It鈥檚 a matter of time before U.S. President Donald Trump wakes up to the reality that Canada should not be slapped with hefty tariffs on the steel and aluminum it ships south of the border. But the opening salvos of a trade war may be fired before that happens.
That鈥檚 the outlook of a prominent international trade and customs lawyer who specializes in Canada-U.S. relations. Daniel Ujczo told CTV鈥檚 Your Morning that he expects cooler heads will eventually prevail, especially if upward pressure on commodity prices cause job losses, and Canada starts to snipe at politically sensitive U.S. goods.
鈥淚t鈥檚 just going to be a question of if, is it going to be days, weeks or months until we see Canada exempted from this tariff,鈥� Ujczo said on Tuesday.
A native of Youngstown, Ohio, a once-mighty Midwestern steel town, Ujczo is confident most workers there would agree that Trump is overplaying Canada鈥檚 role in causing depressed metals prices.
鈥淚 can tell you those people on the ground weren鈥檛 thinking about Canada when they were complaining about foreign steel,鈥� Ujczo said. 鈥淲e鈥檝e heard more about Canada in the last week in the United States then we have over the last 25 years that I have been doing Canada-U.S. (relations).鈥�
Most analysts agree that U.S. steel and aluminum has been hurt, mainly by overproduction in China. Weaker global prices for both metals have made it difficult for many U.S. producers to survive.
However, higher prices could take a significant toll on users of steel and aluminum. General Motors and Ford could each take a US$1 billion profit hit if the tariffs are put in place, according to analysts at Goldman Sachs. Ujczo said layoffs could be in cards as companies adjust to changing prices.
Trump announced the tariffs last week, telling a group of U.S. metal industry executives that imported steel will be slapped with a 25 per cent tariff and foreign aluminum will face a 10 per cent tariff. Canada is the top supplier of both to the U.S., with $15 billion a year in combined sales.
Prime Minister Justin Trudeau spoke with Trump by phone on Monday. The talks, which are said to have been productive, come on the heels of a suggestion by the U.S. president that the tariffs may be used as leverage against Canada and Mexico at the NAFTA negotiating table.
鈥淲e have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A.,鈥� on Monday. 鈥淭ariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must treat our farmers much better.鈥�
Ujczo, who recently returned from the latest round of NAFTA talks in Mexico City, said he saw 鈥渟low and steady progress鈥� underway. He remains confident a trilateral deal will eventually be inked.
He sees Trump鈥檚 recent characterization of Canada as a 鈥渧ery smooth鈥� negotiator that has 鈥渢aken advantage鈥� of the U.S. as evidence that Canada鈥檚 resolve on certain key trade files is being taken seriously by their U.S. counterparts.
鈥淭he U.S. has finally woken up to, 鈥楬ey, they got us on that deal,鈥欌�� Ujczo said. 鈥淚 think you are hearing some of that smooth operator (commentary). We鈥檝e know that in the U.S. now for a while.鈥�
If Trump presses ahead with plans to levy tariffs on Canadian steel and aluminum, he expects Ottawa will be quick to retaliate against politically sensitive targets in order to encourage top U.S. officials to put pressure on the White House.
鈥淚t will be against Harley Davidson in Wisconsin, where Speaker Paul Ryan is from. It will be things like Kentucky bourbon where Senator Mitch McConnell is from,鈥� Ujczo said. 鈥淎nywhere there is an important political figure, that鈥檚 where you will see retaliation.鈥�
Canadian dairy could be in Trump鈥檚 crosshairs, again
Ian Lee, a professor at Carleton University鈥檚 Sprott School of Business, said Canada is in no position to play the victim when it comes to cross-border tariffs. He believes Trump鈥檚 latest reference to the treatment of U.S. farmers suggests he will resume his attacks on Canada鈥檚 supply-managed dairy system.
鈥淚 don鈥檛 agree with anything that President Trump says, generally speaking, about trade,鈥� he told 麻豆传媒 Channel on Tuesday. 鈥淎t the same time, on this file, on this one file, we鈥檙e doing the very thing that we are complaining that the Americans are doing, which is using tariffs. Our worst, most egregious, example of that is the 270 per cent tariff on American dairy products coming into Canada.鈥�
He said he would not be surprised if Trump goes after all of Canada鈥檚 federally-protected industries, from financial services to airlines, before trade relations are settled between the two nations.
鈥淚 followed Trump all through the election, and I saw where he was going. He was saying, 鈥業鈥檓 going to use all the powers and all the levers of the state, of the government, to force other countries that we think are cheating to open up,鈥欌�� Lee said. 鈥淚鈥檓 talking airlines. I鈥檓 talking banking. I鈥檓 talking dairy. I鈥檓 talking telecom.鈥�
Trudeau鈥檚 Washington charm offensive to be put to the test
Rideau Potomac Strategy Group President Eric Miller expects Canada鈥檚 lobbying efforts in the U.S. capitol will pay off when it comes to skirting tariffs on steel and aluminum.
鈥淗e (Trump) has a willingness and track record for following through on his threats. I also see a very significant possibility in Canada getting an exemption,鈥� he told 麻豆传媒 Channel. 鈥淭here is a huge ground-swell in Washington, and I think this is very much a representation of the payoff of the campaign the Trudeau government has launched to generate support in the U.S.鈥�
Miller is also confident that Canada is holding its own at the NAFTA negotiating table.
鈥淐anada has tried during the NAFTA negotiations to the tack of being calm and rational and moving in the right direction, while at the same time seeking to keep the game going.鈥�
