Canada's lobby for tariff relief: from Ottawa, to DC, practically to outer space
Alexander Panetta, The Canadian Press
Published Friday, March 2, 2018 4:20AM EST
Last Updated Friday, March 2, 2018 2:19PM EST
WASHINGTON -- The lobby effort to spare Canada from incoming tariffs has been quietly unfolding for a year and has included Prime Minister Justin Trudeau, senior members of the Trump administration, the Pentagon and the business community -- and this week it even touched the doorstep of outer space.
By sheer coincidence, both the American cabinet member leading the tariff process and one of his Canadian counterparts happened to be at Florida's Kennedy Space Center on Thursday when Donald Trump announced plans to impose whopping tariffs on steel and aluminum imports.
Marc Garneau, a former astronaut and current federal cabinet minister, was there for the first time in 15 years, visiting the old launchpad from which he three times blasted off into space.
So when news broke that Trump intended to dust off a rarely used legal weapon that has stoked fears of a global trade war, he asked to chat with the U.S. cabinet member leading the process: Commerce Secretary Wilbur Ross.
"I essentially voiced the position of the government of Canada... that we did not see any reason to include Canada in this," Garneau said in an interview Friday.
Garneau described Ross's reply: "He said, to use his words, 'There will be an opportunity to petition.'"
The U.S. appears to be leaning toward a hard line.
Ross elaborated on his preference for a total worldwide tariff in an interview Friday. He said limited barriers had failed in the past, because excess Chinese steel had always trickled into other countries' supply chains, then into the U.S. market: "So it has to be broad, it has to be global in its reach, in order to solve the fundamental problem," Ross told CNBC.
It would be a frustrating coda to a year-long campaign.
The Canadian government began pressing for relief since it became clear in early 2017 that the U.S. was considering invoking the excuse of national security to impose tariffs, a move that has infuriated allies around the world.
Trudeau has raised it several times with Trump, and just discussed it last week with a senior U.S. military figure visiting the prime minister's Parliament Hill office. His aide Gerald Butts and Foreign Affairs Minister Chrystia Freeland have been working business leaders. Finance Minister Bill Morneau has pressed his American counterpart Steve Mnuchin. Several officials have raised it with U.S. ambassador Kelly Craft.
Numerous Americans have also argued Canada's case.
But it's looking bleak. While the final details won't be known until next week, Ross's hard line appears to have a powerful champion in his boss, Trump, who evinced a damn-the-torpedoes attitude Friday.
"Trade wars are good, and easy to win," the president tweeted Friday, arguing that the U.S. import-export deficit means it can afford to slow global trade.
That's despite a push from his own allies: past and present U.S. military figures, a usually Trump-friendly editorial board, a supportive union, fellow Republicans and even companies that would otherwise benefit from tariffs.
All have urged Trump not to impose them on the U.S.'s No. 1 seller: Canada.
That includes the editorial page of the Wall Street Journal. Normally a Trump cheering corner, the opinion section of the pro-business newspaper ran an editorial titled, "Trump's tariff folly: his tax on aluminum and steel will hurt the economy and his voters."
It noted that Canada supplies more steel to the U.S. by orders of magnitude than China -- the supposed target of this tariff.
"The tariffs will whack that menace to world peace known as Canada, which supplies 16 per cent (of U.S. steel imports)," said the paper.
"Mr. Trump is punishing our largest trading partner in the middle of a NAFTA renegotiation that he claims will result in a much better deal. Instead he is taking a machete to America's trade credibility. Why should Canada believe a word he says?"
Trump is hearing the same from the military.
The ostensible excuse for these tariffs is that foreign steel undermines U.S. national security, making emergency measures legitimate. Trump plans to use a provision in U.S. law that allows the president to impose tariffs if it's a security matter. His administration has indeed declared it a security issue, and Trump says he's leaning toward bigger penalties than many expected -- a 25 per cent global tariff on steel and 10 per cent on aluminum.
But Trump's own defence secretary, James Mattis, undermined the case for tariffs in a letter released several days ago. He said the military had more than enough steel for its needs, expressed concern broad tariffs would hurt key allies, and urged that any tariffs be narrowly focused.
The administration has been hearing this for months.
As it prepared its national-security study, witness after witness suggested Canada be exempted like it was from U.S. steel actions in the early 2000s and 1980s. Meanwhile, not one witness specifically called for tariffs on their northern neighbour.
A retired U.S. army brigadier-general, John Adams, an expert on the defence-industrial complex, testified that he supported tariffs, with one exception: "The one supplier in whom I have complete confidence is Canada." He added that Canada should bolster its monitoring of dumped imports.
Two of the people in the room with Trump when he announced his tariffs Thursday, and who mostly support his action, expressed similar pro-Canada views.
One of them, Michael Bless, chief executive of Century Aluminum Co., said in his submission to the U.S. government: "As a contiguous, friendly neighbour, Canada is a safe and reliable source of supply. In Century's view, (these penalties) can be effective without applying it to Canada."
Other companies made such submissions to the U.S. government. Bob Prusak, chief executive of Magnitude 7 Metals, testified that he opposed sanctions relief for anyone "other than Canada."