Impact of Tariffs on Canadian Business

Running head: CANADIAN BUSINESS 1
Canadian Business
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The Canadian administration responded to Trump's government decision to impose tariffs
on steel and aluminium by imposing retaliatory tariffs estimated to be worth $16 billion of
American imports (Marowits, 2018). The list entailed a 25% surtax on partial-finished
commodities with the inclusion of steel products and a 10% tariff of consumer commodities with
the addition of coffee and orange juice. It is estimated that more than $16.6 billion worth of
yearly duties account for approximately 6% of the $294 billion of the gross value of
commodities imported from the U.S (Rocha, 2018). This 10% rate on goods and services
accounts for 70% of products impacted by tariffs.
Steel and aluminium industry
Canada got a slap from the U.S following the hefty tariffs imposed on steel and
aluminium industry, an action that will see residents of Canada pay more for items such as cars,
beer and refrigerator among other items. The 25% tariff on steel and 10% on aluminium is a
thorn to the Canadian economy as it will cost it approximately $3.2 billion a year (Dangerfield,
2018). This is because Canada has been ranked as the leading supplier of steel and aluminium to
the United States. Canada exports more than 90% of its steel and the U.S. which is more than
what is shipped by other countries based on data from the Association of Canadian Steel
Producers. The advantages of free trade are scrapped in the late dealing between Canada and the
U.S. as this will see the price of steel and aluminium rise leading to loss of jobs. The American
policy has held the Canadian economy captive. Trump's administration initially initiated tariffs
after president Trump announced that the U.S was being mistreated. He confirmed that taxes on
imports would help protect American employment opportunities while at the same time boost the
economy. U.S. security interests were also cited by the Trump administration aiming to

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implement the tariffs, stressing that the military needs a national domestic supply for its ships
and tanks.
Despite announcements that Canada, Mexico and EU that they were accorded a
temporary exemption from the announced tariffs, the offer was to expire in a few days.
It is estimated that half of Canada’s steel produced is exported majorly to the U.S. and with the
25% tariff imposed, it is evident that the demand for Canadian steel from the U.S will fall
dramatically. There is a need for people working in the Canadian steel industry to worry as they
export and import a lot to the U.S. Thus, there will be job cuts since the U.S. market will be
experiencing job losses which will affect Canada. Only five provinces are responsible for
producing steel in Canada employing more than 20000 individuals with Ontario being the centre
where production is mainly concentrated.
According to the Association of Canadian Steel Producers, three cities that are Sault
Ste.Marie, Ont., Hamilton, Ont., and Sorel-Tracy, Que., in Canada are heavily reliant on the steel
industry. A city such as Hamilton has been dubbed as the Steel city has approximately a
population of about 10000 people employed in the steel industry. It has also been stated that it
produces roughly about a third of the entire Canadian steel that is exported to the United States.
This is crucial to the Canadian economy as it accounts for $2 billion in Canadian procurement
and this translates to more than 30,000 jobs being dependent on the steel industry in Hamilton.
Aluminium Association of Canada reports that approximately 80% of the 3 million tons of
Canadian aluminium is exported to the U.S. annually and this accounts for two-thirds of U.S
gross aluminium imports (Evans, 2018). The Canadian aluminium sector carries with it more
than 8300 jobs with a majority of jobs being concentrated in Quebec. One of the consulting firms

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in the aluminium industry, Harbor, had cited possibilities that import duties would make the
price of machinery, cars and appliances to rise.
Based on a report by Peterson Institute for International Economics (PIIE) an institution
located in Washington U.S., it revealed steel and aluminium industries in Canada would lose
approximately $3.2 billion every year if such tariffs were imposed in exports lost to the United
States. This was immense and one of the biggest hits that could be shouldered by any country as
it is close to five times as much as more than the $600 million that China would yield under such
tariffs. More than $24 billion worth of Canadian steel and aluminium was exported to the U.S. in
2017 with most of the steel and aluminium originating from Ontario and Quebec (Dangerfield,
2018).Some of the pundits from the Financial department postulate that even though Canada was
anticipated to lose around $3.2 billion annually from the imposed taxes on steel and aluminium,
Canadian economy would experience minimal impact on the GDP. Analysts indicate that tariffs
would initiate a GDP reduction of about 0.2-0.3% (Dangerfield, 2018).
Softwood Lumber
Tariffs on Canadian softwood lumber by Trumps administration seem to be driving the
cost of wood based on claims by association of home builders which leads to $9000 increase in
the value of single-family in the U.S (Dattu, Glossop, & Xu, 2017). The 20% tariffs on Canadian
lumber implemented at the end of last year has led to $3000 increase in the average price of a
multi-family unit. The lumber prices are rising, and the issue is exacerbated by tariffs imposed
on the Canadian imports with regards to the Canadian softwood. Secretary Ross expressed her
mutual concern with regards to the rising prices of lumber reported to be higher than the
anticipated tariff rate as it is already hurting the affordability of houses in markets spread across
the U.S.