I believe this is his most controversial move yet and I honestly do not have a prediction of an outcome. It is economically dangerous. With his Steel and Aluminum tariffs he is disregarding "the rules" of which the USA was the primary architect. In terms of Trade, the USA is too important to ignore, however if this escalates it could bring on a recession.
Great discussion group...thanks!
Oh just read this article now....a few hours after I posted this: http://nationalpost.com/opinion/john-ivison-the-great-patriotic-trade-war-against-the-u-s-begins-on-canada-day The problem with these Tariffs is that it is going to cost us more for some goods. :( As the USA will now be paying 25% more for steel. You cannot produce enough internally.
Another article I read... http://nationalpost.com/news/politics/the-good-the-bad-and-the-ugly-heres-what-could-happen-if-trumps-trade-war-escalates
Another article on the Trade Off. More jobs but less overall wealth. Example of Washing Machine prices. The tarrif protected industry gets more jobs. However, overall incomes are lost to paying more for the Tariffed products.
Information from another article... "Shortly after tariffs were announced, steel suppliers, no longer as fearful of price competition, began jacking up prices — they’re no fools. That has meant a 40 percent increase since January in the cost of steel for their customers who use it in their finished products, according to the U.S. Chamber of Commerce. They can either pass that increase on to you or be less profitable.
The story is the same with aluminum: Brewers are forecasting that they’ll pay $347.7 million more for aluminum cans. That has small craft-beer makers such as Melvin Brewing in Alpine, Wyo., which packages 75 percent of its products in cans, fretting about impending prices rises and the risks of passing them along to consumers. Try not to be bitter about it.
Job losses from the metal tariffs alone could top 400,000, according to an analysis by Trade Partnership Worldwide, a nonpartisan consultancy that supports free trade. So while U.S. Steel can celebrate the restart of two blast furnaces in Granite City, Ill., and bring back about 800 workers, 7,500 jobs will be lost elsewhere, the consultancy estimates." https://www.nytimes.com/2018/06/15/opinion/sunday/trump-china-tariffs-trade-farmers.html
I think it is safe to say right now...Option2 - Destabilize is occurring.
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Trump has no worries ... Trudeau does ... the Canadian currency has declined almost 30% In the futures market ... and softened further overnight after Trudeaus failed attempt to embarrass Trump.
Essentially the World is forcing Canada to absorb a 30% tariff on all exported and imported goods.
Like Mexico ... if you don't have the reserves to win ... you have to play to get along.
@questionWeaver Canada is the largest market for USA goods/services. https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States Many USA states would go into a recession as definitely would Canada. The USA will hurt (not as much) as well.
@questionWeaver Not if you look at the analysis of the Great Depression. Economics would definitely differ with your view. https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression
@questionWeaver Did not solely cause...but is considered an important aspect. "Protectionism, such as the American Smoot–Hawley Tariff Act, is often indicated as a cause of the Great Depression, with countries enacting protectionist policies yielding a beggar thy neighbor result.[73][74] The Smoot–Hawley Tariff Act was especially harmful to agriculture because it caused farmers to default on their loans. This event may have worsened or even caused the ensuing bank runs in the Midwest and West that caused the collapse of the banking system. A petition signed by over 1,000 economists was presented to the U.S. government warning that the Smoot-Hawley Tariff Act would bring disastrous economic repercussions; however, this did not stop the act from being signed into law." https://en.wikipedia.org/wiki/Causes_of_the_Great_Depression
Anyway ... no recession in the US will result from tariffs ... Canada needs to learn from the Mexican reserve rush ... and devaluation.
The world has already penalized Canada, via currency, for not playing well with others.
It is not tariffs you should be worried about ... it is the exchange rate ... it stays this low ... and the social programs will suffer.
You need to drop the protectionism with the US, sign a good deal ... get a few good things tossed in ... and let the world traders take the pressure off your currency.
@questionWeaver In what way, of course dairy...but what else?
According to USA figures, the USA imports less from Canada then it exports - "U.S. goods and services trade with Canada totaled an estimated $673.9 billion in 2017. Exports were $341.2 billion; imports were $332.8 billion. The U.S. goods and services trade surplus with Canada was $8.4 billion in 2017." https://ustr.gov/countries-regions/americas/canada USA has some high tariffs on some products -http://www.businessinsider.com/americas-biggest-tariffs-2010-9#asparagus-and-sweet-corn-213-tariff-3 And so does Canada. Like the USA, only in a very few specialized areas. For us it is milk/dairy etc. These Canadian tariffs do need to come down!!! Canadians are paying way too much when the USA can give them to us cheaper. I hope Trump wins on this.
@Jammy I think Canada would certainly move into a recession with a full trade war. I think it is also likely for the USA. I guess USA would go it alone and put up with higher goods and services for more potential jobs (however less overall national wealth). But I agree...in about 10 to 15 years, Canada would have to realign our trading with other nations. Canada would eventually make its way back. I am not sure about the USA if it has a isolationist policy. There is a reason, why stuff in Walmart is so low priced.
@okaybut at end both countries loose jobs and opportunities. Remember 1%in US is much higher than 1% in Canada in job loss. Plus if POTUS doesn’t play nice with other leaders, Canada is not alone. Other countries need our ressources.
@Jammy I agree....let us hope a trade war does not occur. However, it is a little out of hands now. I do believe Trudeau should drop the dairy tariffs. In my view it would be good for both countries.
Almost all exported Canadian products go through the US ports ... or to a US company somewhere in the world.
The reason is simple ... the US pays more and has better more efficient transportation.
If Canada sells elsewhere ... transportation costs increase and net revenue falls ... if that is the plan ... to lower the country's net revenue ... you would do better paying tariffs.
@Jammy @questionWeaver I agree (I will bookmark this question)...once this all unfolds in a few years time QuestionWeaver let us look at it again if you are around. Nothing better than the real outcome to see who called this one right. I do believe, that it is just for negotiating and that Trump will shift positions soon...but we will see.
@okaybut I want to ask you a question or two, does Canada and the rest of the free world get a free pass when taking advantage of US health care innovation ? Does Canada and the rest of the free world get a free ride when it comes to living under the protection of the US military ? It is easy to be a socialist state when you can take advantage of the US this way.
I mean the US is the last bastion of capitalism and freedom in this world. When are people going to stop electing little marxist globalista freaks who wish to create a world government where every person becomes a slave to a technocracy. A socialist hell hole which wants to downsize human beings and monitor the rest of us every breath and movement. Agenda 21, Agenda 30, the writing is on the wall. Please wake up and stop electing globalist pansies like Justin Trudeau who are frauds and who hate individual liberty.
@therighttothink50 Okay.... answers 1) I think with Health Care innovation, the USA gets benefits via commerce. Canada has a couple of our own Pharmas, but all others are owned by the USA (ie. Eli Lilly, Phifzer, etc). 2) Definitely USA military has shouldered way too much of the burden. However to some extent now you have to ask how much of the current spending is due to the Military Industrial complex. But this is not an for Trade, it is for NATO agreements. 3) I do not agree with Trudeau and his policies and have a feeling he might be voted out next election to bring in the right. You do remember you had left wing Obama while we had right of center Harper for many years?
