Tariffs on steel and aluminum: A terrible idea, both for the US and for Canada

Your government has announced tariffs of 25 percent and 10 percent on steel and aluminum imports, respectively. Canada has been exempted from those tariffs, but only on a temporary basis, making long-term prices unpredictable and thus disrupting supply chains. This is a terrible idea, both for you and for us.

I am the member of Canada’s Parliament for Joliette, Quebec. With a land mass roughly one third the size of mainland United States, Quebec has some of the world’s largest water resources, with 3.5 million lakes and rivers for a population of 8 million.

Since aluminum production requires enormous amounts of electricity, our vast hydroelectric resources have always allowed us to supply U.S. manufacturers. It is in Shawinigan, northeast of Montreal, that the Pittsburgh Reduction Company (now known as Alcoa) opened North America’s first major aluminum smelter in 1901. For over a century, Quebec has provided the U.S. manufacturing industry with the raw materials it needs.

Our aluminum is what fuelled the American war effort in WWII and then during the Cold War. In fact, access to this indispensable metal used in aircraft manufacturing has long been considered a matter of U.S. national security. That is why U.S. eliminated tariffs on our aluminum decades before NAFTA.

And now suddenly we have become a threat to your national security? Really?

Citing national security does not make any sense. This pretext will be thrown out by the WTO, and retaliatory measures by Canada would seem inevitable if you end up imposing tariffs on our supplies. I for one will be in Parliament insisting that we take some.

But most of all, this is bad policy. The U.S. produced 800,000 tonnes of aluminum in 2015, but your manufacturing industry processed four times as much, relying on access to aluminum produced elsewhere.

For each U.S. steel mill and aluminum smelter job, 16 workers manufacture products with these metals. By driving up the cost of supplies, your government is putting Boeing at a disadvantage to Airbus and General Motor to Toyota, and that is not counting the canning and food industry, which could also suffer.

I will agree that the aluminum industry is not in the best of shape. Over the past 25 years, China has opened 110 aluminum smelters (Canada has 10, nine of them in Quebec) and now accounts for half of the world’s production. Overcapacity has driven prices down, and American producers have suffered more than others. The same can be said for steel production.

Canada and the U.S. are both suffering from that global overcapacity. We should work together on the issue and put pressure on China. However, your federal government would rather start a trade war with us and declare us a threat to your national security, which is bizarre to say the least.

Over the past century, we have developed a mutually profitable relationship: we provide you with abundant raw material and you process it.

The cost of that can of beer that I buy at the corner store, made in the USA with Quebec aluminum, could very well go up with your 10 percent tariff. In the long run, we will probably end up making our own cans and stop importing them from the U.S., which is no longer a reliable supplier. But before we get to that point, both sides of the border will suffer, our metals industry as well as your manufacturing.

By giving in to special interests, the U.S. government is threatening thousands of jobs on both sides of the border. Perhaps even your own job will be put at risk to make the steel and aluminum giants happy. Like all good neighbors, let’s work together to fight this bad policy.

Gabriel Ste-Marie is an independent member of Canadian’s Parliament from Joliette.