The mayor of the Ontario city nicknamed Steeltown says he hopes “saner heads will prevail” when it comes to U.S. Donald Trump’s proposal to impose a 25 per cent tariff on foreign steel and a 10 per cent tariff on aluminum.

Mayor Fred Eisenberger says that although Hamilton’s economy has “substantially diversified” in recent years, there are still about 9,000 locals directly employed in steelmaking, and many other local jobs that indirectly depend on the industry.

“Whatever tariff is being proposed is going to have an impact on both sides of the border and the impact is not going to be positive,” Eisenberger told CTV Toronto.

“Six billion dollars’ worth of steel moves from Canada into the United States and six billion dollars moves into Canada (annually), so it’s pretty balanced,” he added, referring to figures from the Canadian Steel Producers Association.

The city, about 80 kilometres southwest of Toronto, has a population of 536,917. Its unemployment rate has been falling in recent years, dropping from 6.6 per cent in 2013 to 4.6 per cent last year, thanks to gains in education, health care, hospitality and entertainment.

But Keanin Loomis, President of the Hamilton Chamber of Commerce, says that potentially “devastating” job losses are likely if Trump goes ahead on his proposal largely viewed as aimed at China, and doesn’t create an exemption for Canada.

Loomis says Canada has an advantage over U.S. steel producers due to the lower Canadian dollar, but “if Canadian steel becomes 25 per cent more expensive, then obviously U.S. manufacturers are going to be seeking steel inputs domestically.”

“We’re at a point in time where the steel industry in Hamilton could potentially collapse,” he added. “The Canadian government needs to respond,” he added.

Local steelmaker Dofasco spends about $1 billion a year on iron ore and coal imported from the U.S., according to Loomis.

“We don’t want to escalate matters on trade but unfortunately we might not have much choice,” he said.

Steve Farnsworth, a political scientist at the University of Mary Washington, told CTV News Channel that the tariffs will be bad for Canadians and Americans.

“The idea of protecting jobs and creating higher cost in production means there will be higher costs to people buying products, whether you’re talking about automobiles, or even soup cans,” he said.

“Economists know full well that trade wars depress consumption and lower income for people on both sides,” he said.

But Farnsworth says Trump is acting on “instinct” by making a move that could be popular among U.S. steelworkers who have been “really, really badly hurt by the globalized economy.”

“Donald Trump reacts in an emotional way to that kind of pain that he saw particularly among many of those working-class whites who were a core part of his campaign support,” he said. “Economics is less important for him.”

Prime Minister Justin Trudeau reacted Friday to the suggestion that Trump will create the traffics by invoking a rarely used rule that allows Trump to unilaterally declare tariffs in the name of national security.

"It just makes no sense to highlight that Canada and Canadian steel or aluminum might be a security threat to the United States," Trudeau said during an event in Barrie, Ont.

"That's why this is absolutely unacceptable and it's a point we've made many times, that I've made directly with the president,” Trudeau added.

With files from The Canadian Press