Finance Minister Bill Morneau spoke at a breakfast event co-hosted by the Canadian Club and the Empire Club in Toronto, on Thursday, March 1, 2018. Morneau says he has told his American counterpart that Canada believes its steel and aluminum exports should be exempt from new tariffs on steel and aluminum that are planned by President Donald Trump. THE CANADIAN PRESS/Christopher Katsarov

Trudeau sounds alarm bell as U.S. inches toward tariff war

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

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.

Related: Trump promises big tariffs on steel, aluminum; impact on Canada still unclear

”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.

Related: Trump considers global steel tariffs, potentially hitting Canada

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

Like us on Facebook and follow us on Twitter.

Just Posted

Man suing Penticton library for almost $20K has to settle for less

A man was suing the City of Penticton Library for almost $20,000 after his backpack was stolen

Fall drawdown at Osoyoos Lake starts

Lakeside residents can expect to see water levels drop six inches over the next week

Students down and very dirty at Freak’N Farmer

Students had a chance during the past two weeks to try out the Freak’N Farmer obstacle course

Penticton man with multiple driving infractions loses appeal on ‘harsh’ sentence

Driver has been convicted multiple times, including for criminal negligence causing death

Summerland music promoter wins national award

Paul Biro honoured at 2019 CCMA Awards in Calgary

Third instance of Trudeau in skin-darkening makeup emerges

Another instance of Trudeau using makeup to darken his face has emerged, within 24 hours of the first

Guns, taxes, climate change and more at North Okanagan forum

The five federal candidates in the North Okanagan-Shuswap engaged with the public Wednesday night

Elderly B.C. man gets 10 years in prison for sexually abusing young daughters

WARNING: This story contains graphic details and is not appropriate for all readers

UBC Okanagan golf team starts season with historic win

Men’s team Cole Wilson led the Heat to two titles at the University of Alberta Invitational

Liberal B.C. candidate’s campaign signs vandalized after Trudeau brownface photo bombshell

Kelowna-Lake Country Liberal candidate Stephen Fuhr said the incident was very unfortunate and continues to support Prime Minister Justin Trudeau.

‘This is not a drill’: Whistler Blackcomb gets first snowfall of the season

The 7th Heaven Summit had a dusting of snow Tuesday morning

Legislature gifts, clothing, travel need better control, B.C. auditor says

Audit follows suspensions of managers by Speaker Darryl Plecas

Photos surface of Conservative candidate at B.C. event with people in blackface

The controversial “Black Peter” character has been a feature at Sinterklaas celebrations

Most Read