B.C. businesses are watching closely as Canada’s trade dispute with the U.S. heats up, with the latest threat directed at protected dairy, egg and poultry production.
Soon after extending its “national security” tariffs on imported steel and aluminum to include Canada, U.S. president Donald Trump took to Twitter to warn of demands for increased access to the Canadian agriculture market.
“Canada has all sorts of trade barriers on our agricultural products,” Trump tweeted. “Not acceptable!”
Farmers have not been doing well for 15 years. Mexico, Canada, China and others have treated them unfairly. By the time I finish trade talks, that will change. Big trade barriers against U.S. farmers, and other businesses, will finally be broken. Massive trade deficits no longer!
— Donald J. Trump (@realDonaldTrump) June 4, 2018
Canada’s government-protected dairy, egg and poultry market has been a trade irritant for the U.S. and other countries for years. Only minimal foreign access to those markets was given up in the recently concluded Canada-European Union trade deal, and the Trans Pacific Partnership discussions that Canada has been involved in.
There is an upside to the trade war that has seen Canada retaliate with tariffs on such items as maple syrup and toilet paper, said Dan Baxter, director of policy development at the B.C. Chamber of Commerce. But it is a temporary one that some are calling a “patriotic effect,” where consumers start seeking out Canadian products to show support.
“That’s a very short-term uptick benefit,” Baxter said. “The overall long-term trend when you get into these kinds of trade wars, and of course the Canadian government using very understandable counter-measures, ultimately that hurts consumers and businesses on both sides of the border.”
Rio Tinto Alcan’s recently modernized smelter at Kitimat is faced with a 10-per-cent tariff on sales to the U.S., which Baxter said is likely a side effect of Trump’s focus on its trade imbalance with China.
Canada has had an integrated aluminum market with the U.S. going back 100 years, not only for manufacturing but as part of its NATO and NORAD defence agreements, and before that its cooperation during World War II, he said.
Trudeau was asked about farm subsidies in an appearance on NBC’s Meet the Press program on Sunday, and he acknowledged that Canadian negotiators were “moving towards flexibility” on milk and other products.
“I think they want a better deal on their auto sector from Mexico and I think they want more access on certain agricultural products like dairy in Canada,” Trudeau said.
Trump economic advisor Larry Kudlow said Tuesday the president is leaning towards negotiating separate deals with Canada and Mexico.
Baxter said Canada has provided some access to its agricultural market in the EU and TPP agreements, but received substantial access to foreign markets in exchange. It’s “ironic” that Trump pulled the U.S. out of the TPP, when it gave the U.S. additional farm products access to Canada that he is concerned about now.