WASHINGTON — As the possibility of a trade war between the United States and Canada becomes increasingly plausible, Ohio is uniquely positioned to be a casualty.
Canada accounts for nearly 40 percent of the state’s export market, with Ohio sending Canada nearly $19 billion worth of goods last year — from auto parts to furniture to soap. In comparison, Mexico — Ohio’s second–largest export market — received $6.5 billion worth of goods last year.
In the aftermath of the Trump administration’s May 31 announcement that it would slap tariffs of 25 percent on steel and 10 percent on aluminum from Canada, America’s northern neighbor has decided to strike back hard. On the day the Trump administration announced its tariffs, Canadian Prime Minister Justin Trudeau called the tariffs “absurd.”
The nation then released its own list of retaliatory tariffs, not just on steel and aluminum, but also products such as shaving cream, yogurt, cars and inflatable boats.
The tariffs are set to go into effect July 1.
For Ohio, the impact could be stunning. Consider this:
Yogurt? Dannon, in Minster, makes it.
Strawberry jam? Smuckers, pride of Orrville, manufactures it.
Shaving cream? That hurts Barbasol, made in Ashland.
Parts of washers and dryers? Whirlpool, with locations in Ottawa, Greenville and Clyde.
Cars? Honda, made in Marysville, or Chevrolet, and Lordstown-made Cruzes.
Despite the possible impact, many of the companies have been guarded in their reactions. Honda, for example, said it is “assessing the potential impacts” of the tariffs on both sides.
“While we anticipate that the tariffs will impact Honda’s operations and business partners, we are still in the process of accessing the specific impacts as well as possible strategies to mitigate any adverse effects on our customers, associates, suppliers and dealers,” the company said in a statement.
For decades, the prospect of a trade war with Canada has been an idea about as likely as the prospect of a unicorn invasion.
But the high-wire debate over the renegotiation of the North American Free Trade Agreement — as well as President Donald Trump’s oft-repeated concerns about the U.S. steel industry — has ignited an unlikely tension between the U.S. and a nation that has been a steadfast ally. The tension has gotten heated enough that Trump — during a May 25 call with Trudeau — reportedly quipped that the tariffs were a national security issue because Canada burned down the White House during the War of 1812 (it was actually British troops).
When he first announced the tariffs in March, Trump exempted U.S. allies including Canada, Mexico and the European Union. He lifted those exemptions on May 31 — an action that has provoked a cascade of retaliation from all three. While Canada is by far the leading trading partner, the other two do significant trade with Ohio as well.
To Ohio’s U.S. senators, the tariffs on Canadian aluminum and steel are nonsensical. They don’t mind tariffs, but they want them pointed at countries that have dumped under-priced steel onto the U.S. market.
“I think Canada should be exempted from the steel tariffs,” said Sen. Rob Portman, an Ohio Republican who supports renegotiating NAFTA. “The real problem is China. It’s not Canada.”
Sen. Sherrod Brown, D-Ohio, supports tariffs on China and othersbut said complaints “were never directed at Canada.” Tariffs, he said, were aimed at making China stop dumping cheap products onto the U.S. markets and at leveling the playing field. Directing the tariffs at Canada, he said, “does not do that.”
Consumers would feel the impact in higher prices — the price of auto parts, for example, would have to increase to accommodate the tariffs — and businesses would feel the impact on the bottom line. Some businesses, hoping to avoid sticker shock for consumers, have already begun increasing prices in expectations of the tariffs, according to Ned Hill, a professor at Ohio State University who teaches economic development policy.
Meanwhile, unions appreciate efforts to make sure the U.S. is exporting as much as it imports. But while they are grateful for “the concept of trying to balance the playing field,” said Tim Burga, president of the Ohio AFL-CIO, “the way in which the president has gone about this ... is seemingly not terribly well thought out.”
Both Burga and Eric Burkland, president of the Ohio Manufacturers Association, are betting on — or hoping for — Trump’s volatility to work in their favor. July is a few weeks away, they say, and they are hopeful that Trump is using the tariffs as a bargaining chip and will pull back before Canada imposes its tariffs.
“We don’t want to end up in a trade war with one of our closest allies,” said Burkland.
But Rob Scott, director of trade and manufacturing policy research at the left-leaning Economic Policy Institute, said the U.S. leveled the tariffs after Canada decided not to stand with America and punish China for its cheating. By imposing tariffs on U.S.-made goods, such as playing cards and plywood, he said, Canadians “are shooting themselves in the foot.” They’ll be the ones paying higher prices for the U.S. products that they’re imposing tariffs on, Scott said.
“They had the choice to work with us to develop tougher policies for unfair trade by China or the choice to pick a fight with us,” he said. “They chose the latter.”
Former Rep. Pat Tiberi, who now heads the Ohio Business Roundtable, said that while Americans might not see the initial effects of Canadian tariffs on U.S. goods, they will eventually: A trade war would mean that at some point the U.S. would expand its tariffs on Canada beyond just aluminum and steel. The costs of those tariffs would be passed onto the consumer, he said.
More immediately, the impact will be felt by Ohio businesses. While many of the companies affected are household names, small businesses will also suffer, he said.
The former congressman from Genoa Township said that while many argue that the tariffs are being used as a negotiating tool, “the problem is it creates a ton of uncertainty, and uncertainty slows down the economy.”
He added, “It’s a very, very dangerous game.”
Ian Sheldon, a professor and Andersons Chair of Agricultural Marketing, Trade and Policy at Ohio State University, said the policy may indicate the end of the U.S. taking the lead in the global trade system.
“This is just blowing up the trade system, in my view,” he said. “The U.S. trade deficit is definitely not solved by this.”
Dispatch Washington bureau chief Jack Torry contributed to this story.
jwehrman@dispatch.com
http://www.dispatch.com/news/201806...ould-be-costly-for-export-driven-ohio-economy
Canada accounts for nearly 40 percent of the state’s export market, with Ohio sending Canada nearly $19 billion worth of goods last year — from auto parts to furniture to soap. In comparison, Mexico — Ohio’s second–largest export market — received $6.5 billion worth of goods last year.
In the aftermath of the Trump administration’s May 31 announcement that it would slap tariffs of 25 percent on steel and 10 percent on aluminum from Canada, America’s northern neighbor has decided to strike back hard. On the day the Trump administration announced its tariffs, Canadian Prime Minister Justin Trudeau called the tariffs “absurd.”
The nation then released its own list of retaliatory tariffs, not just on steel and aluminum, but also products such as shaving cream, yogurt, cars and inflatable boats.
The tariffs are set to go into effect July 1.
For Ohio, the impact could be stunning. Consider this:
Yogurt? Dannon, in Minster, makes it.
Strawberry jam? Smuckers, pride of Orrville, manufactures it.
Shaving cream? That hurts Barbasol, made in Ashland.
Parts of washers and dryers? Whirlpool, with locations in Ottawa, Greenville and Clyde.
Cars? Honda, made in Marysville, or Chevrolet, and Lordstown-made Cruzes.
Despite the possible impact, many of the companies have been guarded in their reactions. Honda, for example, said it is “assessing the potential impacts” of the tariffs on both sides.
“While we anticipate that the tariffs will impact Honda’s operations and business partners, we are still in the process of accessing the specific impacts as well as possible strategies to mitigate any adverse effects on our customers, associates, suppliers and dealers,” the company said in a statement.
For decades, the prospect of a trade war with Canada has been an idea about as likely as the prospect of a unicorn invasion.
But the high-wire debate over the renegotiation of the North American Free Trade Agreement — as well as President Donald Trump’s oft-repeated concerns about the U.S. steel industry — has ignited an unlikely tension between the U.S. and a nation that has been a steadfast ally. The tension has gotten heated enough that Trump — during a May 25 call with Trudeau — reportedly quipped that the tariffs were a national security issue because Canada burned down the White House during the War of 1812 (it was actually British troops).
When he first announced the tariffs in March, Trump exempted U.S. allies including Canada, Mexico and the European Union. He lifted those exemptions on May 31 — an action that has provoked a cascade of retaliation from all three. While Canada is by far the leading trading partner, the other two do significant trade with Ohio as well.
To Ohio’s U.S. senators, the tariffs on Canadian aluminum and steel are nonsensical. They don’t mind tariffs, but they want them pointed at countries that have dumped under-priced steel onto the U.S. market.
“I think Canada should be exempted from the steel tariffs,” said Sen. Rob Portman, an Ohio Republican who supports renegotiating NAFTA. “The real problem is China. It’s not Canada.”
Sen. Sherrod Brown, D-Ohio, supports tariffs on China and othersbut said complaints “were never directed at Canada.” Tariffs, he said, were aimed at making China stop dumping cheap products onto the U.S. markets and at leveling the playing field. Directing the tariffs at Canada, he said, “does not do that.”
Consumers would feel the impact in higher prices — the price of auto parts, for example, would have to increase to accommodate the tariffs — and businesses would feel the impact on the bottom line. Some businesses, hoping to avoid sticker shock for consumers, have already begun increasing prices in expectations of the tariffs, according to Ned Hill, a professor at Ohio State University who teaches economic development policy.
Meanwhile, unions appreciate efforts to make sure the U.S. is exporting as much as it imports. But while they are grateful for “the concept of trying to balance the playing field,” said Tim Burga, president of the Ohio AFL-CIO, “the way in which the president has gone about this ... is seemingly not terribly well thought out.”
Both Burga and Eric Burkland, president of the Ohio Manufacturers Association, are betting on — or hoping for — Trump’s volatility to work in their favor. July is a few weeks away, they say, and they are hopeful that Trump is using the tariffs as a bargaining chip and will pull back before Canada imposes its tariffs.
“We don’t want to end up in a trade war with one of our closest allies,” said Burkland.
But Rob Scott, director of trade and manufacturing policy research at the left-leaning Economic Policy Institute, said the U.S. leveled the tariffs after Canada decided not to stand with America and punish China for its cheating. By imposing tariffs on U.S.-made goods, such as playing cards and plywood, he said, Canadians “are shooting themselves in the foot.” They’ll be the ones paying higher prices for the U.S. products that they’re imposing tariffs on, Scott said.
“They had the choice to work with us to develop tougher policies for unfair trade by China or the choice to pick a fight with us,” he said. “They chose the latter.”
Former Rep. Pat Tiberi, who now heads the Ohio Business Roundtable, said that while Americans might not see the initial effects of Canadian tariffs on U.S. goods, they will eventually: A trade war would mean that at some point the U.S. would expand its tariffs on Canada beyond just aluminum and steel. The costs of those tariffs would be passed onto the consumer, he said.
More immediately, the impact will be felt by Ohio businesses. While many of the companies affected are household names, small businesses will also suffer, he said.
The former congressman from Genoa Township said that while many argue that the tariffs are being used as a negotiating tool, “the problem is it creates a ton of uncertainty, and uncertainty slows down the economy.”
He added, “It’s a very, very dangerous game.”
Ian Sheldon, a professor and Andersons Chair of Agricultural Marketing, Trade and Policy at Ohio State University, said the policy may indicate the end of the U.S. taking the lead in the global trade system.
“This is just blowing up the trade system, in my view,” he said. “The U.S. trade deficit is definitely not solved by this.”
Dispatch Washington bureau chief Jack Torry contributed to this story.
jwehrman@dispatch.com
http://www.dispatch.com/news/201806...ould-be-costly-for-export-driven-ohio-economy
