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Steel & Aluminum Tariff Relief for CTEA Members?

Thursday, July 5, 2018   (0 Comments)
Posted by: Don Moore
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(Editorial by Don Moore, Director, Government & Industry Relations)

 

As I am sure everyone has heard we are in the midst of a trade war with the US.  Not good ...

The effect on member manufacturing companies in Canada could be serious, particularly when the steel and aluminum materials required for manufacture are in practice only available from the US.  Some of these materials may already have been targeted for tariffs by the US government as unfinished product imported into the US from Canada, China, or the EU.  So there is the possibility that the increase in cost for the needed materials will have gone up as much as 50%.  This is on top of what I've heard to be a steady stream of price increases due to supply and demand over the past few years.

 

The real problem is not so much for those companies that are selling back into the US.  There are mechanisms like the Duty Drawback Program or the Duties Relief Program that exists to recover the Canadian applied tariffs.  The problem is for the companies simply trying to manufacture for regional customers in Canada.  They must now compete at the higher prices with vehicles that can be sold by US competitors into Canada under the still valid NAFTA rules and not be affected by the additional 10% to 25% retaliatory tariffs.

 

Don't get me wrong, I am not saying that the Canadian Government is wrong in standing up to the US Administration in an effort to stop the strong arm protectionist tactics, and to get back to the NAFTA negotiation table to develop a fair, modern deal across North America.  What I am saying is that there will be pain and in some instances it may be severe.  And, unfortunately our sectors are some of those that may see a substantial amount of that pain.

 

In its announcement on Friday, June 29th the Canadian Government indicated that it had a "Tool Kit" of programs to help alleviate some of the difficulties that the tariffs would create for Canadian businesses.  The two Duty relief programs mentioned above may help some.  Extending the EI workshare agreements may help a bit.  Other provincial efforts to do with training and helping to find other jobs may help a bit.  The $1.7 billion of assistance to the steel and aluminum industries won't likely affect our industries until years down to road (... possibly a little late?).

 

The $250 million addition to the Strategic Innovation Fund is for new innovation typically, unless there is more information in the details when they come out, and the $50 million to help leverage existing trade deals globally isn't likely to help regional vehicle suppliers like many of our members.  This is particularly true if we consider the EU specifically.  Their vehicle regulatory structure is completely different than that of North America.

 

The basic problem with going to other markets is that they typically have fairly mature industries of their own to compete against and logistics would add even more cost and time delays making our products less attractive.  It would take years to gain a foothold, if it is even practical.

So, where does that leave us?  First off, Canada, Mexico and the USA need to get back to the NAFTA negotiation table and come up with a fair, modernized trade agreement ASAP, and this nonsense needs to end quickly.

 

Failing that, the Canadian government needs to look at providing targeted relief to our Canadian companies in order that we can continue to compete in our own backyard.  This could come in the form of company specific exemptions.

 

To this end, the CTEA has put out a survey for some basic information from all Canadian member companies.  We need this data to convince the federal government of our plight.  We have their ear, now we need hard data to prove our point.

 

CTEA has the voice, so let’s be loud!!



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