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Trudeau-Trump trade meltdown threatens $80-billion in Canadian auto exports

ADRIAN MORROW – Globe & Mail
WASHINGTON
PUBLISHED JUNE 10, 2018

U.S. President Donald Trump is increasing his threat to levy 25-per-cent tariffs on car and truck imports, a move that would devastate Canada’s auto industry and unleash the country’s most serious trade war in recent memory.

And the renegotiation of the North American free-trade agreement is stalled, with the sides at an impasse over some of the Trump administration’s toughest protectionist demands.

Auto levies represent the most immediate threat to Canada. The U.S. government is currently undertaking an “investigation” ordered by Mr. Trump to determine whether foreign vehicle imports represent a threat to “national security.”

Tariffs would pummel $80-billion in Canadian exports, hitting a sector that employs more than 120,000 people. By comparison, the Canadian steel and aluminium sectors currently facing U.S. tariffs are roughly one-quarter the size.

Already locked in a trade battle with the U.S. over Mr. Trump’s steel and aluminium tariffs, Canada is facing a mounting threat of severe economic pain inflicted by its closest ally as the relationship between the Trudeau government and the Trump administration plummeted to new lows following the weekend G7 Summit.

The President upped the ante in a Twitter barrage aimed at Mr. Trudeau after the summit, threatening “Tariffs on automobiles flooding the U.S. Market!”

Flavio Volpe, the head of Canada’s auto-parts industry group, said the pain of the tariffs would first be felt by American drivers and auto sellers, because it would take time for auto plants to relocate from Canada to the United States. Ironically, he pointed out, most Canadian-made vehicles are manufactured by branch plants of American corporations using U.S. content.

“It would be a tariff paid for by American consumers who buy cars made mostly from American parts by American companies,” he said. “That’s a shotgun blast where no pellet is left unwasted. It would hit a lot of American feet.”

“It would be a tariff paid for by American consumers who buy cars made mostly from American parts by American companies,” he said. “That’s a shotgun blast where no pellet is left unwasted. It would hit a lot of American feet.”

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