The Trump administration’s announcement of tariffs on steel and aluminum imported from Canada, Mexico and the European Union is the latest provocation in Washington’s assault on the global trade system. Canada’s foreign minister has described the policy as “frankly absurd,” and that sums it up well. The question now is how her government and the others should respond.
The policy is absurd because its official rationale is national security. U.S. military demand for steel and aluminum is small, representing only about 3 percent of domestic production. And Canada, the biggest foreign supplier of steel to the U.S., is (or was) a close friend and ally. The real threat to national security arises from a trade policy that undermines this and other alliances for no good reason.
In reality, national security has nothing to do with the new tariffs. The Trump administration is transparently risking the country’s alliances to extort concessions in separate negotiations over NAFTA and trade with Europe. It first announced the steel and aluminum tariffs weeks ago, but suspended them as talks went on; insufficient progress, it said on Thursday, meant the stay had to end.
Incidentally, this strategy willfully violates U.S. commitments as a member of the World Trade Organization — so it’s illegal as well as counterproductive. Unfortunately, knowing all this doesn’t tell Canada and the others how best to respond.
Today, the Recreation Vehicle Dealers Association (RVDA) of Canada highlighted how American tariffs on Steel and Aluminum will increase the cost of manufacturing RVs, ultimately hurting consumers on both sides of the border.
“About half of the materials for an American-made RV come from Canada, including steel and aluminum. These materials are imported into the United States from Canada, where RVs are manufactured,” said Jean-Francois Lussier, chair of RVDA. “This will inevitably mean increased costs for RVs, punishing consumers in the United States and in Canada.”
“Our industry, like most in North America, has benefitted from the integrated North American Market that NAFTA has created,” continued Lussier. “Major disruptions, such as will be brought by steel and aluminum tariffs, will have serious repercussions for our industry.”
A trade war doesn’t help anyone and impacts everyone.
Even those in the RV industry.