Canadians Say Trust Is Lost; Connecticut Biz Group Says Hitting Canada Hurts Manufacturing
Canadians and New Englanders, brought together by the New England-Canada Business Council, expressed bewilderment at the trade war directed at Canada, but said that President Donald Trump's actions will not be easily overcome as the two countries start to talk about how to change the NAFTA successor agreement in its sunset review.
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Forest Products Association of Canada CEO Derek Nighbor leads a trade group that is drawing Trump's ire, as the president says that the U.S. should punish Canadian lumber and expand U.S. tree harvesting.
Nighbor, speaking on a webinar last week hosted by the business council, asked, "How can we trust the people we’re sitting across the table with if they’re going to rip up those deals away?"
He noted that he met with the U.S. trade group that represents pulp mills, and they are "absolutely opposed to this." He said the only people who support it are those who own stands of trees.
The American Forest and Paper Association said after 25% tariffs went on Canadian imports, "Pulp and paper mills are strategically located across the United States to efficiently and sustainably create essential products for everyday use. From turning wood chips into pulp, pulp into base stock, and then transforming that raw material into a product that is then packaged for distribution, our industry’s manufacturing process involves many stages that can each happen at different facilities on both sides of the border."
It also expressed concerns that a Section 232 investigation on wood imports would disrupt cross-border supply chains.
Matthew Holmes, executive vice president international and chief of public policy at Canada's Chamber of Commerce, also said Trump's actions would make it difficult for Canadian politicians to compromise on USMCA.
"You rip up our trade agreement once, shame on you, you rip it up twice, shame on us," he said. During Trump's first term in office, he threatened to terminate NAFTA, which is what led to the renegotiated free trade agreement.
"There is a casting of the gaze to other world markets," Holmes said. "It’s sending shock waves that will take a long time to correct."
He said Canada had thought it was aligned with the U.S., by imposing identical tariffs on Chinese electric vehicles and trying to protect its metal sectors from overcapacity.
He also expressed bewilderment that the U.S. would prefer to buy nickel or potash from Russia than from Canada.
"There’s a headscratcher to all of this. What's the end game here?"
Holmes was speaking before the executive order March 6 that clarified that USMCA-compliant goods would be spared, but the commerce secretary had already said he expected they would be (see 2503040035). He said, "Regardless of what happens today or tomorrow, the sentiment is we’re going to dealing with this for a while."
Connecticut Business and Industry Association CEO Chris DiPentima, who led his family's small aerospace manufacturing company for decades, both before and after its sale, noted that both exports to Canada and imports from Canada had been growing since USMCA replaced NAFTA, and that Connecticut exported $2.1 billion worth to Canada last year.
Pratt & Whitney, an airplane and helicopter engine maker, is one of Connecticut's largest employers, and it has a major factory in Quebec that 600 companies in Connecticut send parts to, he said. More than 12% of Connecticut's GDP is from manufacturing, he said, the sector Trump wants to help, but this is not helping.
Connecticut's electricity is already expensive, and it relies heavily on Canada for energy. "That’s going to increase the costs in the supply chain," he said, and parts makers have fixed-price contracts with Boeing, Airbus, Sikorsky and Pratt & Whitney. Connecticut has 80,000 aerospace manufacturing jobs, and he said employers have thousands of vacancies they can't fill as workers retire.
"When you do tariffs and protectionism, it’s to bring jobs back to your country," he said. "They can’t fill the jobs at the current demand level. We just don’t have the population growth in the U.S., the immigration policies needed."
Sen. Peter Welch, D-Vt., also spoke on the webinar, criticizing the trade war. "This is a very, very destructive policy," he said. "This makes absolutely no sense for the United States." He said that Vermonters are going to see a 10% to 15% increase in electric bills, will pay 25 cents to 40 cents more for gasoline, and will pay more for home heating oil, which comes from Canada.
"Republicans, by and large, they’re not tariff people, but they’re going along for the ride, for the most part," he said.
He encouraged businesses to share details of how the tariffs and Canadian retaliatory tariffs will affect them, in the hopes that those stories might reach Republican senators who could push back on the tariffs.
DiPentima agreed, "That individual lobbying is so much more powerful than an association," he said.