Home August 2018 The Real Casualties of Tariffs and Trade Wars

The Real Casualties of Tariffs and Trade Wars

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Terry O'Flynn.

On July 2nd, while much of Canada was enjoying a post-fireworks stat holiday, White House Press Secretary Sarah Huckabee Sanders told reporters that “[America has] been very nice to Canada for many years, and they’ve taken advantage of that.” She was speaking to Canada’s retaliatory tariffs, created in response to America’s tariffs on steel, aluminum and automobiles put into effect the week before.

Huckabee Sanders’ sentiment is consistent with the Trump Administration’s stance on international trade: that America has been too generous and not aggressive enough in their trade deals. President Trump hopes to change those deals, starting with these tariffs and ending with a stronger American-focused economy. His tactics can be labelled “unconventional,” too, which include accusations and name-calling online.

While the barbs and tweets make the headlines, it’s the lives of everyday people that are already being affected by the tariffs. Take, for instance, America’s tariffs on Canadian steel and aluminum. They may already be increasing housing costs in Canada’s previously strained markets, and steel companies like Tenaris in Sault Ste. Marie, Ontario have laid off workers in an effort to cut costs. Similarly, Canada’s retaliatory list of tariffs targets Republican strongholds explicitly because the resulting layoffs will hurt the President politically. Paul Ryan’s home state of Wisconsin now faces tariffs that will affect its numerous frozen pizza producers. Likewise, Senate Majority Leader Mitch McConnell had to tell his constituents in Kentucky that bourbon has been hit with a tariff. Canada’s purchasing power may be small compared to other countries and America itself, these tariffs are already being felt by the first casualties of the trade war: people.

One estimate from the Petersen Institute for International Economics estimates that up to 195,000 American workers could lose their jobs as a result of the steel, aluminum, and auto tariffs, the latter of which sees a 25 per cent tariff put on cars made in Canada and shipped to the States. If that turns into an international trade war, job losses could jump to over 600,000.

Canada is also having to foot the bill for these tariffs. Trudeau announced a $2 billion relief fund for companies affected by the tariffs. It is not enough to cover the losses but, hopefully, it can keep people employed while Canada heads to the negotiating table.

An international trade war with the United States is already hurting everyday families in multiple countries around the world. It may be time for Canada to look elsewhere and inwards, like Mexico, who renegotiated agricultural deals with Argentina and Brazil last year, moving some of their economic attention to faster-growing countries. Canada and Canadians may also need to look inwards and decide that the “Made in Canada” label means solidarity with people who do not have a seat at the negotiating table, but are affected nonetheless.

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