Donald Trump’s trade war with the rest of the world is heating up. Our friendly neighbors to the north have issued tariffs on $16.6 billion worth of products or $12.5 billion in American dollars.
After Trump issued a 25% tariff on steel and 10% tariffs on Aluminum, Canada has responded with 25% tariffs on US steel products and a 10% tax on over 80 other American items that range from coffee beans and strawberry jam to maple syrup and toffee.
Why those product categories? The tariffs are meant to offset the cost of tariffs that Donald Trump placed on the country, essentially creating an offset against any potential losses.
The move was expected since Canada was the largest exporter of steel to the United States (by value) last year, making it one of the countries to be most hurt by Trump’s trade maneuver.
Prime Minister Justin Trudeau, in issuing the tariffs, was making good on a previous promise to answer Trump’s tariffs.
“I have made it very clear to the president that it is not something we relish doing but it is something that we absolutely will do,” Trudeau said in June. “[As] Canadians, we’re polite, we’re reasonable but we also will not be pushed around.”
China has already responded by issuing more than $50 billion in tariffs on 545 product categories. The country’s leaders have promised additional tariffs against the United States that will be issued at an undisclosed time.
Trump’s tariffs have also led the European Union to issue 25% tariffs on various US products including motorcycles, a move that is forcing Harley Davidson to start manufacturing some of its exported bike overseas.
President Trump, this week, attacked Harley Davidson in several tweets, claiming the company was easy to “wave the white flag.” Reports suggest that the motorcycle manufacturer is set to lose between $40 million to $100 million over Trump’s trade war. Harley won’t raise prices for exports over fears that part of its customer base will flee for its competitors.
The Auto Market
A bigger war is already brewing between Trudeau and Trump after the POTUS promised to wage a war against automobile manufacturers who have been taking advantage of the North American Free Trade Agreement (NAFTA).
Trudeau appeared on Fox News’ Sunday Morning Futures and had this to say about Trump’s auto manufacturing threat:
“Obviously, it’s a significant concern. Again, considering that autos might be a national security threat to the United States is something that doesn’t entirely make sense, but we’re continuing to work hard on improving and renegotiating NAFTA.”
In the meantime, Trump’s tweets that Trudeau is “weak” don’t seem to be holding much weight as Canada’s Prime Minister goes on the offensive in Trump’s trade war.