.

David Paddon, The Canadian Press


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