‘Makes no sense’: Trudeau sounds alarm bell as U.S. inches toward tariff war

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WASHINGTON — Prime Minister Justin Trudeau describes it as baffling that the United States might be on the verge of using national security as an excuse to impose heavy tariffs on Canadian steel and aluminum.

He reacted Friday after the U.S. indicated that it was leaning toward using a rarely invoked provision in American law that allows a president to unilaterally declare tariffs to counter threats to national security.

As the No. 1 supplier of both steel and aluminum to its southern neighbour, Canada is lobbying hard for an exemption. Canada has hinted at retaliatory action, as have the European Union and Mexico in what could morph into a global trade war.

”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 during an event in Barrie, Ont.

”That’s why this is absolutely unacceptable and it’s a point we’ve made many times, that I’ve made directly with the president. It’s one that we’re going continue to engage with all levels of the U.S. administration on.”

That lobbying effort is facing an uphill battle, if signs Friday are any indication.

U.S. President Donald Trump has a campaign-style rally scheduled March 10 in Pennsylvania, which is the historic heart of the American steel industry and which is now the site of an unexpectedly hard-fought special congressional election.

Trump was reportedly in a foul mood over months of internal foot-dragging over tariffs. He even said he welcomed a tariff war, given the size of the U.S. import-export deficit, tweeting Friday: ”Trade wars are good, and easy to win.”

Trump has announced plans for a tariff of 25 per cent on steel, and 10 per cent on aluminum. Canada is the top supplier of each to the U.S., with $15 billion a year in combined sales for use in things like cars and, ironically, American military gear.

Meanwhile, the protectionist wing of the U.S. administration appears ascendant. The free traders around Trump were frozen out of recent decision-making, according to U.S. press reports. That includes the U.S. military — which has publicly disputed the idea that steel and aluminum imports are a security threat at all, arguing against broad tariffs that might damage alliances.

But the top official on the U.S. steel file appeared Friday to describe it as a fait accompli.

U.S. Commerce Secretary Wilbur Ross defended the idea of tariffs on everybody in an interview, and when he asked whether Trump indeed planned to impose penalties on the entire globe he answered in the affirmative.

”That’s what the president seemed to announce,” Ross told CNBC. ”Let’s assume that to be the case.”

He went on to say partial tariffs wouldn’t work. For example, the U.S. already experimented with steel tariffs or import controls in the 1980s and early 2000s. Ross said past attempts failed because the protective barrier had some holes in it.

He suggested the basic problem was Chinese over-production, which creates a global glut, with dumped products finding a way into the U.S. through third countries: ”You put a tariff on it coming from one country, they trans-ship it through another one. So it has to be broad. It has to be global in its reach.”

Trudeau said he has spoken with Trump numerous times to press Canada’s case about the potential impact of trade-limiting tariffs and will continue to do so, but it wasn’t immediately clear whether he planned to call again in the coming days.

Numerous press reports cast the president as being in an especially foul mood this week over a variety of developments — ranging from the Russia investigation, to White House infighting between his staff and family members, to the departure of close allies.

An NBC report quoted a U.S. official describing the president as ”unglued.”

Conversations between officials are happening on other fronts.

Foreign Affairs Minister Chrystia Freeland, Finance Minister Bill Morneau, Trudeau aide Gerald Butts, Transport Minister Marc Garneau, and Natural Resources Minister Jim Carr have reached out to American officials or the business community in recent days.

Garneau even chatted with Ross in Florida during a satellite launch, which they were both attending as news of the tariffs broke Thursday. He said Ross was non-committal.

This dispute has rattled trade wonks more than most.

One veteran analyst says tariffs are bad economics — but that’s not what scares him most. Gary Hufbauer of Washington’s Peterson Institute said the tariffs could create 5,000 jobs in the U.S. steel industry, but kill 10,000 elsewhere in the economy.

Hufbauer said he fears the risk of a cascading series of reprisals that threaten the stability of the post-Second World War trading system, where any country can use any national-security excuse to impose tariffs.

”It’s bad (for the economy). But on the global stability side it’s much worse,” Hufbauer said. ”What this means is it will be kind of a free-for-all.”

One organization born from the postwar order issued a rare public warning Friday: the World Trade Organization expressed concern about the prospect of escalation, and a damaging global trade war.

Hufbauer did offer one cheerful prediction.

He said he believes that, by necessity, Canada and Mexico will get exempted from tariffs. He suspects they will be forced to respect a quota, ensuring exports to the U.S. remain at current levels, so that the northern and southern neighbours don’t become conduits for shipping excess supply into the U.S.

”If I’m wrong,” Hufbauer added, ”this will just poison the NAFTA talks.”

Alexander Panetta, The Canadian Press

11 COMMENTS

  1. With all due respect to those that differ with my opinion… negotiating with Mr. Trump is not an easy task. Trump is not a politician, he’s a businessman, and he has no issues with tweeting at three in the morning that, should everyone negotiate in good faith, that’s business way, he’ll consider putting aside the tariff…
    Trump may look like he is foot in mouth, but he’ll never give ten million dollars to a confess and convicted terrorist.
    NAFTA will be reinvigorated and it will not be just because of Mr. Trudeau government negotiating abilities.
    If you do not understand the difference between a politician and a businessman, just follow the market, the dow is at 24.5, highest ever, and Trump sent all markets scrambling just with a tweet about Tariff.
    Canada is in a safe position and will be far better in the future, at least when it comes to NAFTA.

  2. Bri, please don’t stop commenting… I was only exercising a bit of leg pulling to inject some sort of humor into a subject that sadly has no humor at all..I enjoy your comments as well as Franks, or anyone else that see’s fit to post.. It’s fun to see how people react to some of this stuff….LOL..

  3. And Frank, the plant is in serious trouble with or without this latest crap..When you hear Trump musing about being a President for life the whole damn world is in deep doo-doo, not just us… If this guy is not soon declared mentally incompetent and kicked out, this current mess will be the least of our problems….

  4. Bri, are you and Frank one and the same?? Sure sounds like you guys go to bed together…LOL.. Frank always hates anyone that disagrees with him, whether he is right or wrong at the time, but I think it’s wrong to pre-judge Trudeau.. It’s not law yet,just a mentally deranged lunatic lashing out at anyone who disagrees with what he wants.. Lets wait a bit and see what happens, the idiot could change his mind again….

    • Bill, Bri and I are not the same person, but thanks for the compliment. And, I assure you, I do not hate everyone who doesn’t agree with me. First, I know my limitations and I know that I’m not the smartest person in any given room. Secondly I’m, sadly, just a bit too passionate for my own good. 2 individuals that I have no use for, if for no other reason, because they do think they’re always the smartest people in the room. AND THEY ARE NOT !!!!!!!!!!!!!!!!! These cartoon characters, of course, are wynne and trudeau. Have a great week !!!

    • OMG…spare me. I have never met Mr. Fata…but if I am bothering folks with my comments…then.. I can stop posting…hate to spoil all the literary fun.

  5. Folks, we are dealing with a lose-lose disaster here in regards to U.S. steel tariffs. If the 25% tariff stays, we are in trouble. If the tariffs stay, we are in deeper trouble because the foreign steel from China, India, South Korea has to find new ports to land on. And guess where that will be- CANADA !!! We have a very soft, unreliable and simply incompetent federal government, as it has been proven by trudeau’s in-action on the pipeline fiasco and things go from bad to worse. This recent federal budget has no plan B if NAFTA fails. We are in trouble and we have no leadership in place to deal with it. There’s no gender equality issue here that’s going to solve our problems folks. We need a government with some testicles. Sorry, but this is very frustrating.

  6. If Trumpo the clown puts a tariff on our steel put the same tariff on his steel. Any simpleton can figure that one out.

  7. I have little trust that Trudeau will do very much .It is time to strike back with tariffs of our own…but Trudeau is not the guy to do that. Playing Mr. Dressup and travelling the world with his family seems to be the norm.

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