Tariff Troubles: Canada Retaliates While GM Announces Job Cuts Ahead

On Friday Canada announced retaliatory tariffs against the United States while General Motors announced that Trump’s new tariffs would cause job cuts in the near future.

In Ottawa, the government of Prime Minister Justin Trudeau released a list of new items that will be subject to import duties beginning in July. The items on the list will be subject to new import taxes ranging from 10 percent to 25 percent of the value of the items. The expected taxes on the new items amount to an estimated $12.6 billion.

The General Motors warning about future layoffs came in the form of comments submitted to the U.S. Commerce Department in response to the large number of new tariffs previously announced by the Trump administration. America’s largest carmaker made clear that the new tariffs would reduce demand for automobiles and cause price increases of thousands of dollars per vehicle.

Trudeau and U.S. President Donald Trump spoke in person on Friday, in their first direct conversation since Trump left the G-7 meetings in Quebec earlier this month and tweeted that Trudeau was “weak” and “dishonest.”

Trudeau’s office issued the following statement after the two leaders spoke:

“As he has said in past conversations and in public, the Prime Minister conveyed that Canada has had no choice but to announce reciprocal countermeasures to the steel and aluminum tariffs that the United States imposed on June 1, 2018. They agreed to stay in close touch on a way forward.”

Canadian Foreign Minister Chrystia Freeland spoke to reporters after her prime minister’s call with Trump, saying: 

“We will not escalate and we will not back down. The new tariffs are regrettable, but this is a perfectly reciprocal action. It is a dollar for dollar response.”

“It is absolutely imperative that common sense should prevail. Having said that our approach from day one of the NAFTA negotiations has been to hope for the best but prepare for the worst.”

The U.S. products chosen had more political than economic impact, according to sources. For example, Canadian imports of yogurt come from Wisconsin, the home state of House Speaker Paul Ryan and yogurt will now be hit with new tariffs.  Another example is whiskey from Kentucky, the home state of Republican Senate leader Mitch McConnell.

GM has been hurt because recently the administration has imposed tariffs on imported steel and aluminum, raising the costs of making cars and trucks in the United States. Domestic car companies rely heavily on imported metals to build their cars, and they also import many car and truck parts from overseas. The resulting cost increases of thousands of dollars per vehicle will have to be absorbed by either consumers of the company, GM said, which could lead to tens of thousands of lost jobs.

Trump’s tariffs have caused retaliation from most U.S. trading partners and according to the Wall Street Journal will significantly hurt Republicans running in this falls midterm elections.

Leo Vidal

Copyright PoliticusUSA LLC 2008-2023