OTTAWA— U.S. President Donald Trump boasted Friday that “trade wars are good, and easy to win,” after his threat to tax steel and aluminum imports marked the latest flashpoint in simmering tensions over cross-border commerce between Canada and its largest trading partner.
The federal government, already at odds with Washington over the lingering softwood lumber dispute and grievances around ongoing NAFTA negotiations, now finds itself confronted with a president seemingly keen to pick a trade war.
Trump declared Thursday that the U.S. government will impose a 25 per cent tariff on imported steel and 10 per cent on aluminum, all in a bid to help boost domestic U.S. industries.
But Prime Minister Justin Trudeau condemned the proposed tariffs as “absolutely unacceptable” and warned they would cause “significant and serious” disruptions on both sides of the border.
“That’s why we’re impressing upon the American administration the unacceptable nature of these proposals that are going to hurt them every bit as much as they will hurt us,” Trudeau said Friday.
Trudeau didn’t go as far to threaten retaliatory trade action but made clear Canada’s unhappiness with Trump’s comments that cast further uncertainty on cross-border trade and undermine ongoing negotiations to craft a new North American Free Trade Agreement.
“I’ve highlighted that this is not something we wanted to see and we will continue to engage with all levels of the American administration in the coming days so they understand that this proposal is unacceptable,” Trudeau said during a visit to Barrie.
Trudeau talked up the integrated steel and aluminum markets between the two countries and Canada’s role as a military ally of the U.S., all in hopes of securing an exemption from the punishing tariffs.
“The level of cooperation and integration of our militaries, our defence of North America and our working together on a broad range of security issues means that it just makes no sense to highlight that Canada and Canadian steel or aluminum might be a security threat to the United States,” Trudeau said.
Finance Minister Bill Morneau spoke to U.S. Treasury Secretary Steven Mnuchin Thursday in what he called a “constructive” call.
“But we are dealing with people that have a different perspective than we do. That’s a reality,” Morneau said
Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!
— Donald J. Trump (@realDonaldTrump) March 1, 2018
Liberal MP Andrew Leslie, the parliamentary secretary responsible for U.S.-Canada relations, told reporters in Ottawa Friday that the government has “repeatedly” asked for exemptions to U.S. moves to restrict steel and aluminum imports. “What’s important for all of us to realize is that the defence industrial base of North American is an integrated unit specifically between Canada and the United States,” Leslie said.
Trump’s announcement of the tariffs on Thursday reportedly caught his own advisors by surprise, sparked immediate concerns from business groups and rattled markets.
But Trump took to social media Friday to defend the move.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said on Twitter.
He later tweeted, “We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!”
In an appearance on CNBC, Commerce Secretary Wilbur Ross said the new tariffs are a response to “global overcapacity and global dumping” and downplayed their impact.
He used a Campbell Soup can and a can of Coke to make his case, saying the steel and aluminum amounted to just pennies of the cost of the container.
“It doesn’t mean anything. So all this hysteria is a lot to do about nothing,” Ross said.
#USW Nat'l Dir. Ken Neumann on Trump trade sanctions: "There is no justification to include Canada with countries that systematically violate trade laws and engage in the dumping of illegally subsidized aluminum and steel." More: https://t.co/dedOAPAaIC #canlab #cdnpoli
— United Steelworkers (@SteelworkersCA) February 27, 2018
Foreign Affairs Minister Chrystia Freeland warned Thursday that if restrictions are slapped on Canadian steel and aluminum products, Ottawa would take “responsive measures to defend its trade interests and workers.”
A Canadian source familiar with the file said that Ottawa will wait for Washington’s final decisions before making any decisions on potential retaliation.
Ken Neumann, National Director of the United Steelworkers, said Canada must stand strong if Trump fails to grant an exemption on the 25 per cent tariff to country’s biggest supplier of steel.
“If he decides that it’s punitive and it will it may give him a leg up in NAFTA, which to me (is) just nonsense, I would expect our government to take a very firm stand of saying this is just wrongheaded and we’re just not going to accept it,” Neumann said.
“To me, it’s just beyond comprehension that the president somehow thinks that Canada is the problem,” he added, predicting the tariff would cause “significant harm” on both sides of the border.
International trade lawyer Lawrence Herman said that Canada has so far shown “remarkable restraint and goodwill” in the face of an “aggressive and bellicose” White House.
But he said that Trump’s aggressive trade moves leave Canada and other nations in the crosshairs of this measure no choice but to strike back with their own punitive trade actions.
“Canada will have to respond. There’s no way Canada can accept these kinds of trade restrictions without retaliating,” Herman said in an interview.
He said Canada could slap surcharges on American goods, such as wine. “You name it. Whatever products are likely to hurt American interests, Canada will target,” Herman said.
“Make them feel the pain of the kind of trade measures that Trump is unilaterally imposing on Canada,” he said.
Statement by Canada on steel and aluminum: https://t.co/5Y4nYKKRsP
— Canada Trade (@CanadaTrade) March 1, 2018
He said the tensions over these tariffs are certain to spill over into the negotiations that have resumed in Mexico City for a new NAFTA deal. And he feared they will trigger cascading trade restrictions around the globe.
Other nations were already plotting retaliation. Jean-Claude Juncker, president of the European Commission, said the EU will “react firmly” in the coming days with countermeasures.
“We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” Juncker said in a statement.
Trump’s tariff threat comes after the U.S. Department of Commerce concluded in two reports published Feb. 16 that imports of steel and aluminum “threaten to impair” American national security. The rationale presented in the reports was that it’s risky to rely on foreign imports of material that is crucial for the military because supplies could be cut off during a war or international dispute.
But some experts quoted in the reports said Canada, as a stable and longstanding U.S. ally, should be exempt from any moves to restrict U.S. imports of aluminum and steel. U.S. Army Brig. Gen. John Adams, for instance, said “the one supplier in whom I have complete confidence is Canada” — though he added that to avoid tariffs, Canada should restrict foreign imports in lockstep with the U.S.