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Unifor views end of tariffs statement with caution

Canada’s ambassador to the United States showing certainty in the tariff issue
Canada’s Ambassador to the United States David MacNaughton attends a business luncheon in Montreal, Wednesday, November 16, 2016. MacNaughton says he believes NAFTA negotiators can reach an agreement in principle by the end of March. (Graham Hughes/The Canadian Press)

Steel and aluminium workers’ union Unifor has received with caution a statement by Canada’s U.S. ambassador that the American tariffs on Canadian steel and aluminium could be gone in a matter of weeks.

Reacting to ambassador David MacNaughton’s comment made on February 21 during a day-long free-trade forum hosted by the Canadian American Business Council in Washington, Unifor researcher Angelo DiCaro said the union has heard similar optimistic messages before.

“Ambassador MacNaughton is as close to this issue as anyone in North America, and I’ve no reason to doubt him. But I’m also wary that we’ve heard these optimistic messages before, and they haven’t panned out,” said DiCaro.

He said there was certainly more cause for optimism than there was in 2018 and that opposition to these national security tariffs on Canada was growing, especially in the U.S. Congress.

“However, unlike other tariff disputes, the decision on steel and aluminium rests squarely with (Trump), and he’s a wild card. We thought these tariffs would have been lifted prior to the signing of USMCA in November, and that obviously didn’t happen.”

The USMCA (United States-Mexico-Canada Agreement) was drafted to replace the North American Fair Trade Agreement (NAFTA). After signing the agreement on November 30 last year, Trump threatened to end NAFTA if Congress didn’t approve the USMCA.

DiCaro said Unifor national president Jerry Dias is in regular contact with federal trade officials on the issue of tariffs and that the union is in agreement with the officials that the tariffs are “baseless and should be removed, full stop.”

“It’s less a negotiation as it is a desire for the U.S. to come to its senses. A lot of our work has been focused on convincing American officials that these tariffs are not in their best interest,” added DiCaro.

He said Unifor’s local union leadership, including Unifor Local 2301 president Marty McIlwrath, have been actively talking to officials both in Canada and Washington about the tariffs. DiCaro believes MacNaughton’s optimism most likely stems from the fact that Trump has been using national security tariffs as leverage in ongoing trade negotiations, including with China and the European Union.

“Trump has finalized a USMCA deal that he’s generally pleased with, and in that respect, maybe he sees tariffs on Canada and Mexico as having served their purpose.”

He said for Trump to replace NAFTA with USMCA, he would need approval from the U.S. Congress.

“Members of Congress have laid out a series of bold conditions, including dropping the tariffs. Trump may do this as a way of throwing opposition voices a bone, to help secure passage of the USMCA.”

He said it was difficult to gauge the effect that the tariffs have had since the tariffs have affected different companies in different ways.

“There certainly hasn’t been any mass decline of steel or aluminium capacity in Canada, but that was also never expected to happen.

“Companies have done what they can to weather the storm, including scaling down production and downloading costs on to consumers.”

He said the ripple effect of these tariffs has been felt broadly by industries reliant on steel and aluminium inputs, like the auto sector.

“Government support programs, including investment supports, enhanced work-sharing and tariff remissions, have helped mitigate the full effect of tariff measures.

“The question is how long can the industry sustain itself under these conditions, and that’s unknown at this point.”

Asked whether he thought the tariffs had been successful, DiCaro said it would depend on who was being asked that question.

He said some U.S. mills are scheduled to reopen, including a U.S. steel site in Alabama, and that while steel industry work has grown, albeit by a very small fraction – one per cent by some estimates – other industries and workers had suffered as a result of the increased costs.

“We understood the point of these tariffs was to stop countries like China from dumping low-cost products into the global market, hurting jobs. So far, the U.S. has approved 40 per cent of requests for tariff exemption on Chinese steel imports.

“Canada, who is the U.S.’ closest and fairest trading partner, has seen just two per cent of exemption applications approved. In aluminium, it’s only 0.2 per cent. It seems the U.S. has forgotten that the goal of these tariffs was to stop unfair trade practices from China.”