Peterborough companies seeing ripple effects of U.S. steel tariffs
Tension continues to grow between Canada and the U.S. over trade.
U.S. president Donald Trump is holding firm on his country’s steel and aluminum tariffs on Canadian exports.
The Trump Administration’s steel and aluminum tariffs will cost jobs and growth, according to a report by the C.D. Howe Institute, an independent not-for-profit research firm.
Canadian, Mexican and European Union steel shipments to the U.S. are slapped with a 25 per cent tariff, while aluminum is hit with 10 per cent tariff.
“The initial impact from a macro point of view won’t be that significant initially, based on the percentage that these products represent on global economic activity on Canada,” said Andrew Pyle, economist. “Having said that, the impact could be more broad-based if businesses see these tariffs long lasting, especially if this trade dispute becomes more protracted.”
“Steel is the name of our company. It has a big impact. We design and build machinery and the main component is either steel or electronics,” said Rhonda Barnet, President & COO of Steelworks Design Inc. “Steel makes up 15 per cent of our material purchases in a year.”
The C.D. Howe study states the impact on GDP in value terms is relatively larger in Canada at -US$8.1 billion than in the United States at -US$3.0 billion.
It also states both economies are less efficient, with labour productivity falling by about 0.05 per cent in the U.S. and 0.08 per cent in Canada, while two-way trade trade falls in the U.S. by 0.7 per cent or US$36 billion, while Canada’s two-way trade falls by close to US$4 billion.
“We don’t buy much steel from the States, or ship to the States, so it doesn’t affect us that way,” said Tom Elliott, president and CEO of Kawartha Metals. “Once the July 1 tariffs come into effect, it will affect our supply chain and it will likely kick up prices on steel. If it’s long term, it will also create more inflation and could create a slowdown in a couple of years.”
“We’ve seen even more than 25 per cent pressure on the price of structural steel. We deal a lot in it. We work with Peterborough Utilities on the dams and provide stop logs. We’ve seen 40 per cent pressure on the price of the logs that we have to purchase from the U.S. for our dams here in Peterborough,” added Barnet. “Consumers will have to pay more. That’s the ultimate cost of tariffs.”
Canada’s retaliatory tariffs on American products will come into effect July 1.
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