Uncertainty the biggest fear as Windsor feels sting of Trump tariffs

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The whirlwind of steel and aluminum tariffs and counter-tariffs began to buffet Canadian businesses Wednesday — with the ensuing trade war chaos proving as costly as the actual new taxes themselves.

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In response to U.S. President Donald Trump slapping a 25 per cent tariff on all steel and aluminum entering the United States as of Tuesday, Canada responded with a reciprocal tariff on the same American products.

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The tariffs will drive up the price of every product containing those metals, from cars and appliances to pots, pans and beer cans.

“Time and uncertainty is our biggest enemy right now, not tariffs,” Laval International president Jonathon Azzopardi told the Star.

“People really underestimate how fragile our two economies are.”

The Canadian tariffs took effect just after midnight on Thursday.

It will result in American steel products being dinged for about $12.6 billion while aluminum products will take a $3-billion hit. There are tariffs valued at an additional $14.2 billion on other U.S. imports.

The new tariffs are on top of the $30 billion in existing Canadian import charges already put in place earlier this month.

With tariffs threatening the viability of companies on either side of the border, Zekelman Industries CEO and Windsor native Barry Zekelman told American broadcaster CNBC in a Tuesday interview it’s time to turn down the temperature in the dispute.

Let’s all calm down and cool down

Zekelman Industries manufacturers steel pipes and tubes and owns Atlas Tube in Harrow along with another 22 plants in the U.S.

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“Donald Trump himself said he wants to restart the Keystone pipeline, which is 800,000 barrels of oil a day from Canada, so obviously he wants to trade with Canada with the right parameters in place,” Zekelman said.

“Let’s all calm down and cool down and actually sit down and make things happen.

“I think Canada and the U.S. can be great, great trading partners for decades and decades to come. There are just some problem areas that need some work.”

The Star reached out to Zekelman Wednesday for a comment on the impact of the tariffs on the company’s Canadian operations, but he replied that his travel schedule and meetings had him tied up.

Zekelman told CNBC there’s no getting around how integrated the economies of the two countries have become. He was blunt about the fallout from an escalating tariff war.

“It would be absolutely brutal,” Zekelman said.

“It would be terrible for our business in Canada, some of which we ship to the U.S. It would also devastate a lot of companies in Canada that are using our product within Canada.”

Azzopardi added it’s going to be challenging for local manufacturers to absorb the cost of the new tariffs for very long. However, some companies might take the pain to maintain relationships with  customers.

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“None of us have that profit margin,” Azzopardi said. “You may end up stomaching some of those new costs.”

History shows tariffs could cost the Canadian steel and aluminum industries substantial market share.

In 2018, Trump placed a 25 per cent tariff on Canadian steel and a 10 per cent tariff on aluminum that lasted about a year. The tariffs resulted in a 37.8 per cent drop in demand for Canadian steel and an 18.6 per cent drop for aluminum, according to Statistics Canada.

However, the pain and chaos won’t be limited to the Canadian side of the border. The previous Trump tariffs on the metals resulted in huge net job losses for the U.S.

A study by the Federal Reserve Bank of New York, Columbia and Princeton universities found that for every one job created in the U.S. aluminum and steel industries, 75 jobs were lost in industries that used those metals as inputs.

It’ll hurt the U.S. even more

A 2019 National Bureau of Economic Research study also confirmed the tariffs were passed along to U.S. businesses and consumers, resulting in them paying an additional US$12.3 billion.

The auto sector is a heavy user of the two metals and big increases in suppliers’ input costs threaten the viability of their supply chains. The industry warned it would only be a matter of days before the North American auto industry ground to a halt if bottlenecks develop.

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“Trump is knowingly inflicting damage to the North American manufacturing sector with these inflationary tariffs that will injure workers, eliminate jobs, and hurt consumers,” said Unifor national president Lana Payne.

“America does not have a monopoly on auto production. Canada has been manufacturing vehicles for over a century and we are the largest Detroit Three purchasing market outside of the U.S.

“These are our jobs, and we will defend them with everything we have. You sell here, you must also build here.”

Unifor Local 200 president John D’Agnolo told the Star production at Ford’s two local engine plants and Stellantis’s Windsor Assembly Plant were operating as normal Wednesday.

D’Agnolo said he doesn’t expect any production changes in Ontario in the face of Trump’s April 2 deadline to move production to the U.S. or face a 25 per cent tariff on the Canadian automotive sector.

“He’s going to put thousands of people out of a job in the U.S. with all these tariffs,” said D’Agnolo, who is also chair of the national union’s automotive council.

“We (Ford) have 2,000 people in Windsor supplying engines to the Kentucky, Michigan and Ohio truck plants and he’s going to put 15,000 people out of work just at those three plants. You add the parts suppliers and its 50,000 just for those plants.

“It’s going to hurt Canada, but it’ll hurt the U.S. even more because the industry is so much bigger over there and there are so many more employees.”

— With files from Doug Schmidt

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Twitter.com/winstarwaddell

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