You can’t seem to turn on the television these days without hearing about the trade troubles between Canada and the United States. The steady ground we once held with one of our largest trading partners seems to be shifting a little each day.
Last week the United States announced that it would be imposing of 25% tariff on steel and 10% on aluminum imports from Canada. According to the Canadian Steel Producers Association, approximately 45% of Canadian steel is exported to the United States. A Report by C.D. Howe estimates that these tariffs could have a significant economic impact on Canada negatively affecting as many as 6,000 jobs the equivalent of a 0.33% reduction in GDP. With this shot across the bow, Canada responded by releasing a list of goods including steel and aluminum as well as a variety of consumer goods being exported to the US that will have tariffs added as of July 1st.
So what does this mean for Manitobans? It may mean a lot for many Manitoba business. From those who manufacturer buses and farm machinery – to the aerospace industry – they are all sure to feel the impacts. But the increased costs will not stop at those who use steel and aluminum, producers in particular our dairy framers will also be impacted. Manitoba has 285 dairy farms, producing approximately 341 million litres of milk with 12 dairy processing plants in the province. The trade balance on dairy between Canada and the U.S. actually favours the U.S. by a ratio of five to one. The US already overproduces milk for export and these tariffs could further devalue the international market and cost Manitoba producers millions.
Trade expert Peter Hall from Export Development Canada was in town last week to speak with industry experts on the state of the world economy, he felt that manufactures would have little choice but to pass costs on to end users, so consumers will certainly feel the pinch.
The trade war between Canada & the United States – Opportunity or Dead End?
Many speculate that the tariffs imposed on imports could result in an increase in the sales of local goods, yet others speculate that local goods will raise in price as products and packaging from the United States are utilized in there production leading to higher process for consumers.
Some see this as an opportunity for local producers to fill a market gap and some see this as an opportunity for Manitoba to explore new markets. Regardless of what side you come down on, we had all better be concerned about the impacts of ongoing trade discussion and the escalating rhetoric between Canada and our largest trading partner the United States as it is sure to not only change the economic landscape but may impact our long standing relationship.