Trade war redux: U.S., Canada exchange trade tariffs

President Donald TrumpLess than two months after the U.S.-Mexico-Canada Agreement (USMCA) went into effect, President Trump is again imposing a 10 percent tariff on aluminum from Canada.

Last week, Trump said he signed a decree to reimpose the levy on Canada, stating the country is “taking advantage of us as usual,” according to The New York Times.

In 2018, Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports based on the findings of Department of Commerce reports that determined global excess capacity for producing steel and aluminum was “weakening our internal economy.”

Canada and Mexico were exempt from steel and aluminum tariffs because of the USMCA, which is an update of the  North American Free Trade Agreement established in 1994. As part of the USMCA, which took effect July 1, 2020, the United States retained the right to reinstate tariffs if it determined an increase in metal imports.

Shortly after Trump’s announcement, Canada Prime Minister Justin Trudeau stated on Twitter his country “will impose countermeasures that will include dollar-for-dollar retaliatory tariffs.”

Kirsten Hillman, Canadian ambassador to the United States, said in an AP report, the country’s tariffs on U.S. aluminum and other products will affect U.S. manufacturers. “It’s going to be more expensive to buy a car or a truck or to buy parts,” Hillman says.

Bill Long, president and CEO of the Motor & Equipment Manufacturers Association (MEMA), says the president’s decision to  impose tariffs on Canadian aluminum places greater financial hardship on American vehicle parts manufacturers when the industry is trying to recover from plant shutdowns and a declining economy.

“MEMA [the parent organization of the Heavy Duty Manufacturers Association] has been a strong advocate and supporter of the Trump administration’s historic U.S.-Mexico-Canada Agreement. We are disappointed with the tariff announcement coming so soon after USMCA entered into force,” Long says.

He says MEMA’s 1,000-member motor vehicle parts manufacturers, with more than 871,000 employees, are in the midst of a national public health and economic crisis.

“These are difficult times and many companies are struggling to maintain payrolls. The last thing companies need are additional tariff increases on necessary materials,” Long says. “Bringing back unilateral tariffs on aluminum from Canada is unwarranted and will harm a key ally. The action will also adversely impact already suffering U.S. consumers by raising the costs of new vehicles as well as parts necessary to repair and maintain motor vehicles.”

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