Blaine Calkins
Member of Parliament for Red Deer - Lacombe

2018-06-28 (June)

Tariffs and Potential Trade War Threaten Our Economy

A trade war with the United States appears imminent. NAFTA talks have stalled, the United States has placed tariffs on our steel and aluminum exports under the guise of “national security concerns”, and the Liberal Government has set up retaliatory tariffs to go into effect on July 1st.

The potential consequences of a trade war are immense. The Canada – U.S. trade relationship totals about $600 Billion per year and over three-quarters of Canadian exports are sent to the United States. Economists estimate that a full-out trade war with the United States would plunge Canada’s economy into a serious
and prolonged recession. 

The negative effects of Trump’s steel and aluminum tariffs are already being felt in Red Deer – Lacombe and across Canada. On June 27th, the House of Commons Standing Committee on International Trade heard horror stories from previously successful Canadian steel and aluminum businesses that are now at risk of bankruptcy due to the tariffs. Considering that steel and aluminum exports only accounted for about 3% of Canada’s exports to the United States, it’s easy to see how damaging more wide-ranging tariffs could be. 

The retaliatory tariffs will harm many local businesses by increasing the costs of their raw materials, and finished goods they import from the United States. A wide array of local businesses – from recreational
boat dealers to breweries to manufacturers – have written to me with their concerns about how these tariffs will negatively impact their businesses. For many of these businesses, importing goods on the tariff list from the United States is the only option as these goods are not produced in Canada. These tariffs would impose a difficult burden on local businesses that are forced to choose between absorbing the additional costs and raising prices.  

The retaliatory tariffs will also hurt Canadian families who will be forced to pay more for a wide range of goods. Although the Liberal Government claims that the retaliatory tariffs are aimed at products where
Canadian alternatives exist, the Retail Council of Canada anticipates higher consumer prices as a result of these measures.  

Clearly there is a need for the Canadian Government to respond to American trade aggression; however, it is crucial that any response minimizes the harm inflicted on Canadian businesses, workers, and families. Additionally, it is critical that a trade war with the United States is avoided at all costs.

Nobody wins in a trade war, especially a trade war with a much larger neighbouring economy.

Now is the time to be responsible. The economic threat is real and the consequences of getting the US-Canada trade relationship wrong are immense. In this situation, the most irresponsible thing our Prime Minister can do is provoke President Trump in an effort to improve his own domestic political appeal. Unfortunately, I am concerned that may be exactly what is happening.

Instead of provoking President Trump, the Liberal Government should take immediate action to secure the elimination of the tariffs on Canadian steel and aluminum, and prevent further tariffs on Canadian goods. The best way to achieve this is through the negotiation of a new NAFTA deal that is in the best interest of Canadian businesses and consumers. In the meantime, the Liberal Government should revisit the list of goods affected by the retaliatory tariffs to minimize the damage to Canadian businesses and consumers. 

 

 
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Blaine Calkins - Member of Parliament for Red Deer - Lacombe