Tariffs on steel and aluminum might cost the U.S. 400,000 jobs — and Canada could get hit too

Click to play video: 'White House denies report of extending exemption to Canada on tariffs'
White House denies report of extending exemption to Canada on tariffs
WATCH: Larry Kudlow on Wednesday denied a report that Steve Mnuchin recommended to President Trump that they extend an exemption to Canada on trade tariffs – Jun 6, 2018

A report released Tuesday by the Washington-based trade and economic consulting firm claims that for every steel and aluminum job saved by the Trump administration’s tariffs on imports, 16 more will be lost.

“Basically, the report finds not surprisingly that the tariffs would increase employment in the steel and the aluminum sectors, but what it shows pretty clearly is that a large number of other workers would lose jobs in the process as higher steel costs ripple through the economy,” said Laura Baughman, one of the report’s authors.

Story continues below advertisement

Trade Partnership Worldwide LLC released the report this week, which claims that over 400,000 jobs will be lost in other sectors of the economy due to higher prices on steel and aluminum. The industry that could be most impacted, with over 375,000 jobs lost, will be the services sector.

“Services sectors will see large employment declines. You wouldn’t expect that when you’re putting a tariff on steel and aluminum that it would have that big of an impact on services sectors but it does. People lose their jobs, so they stop spending money on services,” said Baughman.

In addition, almost 7,000 jobs will be lost in agriculture and 20,000 jobs will be lost in manufacturing, and almost 1,000 lost in the energy sector, for a total of 402,445 jobs, the report said.

Breaking news from Canada and around the world sent to your email, as it happens.

On March 8 of this year, U.S. President Donald Trump signed Proclamations imposing tariffs of 25 per cent on U.S. imports of steel and 10 per cent on U.S. imports of aluminum from all countries except Canada and Mexico. In recent weeks, the Trump government has rescinded that extension, prompting some of its closest allies to retaliate.

Story continues below advertisement

Canada punched back with tariffs, but we’re not immune from job losses

The retaliatory measures from other countries — including Canada, who imposed C$16.5 billion worth of tariffs on American products in response — could significantly magnify the impact the Trump administration’s tariffs on aluminum and steel imports could have on American jobs, states the report.

The report finds that the tariffs coupled with retaliation would reduce U.S. GDP by 0.2 per cent annually, and that while imports would decrease as expected, exports would also decrease.

“I think the retaliation piece of this really magnifies the negative impact on the United States. I’m not going to say it doubles it but it’s potentially that large,” explained Baughman.

Baughman goes on to say that Canada may not be immune from economic impacts and job losses as a result of these tariffs, due to the close relationship between the Canadian and American steel industries.

“The U.S. is, of course, a very large market for Canadian steel and aluminum. So, there are ripple effects back to the Canadian industries as well.

Story continues below advertisement

“Those higher costs will ripple through to Canadian consumers as well, and will cut household spending, which will have ramifications for services and related sectors in Canada.”

What does the U.S. mean when it refers to Canadian steel as a ‘national security threat?’

Republican and Democratic U.S. senators plan to introduce as soon as Tuesday legislation that would force President Donald Trump to obtain Congress’ approval before imposing tariffs on national security grounds, a senior senator said on Tuesday.

Baughman expands on the Trump administration’s argument that Canada and Mexico pose national security threats to the United States, therefore justifying the tariffs. Canadian Prime Minister Justin Trudeau has called the statement “insulting” and referred to it as an “affront” to Canada’s longstanding trade relationship with the U.S.

Baughman explained that the administration is referring to national security as being impacted by the country’s economic instability. If the economy is unstable, Trump officials argue, the U.S. is also vulnerable on a national security basis, she stated.

Story continues below advertisement

“I don’t think they think Canada is a threat to our national security. I think they think imports from Canada is a threat to our economic security and that in turn is a threat to our national security.”

Sponsored content