Expert says Trump’s auto tariff threat could devastate local supply chains, cause massive layoffs

Published On June 12, 2018 | By Matthew Frank | Business, News, Politics

Tariffs would significantly hit Canadian auto workers who make up a large sector of the Canadian economy. (REUTERS/Amit Dave/Files)

Matthew Frank

A Canadian trade expert said the “failed NAFTA negotiations” are at the heart of the tariffs U.S. President Donald Trump imposed on Canada.

After the president’s decision to impose 25 per cent tariffs on Canadian steel and 10 per cent on aluminum was criticized by Prime Minister Justin Trudeau at the G7 summit in Quebec, the president berated Trudeau on Twitter calling him “dishonest’ and “weak.” A few Trump officials continued the attack on national television over the weekend.

The tirades have continued this week where Trump has said he’ll punish “the people of Canada” because of Trudeau’s conference. The prime minister vowed Canada will match dollar-for-dollar beginning July 1 any tariff imposed by the U.S. The tariffs now tally to $16.6 billion, imposed by the U.S. as a national security initiative, which Ottawa considers insulting.

But, Laurie Tannuous, a Cross-Border Institute special advisor at the University of Windsor, said she hopes the tensions between the two will not last long.

“We’re hoping that a cooling-off period could get the Trudeau and Trump administrations back to talks with one another,” Tannuous said.

Trump’s economic advisor Larry Kudlow, who suffered a heart attack Monday, said in a statement last Tuesday that the U.S. asked Canada to hold one-on-one NAFTA negotiations as talks waver.

Tannous hopes there’s a way discussions can resume between the U.S. and Canada. She said if talks resumed, Canadians can see less of a focus on tariffs.

“I think what we’ve seen so far with the administration is that there’s a lot of disruption at the beginning and possibly some confusion,” she said. “I would hope that any threat would not materialize. I don’t think it will last because our economies are too reliant on one another.”

Tannuous said Canada’s supply chain is too closely linked with the United States for that to be possible. She said there are thousands of jobs that could be impacted in Canada, and the price of vehicles would increase.

“If these tariffs are imposed, jobs will be impacted directly in terms of assembly positions because costs are going to go up,” she said. “I would hope that the auto industry could brace itself and hold on until things could be resolved, but the impact would be significant for not just the auto industry, but the myriad of industries that are related.”

Working in a border city

For people working in the auto industry, current tensions between Trudeau and Trump have been cumbersome to say the least.

Jerry Dias, president of Unifor, said in a press release that imposing such tariffs constitutes a full-on trade war. He also applauded the Trudeau’s statement defending Canada’s trade.

“The U.S. has systematically come after Canada’s aerospace, softwood, paper and now steel and aluminum industries,” Dias said. “Unifor fully supports the action taken by the federal government to fight back on behalf of Canadian workers.”

The automotive manufacturing industry employed 125,395 people in 2016, according to Statistics Canada reports.

Dias, the union leader representing more than 40,000 workers in the auto industry and an additional 4,000 members in the aluminum sector, said that these sanctions will have far reaching consequences.

“The U.S. steel and aluminum tariffs will impact everything from beer cans to cars, with consumers and workers on both sides of the border paying the price,” he said.

Renaud Gagné, Unifor Quebec director, said if the tariffs come to pass, Unifor will work to protect Canada’s essential services.

“Unifor will back all necessary retaliatory measures to defend our pulp, paper, steel and aluminum industries from unwarranted tariffs and fight for the interests of all Canadian workers,” he said.

Tariffs would add about $6,400 U.S. to the price of an imported $30,000 U.S. car, according to a report from Trade Partnership Worldwide.

Prices would increase to more than $8,500 U.S. per vehicle unless the leaders can resolve their differences, Tannous predicts.

“If there are a couple weeks of a cooling-off period, and maybe get back to the table on NAFTA and see if we can’t resolve that perhaps all of this will pass by the wayside,” she said.

 

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