U.S. President Donald Trump has signed executive orders imposing a 25 per cent tariff on both steel and aluminum imports, a move industry experts say will hurt businesses on both sides of the Canada-U.S. border and drive prices higher.
“This will be purely inflationary,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, of the tariffs Trump has threatened several times to impose. “This will make cars more expensive everywhere.”
Aluminum from Quebec is typically smelted in B.C. and Quebec, before getting shipped to the U.S. for rolling into sheets, which are then shipped to plants in Canada and the U.S. to be turned into everything from automotive parts to beer cans. Steel also crosses back and forth across the border several times, Volpe noted.
“The metal industry is as highly integrated as the automotive industry,” said Volpe.
The tariffs will raise costs for the construction industry on both sides of the border, even if Canada doesn’t retaliate, said Richard Lyall, president of the Residential Construction Council of Ontario.
And, said Lyall, that could mean some construction projects grind to a halt, because they’d no longer be economically viable.
“These projects take years to plan. And at the last minute, if your costs go up dramatically, some of them are just going to be put on hold,” said Lyall. “The margins on projects are thin to begin with. And the uncertainty has a huge chilling effect.”
“No one will benefit from an arbitrary increase in material and product prices. Our countries and supply chains are intertwined and dependent on each other, so nobody wins in a tariff war,” Lyall added.
In a written statement, the Canadian Steel Producers Association (CSPA) blasted Trump’s proposed tariffs.
“When President Trump implemented tariffs on Canadian steel in 2018, we saw massive disruptions and harm on both sides of the border, hurting both America and Canada,” said CSPA president Catherine Cobden. “While the (targeting) of Canadian steel and aluminum is completely baseless and unwarranted, we must retaliate immediately.”
The head of the United Steelworkers union (USW) in Canada also blasted the tariffs, saying they’d cost thousands of people their jobs.
“Trump’s tariffs are a direct attack on workers and communities,” said Marty Warren, USW’s national director for Canada. “We’ve been through this before and we know these kinds of reckless trade measures don’t work, and hurt workers, destabilize industries and create uncertainty across the economy on both sides of the border.”
USW represents 225,000 workers in Canada, in a wide variety of economic sectors, including 20,000 in the steel industry.
Canadian manufacturers will see their costs rise, even if Canada doesn’t implement retaliatory tariffs, said Dennis Darby, president of Canadian Manufacturers and Exporters. That’s because much of the equipment and parts they buy from U.S. suppliers initially started out as raw materials in Canada.
“It is very, very hard to see who benefits from this. All I see are losers,” said Darby.
Similar tariffs during Trump’s first term in office made Canadian manufacturers reluctant to spend money, given the uncertainty.
“People were holding off any sort of new investment for a year,” said Darby, adding that it’s already happening again.
The co-founder of Hamilton-based Canadian Canning said businesses will almost certainly pass their costs on.
“It’s the end user who’s going to end up paying more,” said Canadian Canning co-founder Vinny Laroia, whose company distributes aluminum cans produced in both Canada and the U.S. “It’s not quite as complicated as the auto industry, but things still cross back and forth several times.”
Trump said he will announce on Monday that the United States will impose 25 per cent tariffs on all steel and aluminum imports, including from Canada and Mexico, as well as other import duties later in the week.
“Any steel coming into the United States is going to have a 25 per cent tariff,” he told reporters Sunday on Air Force One as he flew to New Orleans from Florida to attend the Super Bowl. When asked about aluminum, he responded, “aluminum, too” will be subject to the trade penalties.
With files from The Associated Press
