By JEFFREY JONES
Tuesday, June 19, 2018
U.S. President Donald Trump will almost certainly follow through on threats to impose tariffs on auto imports, heaping more pressure on Canada and Mexico to make concessions as North American freetrade agreement talks enter the crucial next phase, says former cabinet minister Rona Ambrose, a member of Ottawa's NAFTA advisory council.
Mr. Trump has directed the U.S. Department of Commerce to study imports of cars, trucks and auto parts on national security grounds, in the same process that led to tariffs on foreign aluminum and steel, noted Ms. Ambrose, who was interim leader of the federal Conservative Party before she quit politics last year. The move sparked retaliatory measures from Ottawa and strained relations between Prime Minister Justin Trudeau and the U.S. President.
Toronto-Dominion Bank's investment arm, TD Securities Inc., predicts 25-per-cent tariffs on the auto sector would have dire consequences for Canada's economy. In a report on Monday, the bank said that would hit as much as $74-billion worth of exports and cut growth by one half of 1 per cent in 2019, as the economy stagnates for two consecutive quarters.
Growth in Ontario would fall as much as 2 percentage points, the bank said.
"What we now know about President Trump is that when he makes a threat on tariffs, he follows through," Ms. Ambrose said in an interview. "He's done that on every instance so far, whether it's aerospace, softwood lumber or, more recently, aluminum and steel."
The national security investigation, known as Section 232, will be completed shortly, likely leading to auto tariffs on Canada and Mexico, she said. That could mean the loss of one in five jobs in Ontario, Canada's manufacturing heartland, erasing the employment gains of the past two years, TD said.
"It may not be 25 per cent, but I would predict that he will follow through on his threat, so this puts a whole new pressure on our side in particular, and the Mexicans, to come to some sort of an agreement that's amenable to the Americans," she said.
Ms. Ambrose suggested tariffs could be avoided if a NAFTA deal is reached in the next few weeks, although few experts expect that, given the tensions sparked by Mr. Trump's protectionist "America first" stand.
In an interview with Reuters, Innovation Minister Navdeep Bains suggested the government could step in with financial aid for the auto industry. "We're examining all options ... our view is that if any such action is taken, we're going to support our workers," he said last week.
Ms. Ambrose spoke to The Globe and Mail ahead of an announcement on Tuesday that she will become an adviser to TD Securities on a range of issues, using her experience in politics, trade, economics, the environment and gender diversity. The new non-staff position follows her appointment last year to the NAFTA council, which includes business, political and diplomatic leaders.
The Calgary-based Ms. Ambrose held nine ministerial posts in the government of prime minister Stephen Harper, and was interim opposition leader from 2015 until she retired from politics in 2017.
"I'll be working with their corporate clients, whether they are Canadian clients or global clients, on issues where there is an intersection between public policy and politics, which is a space that I'm very comfortable with," she said.
A wild card in the NAFTA talks is the Mexican presidential election on July 1. The Trump administration now believes it has a better chance of achieving concessions on wage increases from Mexico should front-runner Andres Manuel Lopez Obrador defeat President Enrique Pena Nieto, Ms. Ambrose said. Such a move would make U.S. labour more competitive.
"Canada ... we are at the table on an agreement on autos. The issue is getting Mexico there. So once the election in Mexico is over, things might actually look more positive to reach some kind of a wage average that would be more amenable to the Trump administration," she said.
"With the auto tariffs hanging over Mexico and Canada, there is even more pressure on both to come to some kind of agreement with the United States on autos."
Chevrolet Equinox SUVs blanket a yard near a General Motors plant in Ingersoll, Ont. TD Securities predicts 25-per-cent tariffs on the auto sector would have dire consequences for Canada's economy.
Rona Ambrose, seen in Ottawa last May, says her new adviser role with TD Securities will involve working with clients 'on issues where there is an intersection between public policy and politics.'
FRED CHARTRAND/THE CANADIAN PRESS