stats
globeinteractive.com: Making the Business of Life Easier

   Finance globeinvestor   Careers globecareers.workopolis Subscribe to The Globe
The Globe and Mail /globeandmail.com
Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space


Search

space
  This site         Tips

  
space
  The Web Google
space
   space



space

  Where to Find It


Breaking News
  Home Page

  Report on Business

  Sports

  Technology

space
Subscribe to The Globe

Shop at our Globe Store


Print Edition
  Front Page

  Report on Business

  National

  International

  Sports

  Arts & Entertainment

  Editorials

  Columnists

   Headline Index

 Other Sections
  Appointments

  Births & Deaths

  Books

  Classifieds

  Comment

  Education

  Environment

  Facts & Arguments

  Focus

  Health

  Obituaries

  Real Estate

  Review

  Science

  Style

  Technology

  Travel

  Wheels

 Leisure
  Cartoon

  Crosswords

  Food & Dining

  Golf

  Horoscopes

  Movies

  Online Personals

  TV Listings/News

 Specials & Series
  All Reports...

space

Services
   Where to Find It
 A quick guide to what's available on the site

 Newspaper
  Advertise

  Corrections

  Customer Service

  Help & Contact Us

  Reprints

  Subscriptions

 Web Site
  Advertise

  E-Mail Newsletters

  Free Headlines

  Globe Store New

  Help & Contact Us

  Make Us Home

  Mobile New

  Press Room

  Privacy Policy

  Terms & Conditions


GiveLife.ca

    

PRINT EDITION
U.S. tariffs are tipping us toward a recession
space
We must stop playing these destructive games and get back to building things collaboratively
space
By LINDA HASENFRATZ
  
  

Email this article Print this article
Wednesday, July 18, 2018 – Page B4

CEO of Linamar Corp.

The United States has underT taken very aggressive tactics with respect to trade since Donald Trump became President.

The imposition of punitive duties on the United States' own industries and closest allies are hurting American business and will ultimately damage the global economy.

Just a year ago, the Trump administration imposed duties on Canadian softwood lumber, citing improper support of the industry in Canada.

Prices of lumber rose dramatically to offset the high duties imposed, and U.S. consumers are now paying 20 per cent more for building supplies than they did a year ago. Whether Canada or the United States was right or wrong is a moot point: Americans are paying the price for this approach to resolving a disagreement.

Earlier this year, tariffs were imposed on steel and aluminum imported into the United States, with the administration citing security concerns as the basis for the action.

There are 450,000 U.S. workers in metal producing industries but 4.5 million American workers in industries that use metal in their products.

There is not enough capacity of metal in the United States to fill the needs of American companies and adding capacity is a considerable investment requiring considerable time, stretching into 2019 and beyond. Further, the country is at a 19-year low in unemployment, and labour shortages are rampant outside of specific regional pockets. My company has facilities in the United States and we struggle to find enough people there for our growing business. We have an excellent U.S. employee base, great levels of skill and an outstanding work ethic. There just aren't enough workers to fill our needs as we bolster projects there.

What this means is U.S. industries, and subsequently American consumers, will pay more for related products. We are already hearing stories of American industry suffering thanks to these higher costs, or losing business thanks to retaliatory tariffs introduced by countries in response to the tariffs imposed on them.

Industries unable to absorb higher costs are again forced to pass them on to consumers, which ultimately reduces demand and will lead to the layoffs of U.S. workers. It also means less cash available to invest in new product development and innovation, key to growing business and supporting employment.

Of course, all of this would be massively exacerbated by the imposition of tariffs on autos and auto parts should Mr. Trump make that his next move, as is currently under consideration.

With an average of seven border crossings per part in this integrated supply chain, the cost to be borne by industry players would be enormous, forcing a substantial price increase to consumers and a collapse of the auto industry rivalling that seen in 2009.

This would almost certainly tip the economy into a major recession, or depression, and trigger massive layoffs in the United States.

Moving or resourcing parts from Canada to the United States to avoid tariffs is not a realistic mitigant to this action, because the time and cost required to move product to a new facility is prohibitive, as is the time, cost and recertification requirements to source new suppliers stateside.

Where is the return on investment to move or to tool up a new supplier and go through months of recertification? It doesn't exist - just billions of dollars out of pocket to find ourselves exactly where we are today in terms of sales and costs. There is no realistic way to mitigate the tariffs and avoid a recession.

The only way to avoid a recession, blame for which would be placed squarely on the shoulders of Mr. Trump, is to not impose additional tariffs, and to rescind those already imposed on metal before it is too late. We must stop playing these destructive games of protectionist trade policies and get back to building things collaboratively and innovatively together to boost all of our economies and keep our people employed.

I believe in fair trade but I also believe in facts and thinking through consequences, intended and unintended. Let's focus on real facts of the levels of trade between our countries and ensure they are fair. We have a balance of trade between Canada and the United States, that is a fact and that is fair. Let's deal with our disputes fairly and constructively, in a way that all of our citizens can benefit from without being arbitrarily penalized. We have a 200year relationship of being allies, working together, inventing things together and prospering together; let's build on that instead of tearing it apart.

Since signing the NAFTA agreement, U.S. GDP has increased 2.7 times or nearly US$12-trillion, GDP in Canada has increased 2.8 times or roughly US$1-trillion and GDP in Mexico has increased 1.9 times or roughly US$450-billion.

The North American free-trade agreement has clearly benefited the United States the most; assertions to the contrary are simply not correct.

I have been told to not say these things publicly. That I or Linamar could be the subject of the next tweet and our reputation could be hurt as a result; that I am hurting the automotive industry by suggesting that tariffs will bring us down, and adding weight to our already weighed-down stock prices. But I say shame on those who aren't speaking up: If we don't paint a picture of what is coming down the pipe with these actions, then we don't have a leg to stand on to complain when our economy collapses.

The good news is this is one recession that is entirely preventable.

We have spent months in conflict, arguing and penalizing each other. Breaking century-old ties.

When has breaking a link ever made a chain stronger? We achieve so much more when we strengthen ties, when we link arms and approach problems together. We need to stop fighting and start solving. We need to finish the NAFTA discussions in a fair way and get back to trading with each other, not punishing each other. We need to get rid of recently imposed tariffs and not impose new ones.

Mr. Trump can stop this recession from coming by doing all of this quickly. Or, he can continue down this road and be remembered for all history as the instigator of The Great Trump Recession.

Associated Graphic

Contractors work on a home under construction in the Norton Commons subdivision of Louisville, Ky., in March. U.S. consumers are now paying the price for tariffs against Canadian softwood lumber imposed by the Trump administration.

LUKE SHARRETT/BLOOMBERG


Huh? How did I get here?
Return to Main Margaret_Wente Page
Subscribe to
The Globe and Mail
 

Email this article Print this article

space  Advertisement
space

Need CPR for your RSP? Check your portfolio’s pulse and lower yours by improving the overall health of your investments. Click here.

Advertisement

7-Day Site Search
    

Breaking News



Today's Weather


Inside

Rick Salutin
Merrily marching
off to war
Roy MacGregor
Duct tape might hold
when panic strikes


Editorial
Where Manley is going with his first budget




space

Columnists



For a columnist's most recent stories, click on their name below.

 National


Roy MacGregor arrow
This Country
space
Jeffrey Simpson arrow
The Nation
space
Margaret Wente arrow
Counterpoint
space
Hugh Winsor  arrow
The Power Game
space
 Business


Rob Carrick arrow
Personal Finance
space
Drew Fagan arrow
The Big Picture
space
Mathew Ingram arrow
space
Brent Jang arrow
Business West
space
Brian Milner arrow
Taking Stock
space
Eric Reguly arrow
To The Point
space
Andrew Willis arrow
Streetwise
space
 Sports


Stephen Brunt arrow
The Game
space
Eric Duhatschek arrow
space
Allan Maki arrow
space
William Houston arrow
Truth & Rumours
space
Lorne Rubenstein arrow
Golf
space
 The Arts


John Doyle arrow
Television
space
John MacLachlan Gray arrow
Gray's Anatomy
space
David Macfarlane arrow
Cheap Seats
space
Johanna Schneller arrow
Moviegoer
space
 Comment


Murray Campbell arrow
Ontario Politics
space
Lysiane Gagnon arrow
Inside Quebec
space
Marcus Gee arrow
The World
space
William Johnson arrow
Pit Bill
space
Paul Knox arrow
Worldbeat
space
Heather Mallick arrow
As If
space
Leah McLaren arrow
Generation Why
space
Rex Murphy arrow
Japes of Wrath
space
Rick Salutin arrow
On The Other Hand
space
Paul Sullivan arrow
The West
space
William Thorsell arrow
space





Home | Business | National | Int'l | Sports | Columnists | The Arts | Tech | Travel | TV | Wheels
space

© 2003 Bell Globemedia Interactive Inc. All Rights Reserved.
Help & Contact Us | Back to the top of this page