President-elect Donald Trump is threatening to impose 25-percent tariffs on all imported goods from Mexico and Canada. While supporters say Trump is following through on campaign pledges, the idea is being criticized along the northern border where such trade is key to economic stability.
Canadian Prime Minister Justin Trudeau flew to Florida Nov. 29th to meet with Trump and discuss the potential impacts of a 25 percent tariff. The Canadian leader called it “an excellent conversation” but also warned the incoming president that his plan would hurt Americans financially.
Former Congressman Bill Owens represented New York’s 21st District from 2009 to 2015. The Democrat was co-chair of the Northern Border Caucus while in Congress and now serves on the advisory board of the Canadian American Business Council. Owens says any tariff imposed on Canadian goods would impact the regional and U.S. economy.
“Because there’s such a broad range of goods being moved into the U.S. from Canada. And it’s not just the goods that stop here,” Owens noted. “You have all of the transportation industry that surrounds them. You have warehousing. You have trucking. And if all of a sudden that gets cut back, that going to have significant impact on our region. The particular products that may be going to a manufacturing plant, I think, in relative terms will be small dollar value as compared to the warehousing and the transportation of those goods. So it’s very, very problematic.”
Speaking on WAMC’s Congressional Corner this week, Congressman Pat Ryan, a Democrat representing New York’s 18th District, said Trump’s proposed tariffs would be devastating for small businesses and consumers.
“I think this would just grind to a halt the recovery that President Biden has been able to largely bring to effect in post-COVID recovery. And it would punish exactly the wrong people which are the American people just trying to buy what their family needs food, clothes and otherwise,” Ryan said. “So I’m hopeful we can stop and prevent these. And we’ve seen the response from China, Canada and Mexico saying if you were to do this, we would sort of respond in kind and essentially start a trade war. Any time in history we’ve had a trade war the people that pay the price are the American people and of course the billionaires and the big corporations are fine. And I worry that we’ll have more of that under President-elect Trump.”
A.N. Deringer, based in St. Albans, Vermont, is one of the largest customs brokers in the country. Director of Customs Affairs and Compliance Amy Magnus explains that most companies doing cross border business have already finalized contracts, and additional tariffs would throw trade into disarray.
“Purchase orders have already been cut, for a whole year maybe. Prices have already been agreed to between a manufacturer overseas or in Canada or in Mexico. These things have all been planned out with profit already calculated,” explained Magnus. “And the other thing is in the statement that Trump made he said he was going to make it effective I think on January 20th. Well, that would be extreme. It’s going to be quite difficult.”
Magnus notes that many of their clients have benefitted from free trade agreements for years and have never paid duties such as a tariff.
“This is so unprecedented. Just reminding you again of the relationship that we’ve had particularly with Canada over all these years and the free trade agreements that both sides have enjoyed over many years. It will be disruptive to suddenly have duties assessed,” Magnus said.
Owens says it’s not clear if imposing tariffs would violate terms of the current U.S. Mexico Canada Free Trade Agreement.
“Under the Free Trade Agreement you can’t impose tariffs unless the other country is doing something in violation of the free trade agreement. But in the absence of that, those tariffs are probably violations of the free trade agreement,” Owens observed. “Now that will take a couple years probably to work its way through the courts and it’ll cause a lot of discord in our relationship particularly with Canada.”
Canada has not ruled out retaliatory tariffs if Trump follows through.
