Trump Links Trade To National Security
Once again, Fails To Do Homework
Lumber and Dairy weren't enough? Trump Goes After Canada On Aluminium
By Ray Cunneff
April 27, 2017
On the same day that President Donald Trump reversed himself on his oft-repeated campaign pledge to scrap the 23 year-old NAFTA trade treaty with Mexico and Canada, the administration has invoked the "nuclear option" on trade by linking it to national security. And after threatening protectionist tariffs against Canada over hardwood and dairy imports, the administration is now going after Canada over aluminium.
In 2016, the U.S. imported more than 6.5 million metric tons of aluminum for use in the auto industry, construction and a variety of other sectors. Canada was by far the biggest foreign supplier, with shipments totaling more than 3 million tons. Commerce Secretary Wilbur Ross has said “Imports have been flooding into the aluminum industry” and that import restrictions may be needed for the U.S. to continue producing enough "high purity" aluminium for use in military aircraft, armored vehicles, combat vessels and missiles.
But typically, the administration has acted reflexively without thinking the matter through. It turns out that there is only one U.S. smelter that produces high-purity aluminium and they are having financial difficulty. Furthermore, more than 161,000 American workers' jobs depend upon imported aluminium. And free trade advocates criticized the actions, arguing that they could encourage other countries to begin blocking U.S. exports on national security grounds.
The Trump administration's trade protectionism has caused Canada to aggressively seek new markets for its products. And just like the aftermath of Trump having scrapped the Trans-Pacific Trade Partnership (TPP), the remaining eleven nations that formed the partnership have begun negotiations for a new Pacific trade pact - minus the U.S.
And according to a report from the Bloomberg Business Service titled "America's $1.2 Billion Mexico Milk Trade Is Now at Risk," the world's biggest buyer of U.S. milk is looking for new sources, working on a deal with giant milk producer New Zealand and increasing imports from Europe.
Canadian international trade analyst Patrick Leblond says ill-conceived, reactionary comments by Trump have an effect, not just on government negotiators but consumers. "It puts a damper on how people see the U.S. and how they see U.S. products."
As Trump talks about "America First," consumers might be increasingly tempted to pursue a strategy of "America Last."