Tariff war to impact local economy

In response to President Donald Trump’s decision to impose unjustified tariffs on Canadian goods, the Government of Canada is moving forward with 25 per cent tariffs on $155 billion worth of goods.

“Canada will not stand by as the U.S., our closest and most important trading partner, applies harmful and unjustified tariffs against us,” said The Honourable Melanie Joly, Minister of Foreign Affairs.

“With these countermeasures, we are defending Canada’s interests and are doing what is best for Canadians and our economy.”

A tariff is a tax imposed by one country on goods and services imported from another country. Tariffs may result in increased prices for domestic consumers, which may make imported goods less appealing.

With tariffs imposed by the U.S., and Canada’s retaliatory tariffs in place, international commerce will no doubt place pressure on the economy.

According to the Department of Finance Canada, these countermeasures have one goal: to protect and defend Canada’s interests, consumers, workers, and businesses.

With a more liberalized or free trade agreement, such as with the North American Free Trade Agreement (NAFTA), this means lower barriers to trade, which can benefit both the U.S. and Canada, by keeping lower prices and allowing international commerce to flow unimpeded.

Historically, tariffs have helped governments protect domestic industries from foreign competition. Today, tariffs are the most basic tool used by countries in a trade war.

“This first set of countermeasures is about protecting – and supporting – Canada’s interests, workers, and industries,” said The Honourable Dominic LeBlanc, Minister of Finance and Intergovernmental Affairs.

“These U.S. tariffs are plainly unjustified. They are detrimental to both American and Canadian families and businesses. Working with provincial, territorial and industry partners, our singular focus is to get them removed as quickly as possible. Until then, our response will be balanced and resolute.”

The first phase of Canada’s response includes tariffs on $30 billion in goods imported from the United States (U.S.), effective February 4, when the U.S. tariffs are applied.

Goods on this list include orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.

Further tariffs will be made on other imported goods worth $125 billion, including passenger vehicles and trucks, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.

With this tariff war in place, the U.S. administration’s decision to impose tariffs will undoubtedly have devastating consequences for the American economy and people.

Tariffs will disrupt production at U.S. auto assembly plants and oil refineries, raise costs for American consumers at gas pumps and grocery stores, and put prosperity at risk.

According to the federal government, Canada is the top customer for U.S. goods and services exports and a critical supplied of goods and services integral to the U.S. economy, with Canada buying more U.S. goods than China, Japan, France and the United Kingdom combined.

Canada is the largest export market for 36 states and is among the top three for 46 states, with 43 states exporting $1 billion USD to Canada every year.

Millions of jobs on both sides of the border depend on this relationship, and millions will be affected.

Canada and the U.S. have been part of a free trading agreement since January 1, 1994, when NAFTA was signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas and U.S. President George H.W. Bush.

Over the last 31 years, NAFTA brought further economic growth and rising standards of living for people in all three countries.

NAFTA has set a valuable example of the benefits of trade liberalization for the rest of the world, as the world’s largest free trade area.

Under NAFTA, tariffs on all covered goods traded between Canada and Mexico were eliminated in 2008.

Tariffs on covered goods traded between Canada and the U.S. became duty free on January 1, 1989, which was carried forward.

Over the last three decades, NAFTA has had an overwhelmingly positive effect on the Canadian economy and has been a success on a global level.

In 2016, NAFTA partners represented 28 per cent of the world’s gross domestic product (GDP) with just less than 7 per cent of the world’s population.

Since the implementation of NAFTA, the North American economy has expanded, with the combined GDP for Canada, the U.S. and Mexico reaching USD $21.1 trillion in 2016.

According to federal statistics, Canada and the U.S. have one of the world’s largest investment relationships with a bilateral investment stock totalling more than $866.4 billion CAD in 2016.

“Canada and the U.S. are more than just trading partners,” added LeBlanc.

“We are highly integrated economies – and this has greatly benefitted both of our countries, for more than 150 years. We want to preserve this relationship, but in the face of the unjustified U.S. tariffs against Canadian goods, we are taking action to protect our economy, our workers and our businesses. We will always stand for Canada.”

The United States-Mexico-Canada Agreement (USMCA) replaced NAFTA on July 1, 2020. This new agreement aimed to create a more balanced, reciprocal trade partnership and strengthen economic ties with the United States, Canada and Mexico.

It was the unjustified tariffs made by the Trump administration that quickly dissolved that partnership.

This trade war will be harmful to the U.S., to Canada, and to Mexico, and consequences will immediately impact the local economy.

According to Goderich Mayor Trevor Bazinet, the Town of Goderich will ensure its buying decisions prioritize Canadian products and services over American.

“We must work together to protect our local businesses and industries,” said Bazinet in a post on social media.

“Whenever we have experienced difficult times in the Town of Goderich, we have always supported one another and our local businesses.”

Bazinet explained that the Town of Goderich and its residents need to develop an action plan to support, promote, collaborate, and advocate for and with local businesses and industries.

“I’m not telling anyone that they must buy Canadian when they are making future purchases, but I am asking you to consider it,” added Bazinet.

The Huron Chamber of Commerce is also deeply concerned about Trump’s recent decision to impose tariffs on Canadian imports.

This action poses significant challenges for businesses and communities within Huron County.

“Disrupting this relationship through tariffs will inevitably lead to increased costs for families, communities, and enterprises,” explained Colin Carmichael, Executive Director of Huron Chamber of Commerce.

“The increased costs and potential barriers to the U.S. market threaten jobs and the economic well-being of our community.”

In Huron County, local businesses, especially those in agriculture and manufacturing are vulnerable to these tariffs, according to Carmichael.

Huron Chamber has already been alerted to layoffs at some local manufacturers due to reduced U.S. orders in anticipation of these tariffs.

“The people of Huron County have always demonstrated incredible resilience in the face of economic challenges,” added Carmichael.

“We’ve seen time and time again how our community rallies to support local businesses, whether through supply chain disruptions, market shifts, or global uncertainties. While these tariffs present a serious challenge, I have no doubt that Huron County will once again come together to support our businesses and workers through these difficult times.”