CANADA ECONOMICS
INTERNATIONAL TRADE
The Globe and Mail. 5 Mar 2018.ANALYSIS. Trump’s looming steel tariff attack is about to test Republicans’ mettle. Steel executives in the United States applauded President Donald Trump’s tariff initiative on steel and aluminum imports, playing down the threat of a global trade war growing out of the plan.
DAVID SHRIBMAN, , Special to The Globe and Mail
Canada doesn’t cheat. It’s important that Trump looks at which countries don’t cheat. We’re going to push him to do something to favour Canada.
LEO GERARD, ONTARIO-BORN, HEAD OF THE UNITED STEELWORKERS LABOUR UNION
PITTSBURGH - Donald Trump said last week that he welcomed a trade war. This week, he will find out if he gets one. And next week he may discover if his initiative to slap tariffs on steel and aluminum imports, motivated as much by domestic politics as by economic policy, will have the intended effect at the ballot box and boost Republican electoral prospects.
This week the United States’ largest trading partners, including Canada, will begin to learn the details of the Trump plan, which White House officials originally insisted would provide no carve-outs or exemptions, even for countries with deep and well-established trade relationships. But the insight that Allan Gotlieb, Canada’s ambassador to the United States from 1981 to 1989, added to the permanent wisdom of Washington may apply here and could work to Canada’s benefit: No decision in the American capital ever is final.
By sheer but significant coincidence, the first political test of the Trump tariff gambit comes a week from Tuesday here in the heart of steel country, where voters will fill a vacancy in the House of Representatives in a very close special congressional election that has attracted keen attention from the President, who visited the district six weeks ago and returns Saturday to campaign for Rick Saccone, the Republican candidate. Mr. Saccone, a state representative, has a slender lead in the district, which gave Mr. Trump a 20-point advantage in the 2016 election, over his Democratic rival, Conor Lamb.
Details of the Trump tariff plan, which generally is to impose levies of 25 per cent on steel and 10 per cent on aluminum, likely are to begin to emerge this week, although the contours of the final package may be weeks away. Mr. Trump announced the tariffs with little or no consultation with his top advisers, much the way he rolled out the US$1.4-trillion tax-cut plan late last year.
Like the tax plan, the presidential remarks on the measure were short on specifics and took no account of the complexity of the initiative he was undertaking. It remains unclear, for example, whether the tariff applies exclusively to finished steel or whether semi-finished steel products, used in the production of heavy machinery or in concrete reinforcing bars, are to be affected. Alcoa, based here in Pittsburgh, has smelters both in Canada and the United States and already has indicated it wants its products to be exempted from the Trump measures.
An important element in the weeks ahead will be the congenial relationship between Leo Gerard, the Canadian who heads the powerful United Steelworkers labour union, and Wilbur Ross, Mr. Trump’s commerce secretary. Mr. Gerard, born in Creighton Mine, Ont., repeatedly has argued that Canada and the United States have a relatively balanced and stable metals trade. “Canada doesn’t cheat,” Mr. Gerard said in an interview. “It’s important that Trump looks at which countries don’t cheat. We’re going to push him to do something to favour Canada.”
Paul O’Neill, the former Alcoa chief who was secretary of the treasury under President George W. Bush, added in a separate interview: “It is important that the President is prepared to take action. But it has to be targeted action, against only countries that cheat.”
Finance Minister Bill Morneau said Sunday on CTV’s Question Period that “this is not an acceptable possibility for us to put tariffs on an important commodity like steel and aluminum.”
The European Union already has threatened new tariffs on American products, especially spirits and motorcycles – evocative, symbolic products of the U.S. economy produced in the homes of the Senate majority leader, Mitch McConnell of Kentucky, and the House speaker, Paul Ryan of Wisconsin, respectively.
China’s reaction was muted, but Brazil and Asian countries also are contemplating new duties, arguing – as the devoutly conservative editorial page of The Wall Street Journal, long a bastion of free-trade nostrums, did on the weekend – that the Trump decision was “one of the greatest examples of presidential nonsense in history.”
Tariffs have been a combustible part of American politics since 1816. A tariff bill passed a dozen years later, known as the Tariff of Abominations, actually led later to the resignation of a vice-president, John C. Calhoun, in 1832. The Smoot-Hawley tariff of 1930 has been popularly blamed for deepening the Great Depression, although some economic scholars now dispute that conviction. Trade issues have been no less controversial in Canada, with the Conservatives defeating the Liberals in 1911 during bitter debates over reciprocity by employing the slogan “No truck or trade with the Yankees.”
In a debate Saturday evening in the Pittsburgh area, both candidates in the special congressional election generally backed the President’s initiative. Steel executives in the United States applauded the latest tariff initiative, playing down the threat of a global trade war growing out of the Trump plan.
“We’re in a trade war already, and we’re losing,” said John P. Surma, former chairman and CEO of U.S. Steel, also headquartered in Pittsburgh. “This is a way to strike a balance and stop losing.”
Even so, some experts warned that the Trump move would seriously disrupt the global economy.
“This is likely to escalate trade tensions, particularly as it looks likely to apply to a broad group of countries including to some allies of the U.S.,” wrote Jan Hatzius, the chief economist for Goldman Sachs who warned that “further disruptive trade developments over the coming months, including stalled NAFTA [North American free-trade agreement] negotiations and potential restrictions on Chinese trade and investment” could be coming.
In his insurgent presidential campaign of 2016, Mr. Trump vowed to bring steel and coal jobs back to areas such as southwestern Pennsylvania, which for a century had a surfeit of both. But many experts believe that those jobs and industries, the victims as much of automation as of global competition, are unlikely to rebound to their earlier health. The United States today imports about a third of its steel and almost all of its aluminum.
“The integrated steel plants were here because of the waterways and the coal and coke resources,” said Christopher Briem of the Center for Social and Urban Research at the University of Pittsburgh. “But the new investment in steel has been in mini mills, and this is not a competitive place for that. I’m sure the intent is to preserve some of the jobs that remain here, but it won’t bring back the old days.”
Employment in the primary metals industry peaked at 380,000 jobs in this region in 1952. Indeed, there were more steel workers at one plant, the Aliquippa Works of Jones and Laughlin (15,000), in its heyday than the entire Pittsburgh region has today.
The Globe and Mail. 5 Mar 2018. Canadian government is fighting on several fronts for a tariff exemption. Trump advisers hint at procedure for exclusion from levies while vowing that allies won’t be exempt
ADRIAN MORROW, MEXICO CITY
SEAN SILCOFF, OTTAWA
With a report from Paul Waldie in London
Donald Trump’s advisers say he does not want to spare Canada and other U.S. allies from punishing tariffs on steel and aluminum – but are also suggesting individual companies can apply for exemptions and no final decision has been made, adding to mounting confusion over the President’s looming trade attack.
Canada is seizing on the chaos in Mr. Trump’s White House to make a full-court press for an exemption ahead of the final rollout of tariffs expected this week. And Ottawa has high-powered help within the U.S. government and big business, as even Mr. Trump’s own administration is starkly divided between economic nationalists girding for a trade war and free-traders who want to avoid battle.
Mr. Trump on Thursday announced tariffs of 25 per cent on steel and 10 per cent on aluminum, for reasons of “national security.” While the move was seen as targeted at China and other U.S. rivals, it will disproportionately hit Canada, which is the largest supplier of both metals to the United States. Ottawa contends it is absurd to deem Canada, one of the United States’s closest and oldest allies, a threat to its national security.
Mr. Trump, who unveiled the levies on the spur of the moment at a meeting with U.S. steel executives, revealed no further details. Sources in the Canadian government and steel industry on both sides of the border said the White House had given them no answers on how the tariffs would actually work.
Peter Navarro, Mr. Trump’s nationalistic trade adviser, told CNN’s State of the Union on Sunday that Canada and other U.S. friends, such as the European Union, would be hit with tariffs.
“At this point in time, there’s no country exclusions,” he said. “As soon as you exempt one country, then you have to exempt another country.”
Commerce Secretary Wilbur Ross told ABC Mr. Trump is “talking about a fairly broad brush” with “no country exclusions” on the tariffs.
Both Canada and the EU have threatened retaliation if they are not exempted. The President on Saturday threatened to retaliate against the retaliation. “If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” he tweeted.
Despite the harsh words, both Mr. Navarro and Mr. Ross indicated there might still be room to avoid a worldwide trade brawl. Mr. Navarro said there would be “an exemption procedure” for specific instances where foreign steel was necessary for U.S. business.
One steel industry source said Mr. Navarro’s idea is to allow companies or industries to petition the U.S. government to have their products exempted from tariffs if they can show that including them is hurting U.S. business or consumers.
The Canadian government is fighting on several fronts for an exemption: Foreign Minister Chrystia Freeland pressed Mr. Ross on the weekend and also sat down with a group of U.S. congressmen led by Kevin Brady, chair of the powerful House ways and means committee, at the Canadian embassy in Mexico on Sunday, government sources said. Ms. Freeland meets on Monday with U.S. Trade Representative Robert Lighthizer during renegotiations of the North American free-trade agreement in Mexico City.
Ontario Premier Kathleen Wynne, whose province is at the centre of the Canadian steel industry, was spending Sunday and Monday calling trade-friendly U.S. governors and asking them to lobby the administration on Canada’s behalf, one Queen’s Park source said.
And Finance Minister Bill Morneau said he had spoken with U.S. Treasury Secretary Steven Mnuchin, a more moderate member of the administration.
British Prime Minister Theresa May also expressed “deep concern” over Mr. Trump’s plans in a phone call with him on Sunday, according to a Downing Street summary of the conversation.
Canada has a host of allies south of the border fighting on its behalf. Mr. Brady said Sunday that “all fairly-traded steel and aluminum” – including from Canada and Mexico – should be exempted from tariffs. U.S. Defence Secretary James Mattis has also argued that steel tariffs should spare U.S. allies.
The U.S. and Canadian steel and aluminum industries are heavily integrated, with major U.S. players owning portions of both, including Alcoa and Stelco.
Jean Simard, president of the Aluminium Association of Canada, said the United States’s “contemptuous” attitude would make the country uncompetitive by driving up the prices of its products. “It’s going to get dirtier before it gets better. I think we’re looking at a possible all-out trade war, including Canada, Europe, Asian countries,” he said in an interview.
Other industry players said that, notwithstanding the verbal broadsides of Mr. Navarro and Mr. Trump, there was still hope.
“I don’t know that the comments [Sunday] necessarily change much, in that we’re going to continue as an industry and in partnership with the government to push for an exemption or an exclusion to these measures,” said Joseph Galimberti, president of the Canadian Steel Producers Association.
The Globe and Mail. 5 Mar 2018. Trump’s ignorant steel tariff is a sour taste of what is to come
LAWRENCE HERMAN, Former Canadian diplomat who practises international trade law. He is a senior fellow of the C.D. Howe Institute
Far from making America great again, the U.S. President is destroying faith in American leadership, revealing the United States an unreliable partner, whether it be at the WTO, the North American free-trade agreement, the Paris climate accord, the Trans-Pacific Partnership or other forums.
Donald Trump’s tweet that “Trade wars are good, and easy to win” is one of the strangest comments – and there have been many – made by this President since assuming office.
Done in his typically bellicose manner, Mr. Trump’s announcement of new tariffs on steel and aluminum imports is another American assault on the rulesbased global trading system and an affront to the international community at large.
It provoked immediate and vigorous worldwide condemnation. The European Union, Germany, Canada and others have threatened retaliation if the United States goes ahead with this. China won’t stand idly by without responding.
Details of the tariffs will be issued this week. While we don’t know for sure, Canada likely won’t be excluded. But even if Canada gets off the hook, the world could be plunged headlong into a global trade war with unpredictable consequences.
All of this follows recommendations made by U.S. Commerce Secretary Wilbur Ross under an obscure law called the 1962 Trade Expansion Act, the last time it was used being in 2001 when the Commerce Department found that no American security interests were prejudiced by imports of semi-finished steel.
The report totally ignores any reference to U.S. treaty obligations under the World Trade Organization Agreement, as if none of this matters a wit. This is typical of the disregard shown by the Trump administration toward American treaty commitments, equally reflected in its 2018 Trade Policy Agenda, tabled last month, which talks of a “new era” in U.S. trade policy, unapologetically using U.S. leverage and not letting the WTO or any other international body interfere.
The world trade order, whatever its limitations, has already been weakened by Mr. Trump’s hostile “America First” agenda.
Far from making America great again, the U.S. President is destroying faith in American leadership, revealing the United States an unreliable partner, whether it be at the WTO, the North American free-trade agreement, the Paris climate accord, the Trans-Pacific Partnership or other forums.
It will take years to restore that leadership, if that’s even possible, as China and Russia, in particular, move strategically into the vacuum.
While not perfect, the WTO is the centre pole for ensuring orderly conduct of global commerce, a system of which the United States was the principal architect and, whatever Mr. Trump and U.S. Trade Representative Robert Lighthizer claim, its chief beneficiary.
As the product of decades of collective efforts, the WTO’s rules aim to prevent a repeat of the beggar-thy-neighbour tariff policies of the 1930s through carefully crafted rules designed to maintain stability and keep global markets open and functioning.
Good-faith respect for those rules, especially by the world’s most powerful country, is fundamental to the preservation of the WTO as an institution.
Mr. Trump’s latest foray into unilateralism does damage by unravelling more than 70 years of statecraft, whereby governments carefully avoided trade restrictions under claims of national security, recognizing the incalculable damage it would do to global business and commerce.
There are, admittedly, some exceptions to WTO obligations, ones that Mr. Trump may be relying on. A WTO member can temporarily opt out of legally binding commitments in exceptional cases necessary “for the protection of its essential security interests.”
However, that exception applies only in time of “war or other emergency in international relations.” Imports of foreign steel and aluminum, even if distasteful to the Trump team, hardly amount to an international emergency of any sort.
The national security off-ramp employed by Mr. Trump is now one of the most serious challenges facing the WTO since its inception, going to the root of its very being. If the United States can opt out of its trade obligations, who’s to stop other countries from doing the same thing, dressing up their rationale in the cloak of national security?
A round of clashes at the WTO in Geneva are only part of the responses these new U.S. measures will unleash. As stated, immediate retaliatory actions by China, the EU, Russia and other countries, including Canada, are already being drawn up.
Contrary to what Mr. Trump tweeted, trade wars are never easy to win. In fact, no one comes out a winner.
A foretaste of the destabilizing impact of the U.S. tariffs was seen Friday as stock markets around the world took a hit, a reflection of what’s in store in the months – and years – under Mr. Trump’s xenophobic world view.
To make America great again – if that can ever be done – means restoring faith and reliability in U.S. leadership. Sadly, we are heading in the opposite direction, as global order suffers under the chaos and stress wrought by Donald Trump.
The Globe and Mail. 5 Mar 2018. BoC’s murky outlook thickens on Trump tariffs. As uncertainty around NAFTA looms, central bank must also grapple with President’s latest protectionist move
MICHAEL BABAD, Columnist
THE WEEK AHEAD
Stephen Poloz’s life just got a lot more complicated.
Not that the Bank of Canada governor was going to tinker with interest rates this week – he wasn’t – but an uncertain economic outlook just got a lot more uncertain.
Mr. Poloz, senior deputy governor Carolyn Wilkins and their colleagues were heading into Wednesday’s policy announcement already concerned about the potential outcome of talks to renegotiate the North American free-trade agreement.
Now they’ve got the added threat of U.S. tariffs on steel and aluminum import duties to worry about in the wake of President Donald Trump’s pledge to hit those products with levies of 25 per cent and 10 per cent, respectively, this week.
Those would hit the Canadian economy hard, among other things, forcing the Bank of Canada to respond.
You can add to all this, too, to the fact that the economy has downshifted from its earlier surge, growing at an annual pace of 1.5 per cent and 1.7 per cent in the third and fourth quarters of 2017; that the central bank is still watching to see how consumers are handling the previous rate hike; and how the country is adjusting to new mortgage qualification rules.
“The softer-than-expected recent trend in Canadian economic growth observed in late 2017 and the intensifying risk of a trade war are good reasons for the BoC to stay cautious, even though the January [consumer price index] report showed further acceleration in consumer inflation,” Laurentian Bank Securities chief economist Sébastien Lavoie and analyst Hugo Lacasse said.
“Following the mid-January hike, we have been expecting only one more 25-basis-point policy rate increase this year,” they added in a lookahead to Wednesday’s decision. “Given these new disappointing developments for the Canadian outlook, we remain comfortable with our call.”
Others expect more than one increase this year from the Bank of Canada, whose key overnight rate stands at 1.25 per cent.
Regardless, don’t expect many hints from Mr. Poloz and Ms. Wilkins on Wednesday.
“A distaste for forward guidance will keep the BoC from delivering any clear-cut signals of what lies ahead,” CIBC World Markets chief economist Avery Shenfeld said. “They will retain the view that rates will eventually be higher, but will have enough cautionary words about the outlook to justify a stand-pat stance this month.”
It’s a busy week even without the Bank of Canada.
MONDAY: “NERVES OF STEEL”
There’s not much on the economic or earnings fronts, but watch for how the markets open in the wake of last week’s turmoil.
“Equity markets slumped [last] week on growing risk of a U.S.-led global trade spat,” Bank of Montreal senior economist Robert Kavcic said in a report titled Nerves Of Steel, referring to Mr. Trump’s tariff announcement and noting the S&P 500’s loss of 2 per cent.
“After amped-up volatility in recent weeks, that leaves the index roughly flat on the year, while most major global indices are looking at single-digit declines,” Mr. Kavcic added. “The TSX gave back 1.6 per cent, with tariff concerns overshadowing a solid run of bank earnings, including a wave of dividend increases. The banks dipped 1.1 per cent on the week, but are the second-best performing (or least-bad) sector on the Canadian landscape this year, down 2.1 per cent.”
TUESDAY: WATCH OUR MATES
It’s always worth watching what happens in Australia, given the similarities in our economies.
The Reserve Bank of Australia is expected to hold its key rate at 1.5 per cent today, while Capital Economics projects Wednesday’s report on gross domestic product to show fourth-quarter growth of 0.5 per cent.
Also on tap is the U.S. measure of factory orders in January, projected to show a drop of 1.2 per cent.
WEDNESDAY: TRUMP’S TIRADES
A busy day, starting with Mr. Trump’s focus on trade deficits.
The U.S. trade gap is expected to come in at US$55-billion or more for January, thus wider than December’s US$53.1-billion.
“The data releases [this] week are only likely to harden Trump’s protectionist views, with January’s trade figures (Wednesday) expected to show a further widening in the deficit,” Paul Ashworth of Capital Economics said.
Statistics Canada releases its monthly trade report at the same time, and economists expect a narrower $2-billion from December’s $3.2-billion. (Yes, Mr. Trump, blame Canada.)
The federal agency also reports fourth-quarter labour productivity.
THURSDAY: AN EASY ACT TO FOLLOW
Given that Mr. Poloz is expected to have done nothing the day before, the European Central Bank has an easy act to follow when it releases its decision.
“It was just in December that the ECB released its ‘substantial upward revisions to GDP’ growth forecasts,” Bank of Montreal senior economist Jennifer Lee said.
“Although inflation had yet to show convincing signs of an upturn (still the case), the governing council believed that the ‘language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year,’ ” she added. “So when’s ‘early’? Given the improved outlook, we believe that the March 8 meeting should be that meeting. A rate hike is not even on the radar this year, but the ECB can take one baby step toward ending its [quantitative easing] program that began in March, 2015.”
We’ll also get to see the latest on the real estate market as Canada Mortgage and Housing Corp. reports what BMO expects will be a rise in construction starts to an annual pace of about 218,000 in February. That will be followed 15 minutes later by a Statscan report forecast to show a 2-per-cent decline in building permits in January.
FRIDAY: ROLL THE DICE
Go ahead, roll the dice on what you expect Statscan’s monthly jobs report to show.
It’s always a crapshoot, but, for the record, economists expect the February results to show net job gains of between 2,000 and 20,000, and unemployment holding at 5.9 per cent.
“The full/part time split will be watched after part-time employment fell by a record 137,000 in January,” RBC economists said in a lookahead, noting, too, the focus on wage increases after the most recent report showed an annual rise of 3.3 per cent in average hourly earnings, the fastest in almost two years.
“Part of that increase was due to a minimum wage hike in Ontario, although there appeared to be some acceleration in other parts of the country, as well,” RBC said. “Further signs of wage growth beyond a minimum wage impact would provide confirmation to the Bank of Canada that labour markets are operating at least close to, if not somewhat beyond, long-run capacity limits.”
Observers expect the U.S. February jobs report to show about 200,000 positions created, with unemployment dipping to 4 per cent.
THE GLOBE AND MAIL. MARCH 5, 2018. No break for Canada on tariffs unless ‘fair’ NAFTA struck, Trump warns
ADRIAN MORROW, U.S. CORRESPONDENT
MEXICO CITY - U.S. President Donald Trump is threatening to hit Canada and Mexico with hefty tariffs on steel and aluminum until the two countries agree to a renegotiated NAFTA.
On the final day of the seventh round of contentious North American free-trade agreement talks in Mexico City on Monday, Mr. Trump took to Twitter to blame the pact for taking away jobs in the United States and give his negotiating partners an ultimatum.
"We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed," Mr. Trump tweeted.
According to the United States's own figures, that country actually has a trade surplus of $12.5-billion with Canada, meaning the U.S. sells more goods and services to Canada than it buys.
Tying the tariffs to NAFTA cranks up the pressure in already tense negotiations – and explicitly links Mr. Trump's protectionist attack on NAFTA to his threatened global trade war on the two metals. Canada is the largest supplier of both steel and aluminum to the U.S. and facing tariffs would put a serious squeeze on the country.
Canada and Mexico have been fighting back against a series of protectionist U.S. demands at the NAFTA table. The Trump administration wants to slap a 50 per cent U.S.-content requirement on all vehicles made in Canada and Mexico, severely restrict Canadian and Mexican companies from bidding on U.S. government contracts and abolish or gut all of NAFTA's dispute-resolution mechanisms.
Canadian Foreign Minister Chrystia Freeland is scheduled to meet Monday in Mexico City with U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo, followed by public statements from the three.
Sources with knowledge of the talks said there had been little progress made in this round on these sticking points.
Mr. Trump tweeted Monday that he also wanted Canada to "treat our farmers much better" in its "highly restrictive" market – an apparent reference to Canada's supply-management system of price fixing that keeps most foreign imports of milk, eggs and poultry out of the country. And he said Mexico had to do "much more on stopping drugs from pouring into the U.S."
"To protect our Country we must protect American Steel! #AMERICA FIRST," the President concluded his tweetstorm.
Speaking to reporters in the Oval Office later, Mr. Trump repeated his long-standing threat to shred NAFTA if it isn't renegotiated to his liking.
"No, we're not backing down…we've had a very bad deal with Mexico, a very bad deal with Canada. It's called NAFTA. Our factories have left our country, our jobs have left our country," he said. "If we don't make a deal, I'll terminate NAFTA."
The President reiterated that steel tariffs would be "one of the points that's we'll negotiate" at the NAFTA table. And he said he "just got a call" from his negotiators in Mexico City. "Mexico and, really, Canada want to talk about it."
Mr. Trump announced on Thursday that he would impose tariffs of 25 per cent on steel and 10 per cent on aluminum in a bid to help U.S. suppliers at the expense of other countries. The President justified the tariffs as an issue of "national security," meaning the U.S. cannot trust other countries to supply the metal for its military equipment.
U.S. allies, including Canada, Mexico and the European Union have been lobbying to be exempted from the tariffs, contending they pose no security risk to the United States. Canada and the EU have both threatened to retaliate if the U.S. imposes tariffs, setting the stage for a global trade war. The EU has said it would slap tariffs on a wide range of American products, from Harley-Davidson motorcycles to Levi's blue jeans.
The White House had previously released no details on how the tariffs would be applied, and officials in the Canadian government and steel industry said they had not been able to get firm information out of the U.S. government.
Mr. Trump's own administration is locked in an internal battle over the tariffs: U.S. Defense Secretary James Mattis released a report contending that the steel and aluminum supplies are not significant for national security and urging Mr. Trump to exempt American allies from the duties. Economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin also favour not imposing tariffs.
Economic nationalists in the administration, including Mr. Lighthizer, trade adviser Peter Navarro and Commerce Secretary Wilbur Ross, meanwhile, favour protectionist trade action. But it has been clear since Mr. Trump's surprise announcement Thursday that even they were unsure how exactly the President would roll out his tariffs.
On Sunday, Mr. Navarro told CNN that "there's no country exclusions," but said there would be "an exemption procedure" for U.S. businesses and industries to apply for the right to import foreign steel and aluminum without paying a tariff. Mr. Ross said Mr. Trump had not told him of any exclusions, but left the door open to the possibility.
Canada had been taking advantage of the confusion in the White House to fight for an exemption from the tariffs. Ms. Freeland has lobbied Mr. Ross and also met Sunday in Mexico with members of Congress, including Kevin Brady, who chairs the House committee that oversees trade. Finance Minister Bill Morneau has spoken with Mr. Mnuchin on the matter, and Ontario Premier Kathleen Wynne spent Sunday and Monday calling U.S. governors and urging them to lobby the White House to spare Canada.
Ottawa is also getting a high-powered assist from members of Mr. Trump's own Republican caucus. Speaker Paul Ryan has spoken with Mr. Trump directly to urge him to change his mind and impose no tariffs on anyone.
"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," Mr. Ryan's office said in a statement. "The new tax reform law has boosted the economy and we certainly don't want to jeopardize those gains."
Canada and Mexico had prepared a series of compromise proposals on the key autos issue for the seventh round of NAFTA, but were unable to present them after the U.S.'s lead negotiator on the file, Jason Bernstein, was called back to Washington for hasty consultations with the U.S. auto industry. The three countries are expected to schedule an autos-specific negotiating session in the coming weeks, before the eighth round of talks in Washington in April.
THE GLOBE AND MAIL. MARCH 4, 2018. TRADE. Canada waging full-court press against U.S. steel, aluminum tariffs
ADRIAN MORROW, MEXICO CITY
SEAN SILCOFF, OTTAWA
Donald Trump's advisers say he does not want to spare Canada and other U.S. allies from punishing tariffs on steel and aluminum – but are also suggesting individual companies can apply for exemptions and no final decision has been made, adding to mounting confusion over the President's looming trade attack.
Canada is seizing on the chaos in Mr. Trump's White House to make a full-court press for an exemption ahead of the final rollout of tariffs expected this week. And Ottawa has high-powered help within the U.S. government and big business, as even Mr. Trump's own administration is starkly divided between economic nationalists girding for a trade war and free-traders who want to avoid battle.
Mr. Trump on Thursday announced tariffs of 25 per cent on steel and 10 per cent on aluminum, for reasons of "national security." While the move was seen as targeted at China and other U.S. rivals, it will disproportionately hit Canada, which is the largest supplier of both metals to the United States. Ottawa contends it is absurd to deem Canada, one of the United States's closest and oldest allies, a threat to its national security.
Mr. Trump, who unveiled the levies on the spur of the moment at a meeting with U.S. steel executives, revealed no further details. Sources in the Canadian government and steel industry on both sides of the border said the White House had given them no answers on how the tariffs would actually work.
Peter Navarro, Mr. Trump's nationalistic trade adviser, told CNN's State of the Union on Sunday that Canada and other U.S. friends, such as the European Union, would be hit with tariffs.
"At this point in time, there's no country exclusions," he said. "As soon as you exempt one country, then you have to exempt another country."
Commerce Secretary Wilbur Ross told ABC Mr. Trump is "talking about a fairly broad brush" with "no country exclusions" on the tariffs.
Both Canada and the EU have threatened retaliation if they are not exempted. The President on Saturday threatened to retaliate against the retaliation. "If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.," he tweeted.
Despite the harsh words, both Mr. Navarro and Mr. Ross indicated there might still be room to avoid a worldwide trade brawl. Mr. Navarro said there would be "an exemption procedure" for specific instances where foreign steel was necessary for U.S. business.
One steel industry source said Mr. Navarro's idea is to allow companies or industries to petition the U.S. government to have their products exempted from tariffs if they can show that including them is hurting U.S. business or consumers.
The Canadian government is fighting on several fronts for an exemption: Foreign Minister Chrystia Freeland pressed Mr. Ross on the weekend and also sat down with a group of U.S. congressmen led by Kevin Brady, chair of the powerful House ways and means committee, at the Canadian embassy in Mexico on Sunday, government sources said. Ms. Freeland meets on Monday with U.S. Trade Representative Robert Lighthizer during renegotiations of the North American free-trade agreement in Mexico City.
Ontario Premier Kathleen Wynne, whose province is at the centre of the Canadian steel industry, was spending Sunday and Monday calling trade-friendly U.S. governors and asking them to lobby the administration on Canada's behalf, one Queen's Park source said.
And Finance Minister Bill Morneau said he had spoken with U.S. Treasury Secretary Steven Mnuchin, a more moderate member of the administration.
British Prime Minister Theresa May also expressed "deep concern" over Mr. Trump's plans in a phone call with him on Sunday, according to a Downing Street summary of the conversation.
Canada has a host of allies south of the border fighting on its behalf. Mr. Brady said Sunday that "all fairly-traded steel and aluminum" – including from Canada and Mexico – should be exempted from tariffs. U.S. Defence Secretary James Mattis has also argued that steel tariffs should spare U.S. allies.
The U.S. and Canadian steel and aluminum industries are heavily integrated, with major U.S. players owning portions of both, including Alcoa and Stelco.
Jean Simard, president of the Aluminium Association of Canada, said the United States's "contemptuous" attitude would make the country uncompetitive by driving up the prices of its products. "It's going to get dirtier before it gets better. I think we're looking at a possible all-out trade war, including Canada, Europe, Asian countries," he said in an interview.
Other industry players said that, notwithstanding the verbal broadsides of Mr. Navarro and Mr. Trump, there was still hope.
"I don't know that the comments [Sunday] necessarily change much, in that we're going to continue as an industry and in partnership with the government to push for an exemption or an exclusion to these measures," said Joseph Galimberti, president of the Canadian Steel Producers Association.
With a report from Paul Waldie in London
THE GLOBE AND MAIL. REUTERS. MARCH 5, 2018. U.S. trade panel backs probe into welded pipe imports from six countries, including Canada
ERIC WALSH, WASHINGTON
The U.S. International Trade Commission on Monday voted to continue anti-dumping and subsidy investigations into imports of large-diameter welded pipe from Canada, China, Greece, India, South Korea and Turkey, it said in a statement.
The U.S. Commerce Department said last month it was examining whether manufacturers from those countries are selling the pipe in the United States at below-market rates or are being unfairly subsidized by their governments.
The trade case comes amidst global trade jitters after U.S. President Donald Trump said last week he would impose broad tariffs on imports of steel and aluminum to protect U.S. national security under a Cold War-era trade law, a move that could raise consumer prices and ignite a trade war. Imports of the welded steel pipe, used to build oil and gas pipelines, in 2016 totaled $441.4-million from the six countries, department data show.
The probe was launched after a petition from a group of privately held U.S. producers and covers welded carbon and alloy steel pipe larger than 16 inches (406.4 mm) in diameter.
The pipe can be used to transport oil, gas, slurry, steam or other fluids, liquids or gases.
The investigation is one of around 100 the Trump administration has opened since taking office, which it says are aimed at protecting U.S. manufacturers in global markets.
The Commerce Department estimated that in 2016 imports of large-diameter welded pipe from Canada had a value of $66-million, China $139-million, India $26-million, Greece $70-million, South Korea $150.3-million and Turkey $116.1-million.
It estimated dumping margins at 50.89 per cent for Canada, 120.84 per cent to 132.63 per cent for China, 41.04 per cent for Greece, 37.94 per cent for India, 16.18 per cent and 20.39 per cent for South Korea and 66.09 per cent for Turkey.
"Dumping" is the practice of selling goods below market price.
The Commerce Department is scheduled to make its preliminary subsidy decision by April 16 and its preliminary dumping determination by June 29.
Trump campaigned on a platform of restoring a level playing field to trade relations, in particular with China. Even before the steel and aluminum tariff proposals, his administration was accused of courting a trade war by vetoing new appeals judges at the World Trade Organization, hobbling the trade dispute settlement system and running the risk that trade friction will explode into tit-for-tat actions.
NAFTA
GLOBAL AFFAIRS CANADA. March 5, 2018. Foreign Affairs Minister’s itinerary at NAFTA round seven negotiations
Mexico City, DF, Mexico - The Honourable Chrystia Freeland, Canada’s Minister of Foreign Affairs, will attend bilateral and trilateral meetings on March 5, 2018, with Ildefonso Guajardo, Mexico’s Secretary of Economy, and Ambassador Robert Lighthizer, United States Trade Representative in Mexico City, Mexico.
Schedule of events for March 5, 2018:
Event: Bilateral meeting between Minister Freeland and Ambassador Lighthizer
Time: 11:15 a.m. ET
Location: Secretaría de Economía, Paseo de la Reforma 296, Col. Juárez, Del. Cuauhtémoc, Ciudad de México.
Notes for media:
Closed to media.
Event: Bilateral meeting between Minister Freeland and Secretary Guajardo
Time: 12:30 a.m. ET
Location: Secretaría de Economía, Paseo de la Reforma 296, Col. Juárez, Del. Cuauhtémoc, Ciudad de México.
Notes for media:
Closed to media.
Event: Trilateral meeting between Minister Freeland, Ambassador Lighthizer and Secretary Guajardo
Time: 1:45 p.m. ET
Location: Secretaría de Economía, Paseo de la Reforma 296, Col. Juárez, Del. Cuauhtémoc, Ciudad de México.
Notes for media:
Closed to media.
Event: Statements to the press
Time: 3:15 p.m. ET
Location: Sala Secretarios, 18th Floor, Secretaría de Economía, Paseo de la Reforma 296, Col. Juárez, Del. Cuauhtémoc, Ciudad de México.
Notes for media:
Open coverage.
Photographers should arrive 45 minutes in advance and journalists should arrive 30 minutes in advance.
Event: Media availability with Minister Freeland
Time: 4:00 p.m. ET
Location: Secretaría de Economía , Paseo de la Reforma 296, Col. Juárez, Del. Cuauhtémoc, Ciudad de México.
Notes for media:
Open coverage.
Question and answer period.
REUTERS. MARCH 5, 2018. Canada, Mexico push back on Trump's 'fair' NAFTA deal suggestion
Lesley Wroughton, Adriana Barrera
MEXICO CITY (Reuters) - Canada and Mexico on Monday pushed back against President Donald Trump’s suggestion that steel and aluminum tariffs could be waived if they signed a new and“fair” NAFTA deal, setting the stage for a tense end to the latest talks to update the trade pact.
The two U.S. trading partners have threatened retaliation unless they are exempted from the planned tariffs, which have rattled financial markets. Both Canada and Mexico send more than 75 percent of their goods exports to the United States.
“Mexico shouldn’t be included in steel & aluminum tariffs. It’s the wrong way to incentivize the creation of a new & modern NAFTA,” Economy Minister Ildefonso Guajardo said on Twitter.
Canadian Finance Minister Bill Morneau, speaking north of Toronto, said Ottawa is now negotiating NAFTA with a partner that has“changed the terms of the discussion,” referring to the United States.
Negotiators from the three countries are scheduled to meet later on Monday in Mexico City to wrap up the latest round of talks aimed at modernizing the 1994 North American Free Trade Agreement.
Trump, who has repeatedly said he will walk away from the trade deal unless major changes are made, had tweeted a few hours earlier that“Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”
The U.S. president has proposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports, arguing they are needed to protect U.S. industries and jobs. He is expected to reveal more details later this week.
Talks on the $1.2 trillion NAFTA pact are moving slowly, in part because Canada and Mexico are resisting U.S. demands for major changes such as adding a sunset clause and boosting the North American content of autos produced inside NAFTA.
Uncertainty over the talks, and the potential for a wider global trade war, are making investors nervous. Trump’s tweet helped push the Canadian dollar down to C$1.2988 to the U.S. dollar, the lowest level since July 7, 2017.
The Mexican peso was down 0.7 percent at 18.94 pesos per dollar.
PROTECTIONIST SHADOW
The Mexico City round of talks is the seventh since last August. Negotiators had hoped to wrap up their work with an eighth and final session by the end of March, but officials say they will not now meet that deadline.
Guajardo, Canadian Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer - the three ministers driving the talks - are due to meet on Monday to assess what the Mexico round achieved.
Kevin Brady, the Republican chairman of the U.S. House of Representatives Ways and Means Committee, which oversees U.S. trade policy, on Sunday said he expected the tariffs issue“to be front and center” at the meeting.
Freeland, Guajardo and Lighthizer are scheduled to address the media at 2:15 p.m. local time (2015 GMT) in Mexico City.
Officials have so far been evasive when asked how the three nations can continue trying to update NAFTA at a time when Trump is about to take a highly protectionist measure.
Trump also said Canada had to treat American farmers better and called on Mexico to stop drugs“from pouring into the U.S.”
A White House representative did not respond to a request for comment on Trump’s statement.
Mexico’s Foreign Minister Luis Videgaray, in a separate tweet, said efforts to combat drug trafficking were a shared responsibility. Canadian officials did not respond to requests for comment.
NAFTA negotiators have successfully concluded discussions on rules governing food safety and animal health, a Mexican source familiar with the matter said on Monday.
Additional reporting by David Ljunggren, Dave Graham and Susan Love in Mexico City and Fergal Smith in Toronto; Writing by Lesley Wroughton and David Ljunggren; Editing by Chizu Nomiyama and Paul Simao
REUTERS. MARCH 5, 2018. Trump ups trade pressure on Canada, Mexico; senior Republicans urge rethink
Susan Cornwell, Makini Brice
WASHINGTON/MEXICO CITY (Reuters) - U.S. President Donald Trump increased pressure on Canada and Mexico over trade on Monday, saying the two could avoid being caught in his planned hefty tariffs on steel and aluminum if they ceded ground in talks on a new NAFTA trade deal.
Trump also said, after a weekend of tweets in which he threatened to hit German automakers with tariffs, that Mexico needed to do more to stem the flow illegal drugs to the United States, something not encompassed by the talks over the North American Free Trade Agreement.
Trump’s determination to push ahead with a 25 percent tariff on steel imports and a 10 percent duty on aluminum has prompted threats of retaliation from the European Union, Canada, China and Brazil among others. It has roiled world stockmarkets as investors worry about the prospect for an ever-escalating trade war that would derail global economic growth.
His plan, announced on Thursday, has also hit resistance from some senior figures in his own Republican Party.
House of Representatives Speaker Paul Ryan, a Republican whose state of Wisconsin would be hit by proposed European counter-tariffs on Harley Davidson motorcycles, urged the White House on Monday not to push ahead with the action.
Fellow Republican Kevin Brady, the top House legislator on trade, said American consumers should not be forced to pay more for goods.
Trump has been unmoved by lobbying from lawmakers, leading companies and industry groups since he first announced the measure. If anything, he has repeatedly upped the ante.
“We’re not backing down,” Trump said during a White House meeting with Israeli Prime Minister Benjamin Netanyahu.“I don’t think you’re going to have a trade war,” he added, without elaborating.
U.S. stocks reversed early losses to trade in positive territory after falls last week that were triggered in part by Trump’s tariff plans. Treasuries rallied as investors sought out safe-haven securities.
In Europe, German car giants Volkswagen AG (VOWG_p.DE) and BMW also recovered from earlier losses. German car companies urged policymakers on Monday to avoid a trade war with the United States“at all costs.”
Trump was expected to finalize the planned tariffs later in the week, posing a tough challenge for U.S. Trade Representative Robert Lighthizer, Canada’s Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo. They were meeting in Mexico City on Monday to wrap up the latest round of discussions on revamping the 1994 NAFTA deal.
“Mexico shouldn’t be included in steel & aluminum tariffs. It’s the wrong way to incentivize the creation of a new & modern NAFTA,” Guajardo said on Twitter.
Trump has touted the tariffs as a way to revive the U.S. steel and aluminum industries, in keeping with his promises both on the campaign trail and in the White House that he will seek deals that better favor American workers.
That has included the threat that Washington will withdraw from NAFTA if it is not satisfactorily renegotiated. He withdrew from a proposed Pacific trade pact on his first day in office in January last year.
Volkswagen AG
153.54
VOWG_P.DEXETRA
-0.22(-0.14%)
VOWG_p.DE
VOWG_p.DE
NAFTA TALKS
In another comment on the NAFTA talks on Monday, Trump reprised two running criticisms of Canada and Mexico. Last year Trump came close to withdrawing from NAFTA after he visited American dairy farmers in Wisconsin who say they have been hit by Canadian rules that discriminate against U.S. milk exports.
“Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying,” Trump tweeted.
The Mexican and Canadian ministers were likely to press Trump’s trade envoy for more details on how their countries could be excluded from the blanket tariffs.
Canadian Finance Minister Bill Morneau said on Monday the country was negotiating on NAFTA with a partner that has“changed the terms of the discussion.”
In Washington, aides scrambled to meet Trump’s demand for the paperwork to be completed for a formal announcement this week. The exact timing was still unclear as the tariff documentation had to be drafted and go through a variety of reviews, a process that takes days, an administration official said.
Trump remained adamant about signing the tariffs, according to officials in and out of the White House. The president“sees this as a base issue for him,” one Trump outside adviser said.
There was always a chance that Trump“could amend his initial announcement” to take account of the concerns expressed about it, said a source familiar with the internal debate at the White House.
Reporting by Susan Heavey and Adriana Barrrera; Additional reporting by Steve Holland, Eric Walsh, Sharay Angulo, Lesley Wroughton, David Ljunggren, Sujata Rao, Ilona Wissenbach, Michael Nienaber, Fergal Smith; Writing by David Chance; Editing by Andrea Ricci and Frances Kerry
BLOOMBERG. 5 March 2018. U.S. Says Time Running Out for Nafta Deal
By Eric Martin, Andrew Mayeda, and Josh Wingrove
U.S. Trade Representative Robert Lighthizer said progress on updating Nafta fell short of expectations during the latest negotiations and that time is running out for a new deal.
“Our time is running very short,” Lighthizer said during a ministerial briefing at the conclusion of the seventh round of talks in Mexico City on Monday. Campaigning will begin “in earnest” next month for Mexican presidential elections on July 1, while the Canadian provinces of Ontario and Quebec will hold elections this year and the U.S. will have a congressional mid-term vote, Lighthizer said. “All of these complicates our work,” he said.
“I feel the longer we proceed the more political headwinds we will feel,” Lighthizer said.
The U.S. would prefer hammering out a deal with Mexico and Canada but if those talks fail the Trump administration would consider separate bilateral deals, said Lighthizer. Canada’s Foreign Minister Chrystia Freeland, speaking at the briefing, said there’s been solid progress toward a deal.
BLOOMBERG. 5 March 2018. Trump Says No Mexico, Canada Steel Break Without Fair Nafta
By Eric Martin and Andrew Mayeda
- Steel tariff plan overshadows negotiations on new Nafta
- Negotiators made progress on mundane issues in Mexico City
Bloomberg’s Michael McKee reports on how President Trump’s planned tariffs could impact Nafta talks.
President Donald Trump said the U.S. won’t lower tariffs on steel and aluminum from Mexico and Canada unless the two countries agree to a revamped Nafta that’s fair to the U.S.
“NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs,” the president said in a tweet Monday. “Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”
Trump, later speaking to reporters, added that he had just spoken by phone with negotiators at ongoing talks in Mexico City and that he’s under the impression that Canada and Mexico are open to a discussion. “But if they are not going to make a NAFTA deal, we’re just going to leave it this way,” Trump said at a news conference in Washington, suggesting he’d not waive the tariffs.
Trump’s plan to impose stiff tariffs on steel and aluminum is overshadowing talks to overhaul the North American Free Trade Agreement. The president’s intervention may complicate a process that had already been yielding little progress on the most contentious issues.
The Mexican peso and Canadian dollar extended their losses right after Trump’s comments. The peso later pared back some of its decline, trading 0.2 percent weaker against the dollar by 1:17 p.m. in New York, while the Canadian dollar dropped 0.7 percent to C$1.2977.
Until recently, the U.S. probe into the national-security risks of steel and aluminum has been considered separate from the Nafta discussions. Over the weekend, Trump advisers gave no indication that any countries would be excluded from the tariffs.
The seventh round of negotiations wrap up Monday in Mexico City, with U.S. Trade Representative Robert Lighthizer due to meet with Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland, just hours after Trump’s tweet. The three will address the media in the afternoon.
Trump’s decision on tariffs came Thursday in the middle of talks, catching negotiators off guard. On Sunday, Trump’s senior trade advisers said the president doesn’t want any nation excluded from the tariffs, set to be imposed as early as this week. Canada, the biggest supplier of steel and aluminum to the U.S., and Mexico, the No. 4 source of steel, have asked to be excluded, and both indicated they will strike back if Trump includes them in the stiff duties.
At the Nafta talks in Mexico City, negotiators agreed on two more topic areas and discussed details of Canada’s idea to redraw the way regional content for cars is measured. Yet work on the autos issue, which may hold the key to the entire deal, has been slow. It now looks impossible for negotiators to meet their goal of getting an agreement by the end of this month, especially amid the prospect of escalating trade tensions from the steel dispute.
“I applaud the president for targeting unfairly traded steel and aluminum,” Representative Kevin Brady, a Texas Republican and chairman of the House Ways and Means Committee, told reporters in Mexico City on Sunday. “But blanket tariffs that also sweep up fairly traded steel and aluminum, especially with trading partners like Canada and Mexico -- they should be excluded.”
Progress was made on the “nuts and bolts” of a new Nafta deal, Brady said after being briefed.
Trump’s announcement that he plans to impose tariffs of 25 percent on imported steel and 10 percent on aluminum landed like a bombshell, prompting expletives from a least one negotiator and casting a pall over the painstaking efforts to update the 24-year-old deal.
Most Contentious
Mexico and Canada began negotiating with the U.S. in August at the initiative of Trump, who’s repeatedly said the Nafta accord led U.S. companies to fire workers and move factories to Mexico. Trump has promised to negotiate a better deal for America or withdraw.
The most contentious issues include a proposal to require more auto manufacturing in the U.S., seasonal barriers to farming goods, access to U.S. procurement deals, dispute resolution mechanisms, and a clause that would terminate the deal after five years.
Rules for cars were scheduled to play a prominent role over the past week, but the top U.S. negotiator on the issue was hurriedly summoned back to Washington on the first day of the talks to meet with representatives from American auto companies. Negotiators now plan to schedule more discussions on vehicles before the next formal negotiating round.
“It’s a delay on the original goals that they imposed on themselves of having the treaty done in a few months, but many of us understood that as a political statement rather than something feasible,” said Carlos Vejar, a lawyer at Holland & Knight in Mexico City who was part of the Mexican Economy Ministry’s negotiating team for more than two decades.
Important Strides
In Mexico City, negotiators finished work on regulatory best practices and transparency guidelines, and also reached agreement on rules for the chemicals industry, according to people familiar with the talks, who asked not to be identified because negotiations are private.
Negotiators have completed five of the roughly 30 topic areas, known as chapters, likely to comprise the updated deal. Still, they say important strides have been made in other areas, and a deal could come together quickly once the toughest issues are worked out.
“Nafta negotiations are at a critical point where there are specific and very technical issues that are going to be elevated to a higher decision-making level, out of the negotiating table,” Vejar said. “Some of those issues will not be resolved until the very end of the negotiations, at the very last moment. Either you get the deal done, or you just can’t.”
When that last moment will be, and if Trump will have the patience to see the process through, is still anybody’s guess.
— With assistance by Josh Wingrove, and Toluse Olorunnipa
BLOOMBERG. 5 March 2018. U.S. Metals Tariffs Would Hit Canada Much Harder Than Mexico
By Joch Wingrove and Erik Hertzberg
Canada has the most to lose among Nafta partners if Donald Trump presses ahead with plans to slap steel and aluminum tariffs on his neighbors.
Canadian and Mexican exports of the two metals, along with iron and related products, to the U.S. reached $24.6 billion in 2017, a level surpassed only twice before, according to American data dating back to 1996. But the balance is tilted: 71 percent of those U.S. imports came from Canada.
The northern country’s major steel producers are ArcelorMittal Dofasco, owned by Luxembourg-based ArcelorMittal; Algoma, owned by privately-held Essar Global Fund Ltd.; and Stelco Holdings Inc., majority-owned by New York-based Bedrock Industries Inc. London-based Rio Tinto Plc, which ships more than 1.4 million metric tons of aluminum to the U.S. annually from Canada, said last week it would continue to push for an exemption given the highly integrated Canada-U.S. market for autos and other manufactured goods.
Stelco was up 2 percent on the day as of 2:10 p.m. in Toronto, while ArcelorMittal was down 0.8 percent.
Canada -- both the top source of U.S. steel imports and top buyer of U.S. steel exports -- has threatened to retaliate and continues to press for an exemption. While the White House has signaled certain sectors could be excluded from the tariffs, Trump tweeted Monday that he would only spare Canada and Mexico if he gets “new & fair” deal in the renegotiation of the North American Free Trade Agreement.
Canadian Foreign Minister Chrystia Freeland is scheduled to meet privately with U.S. Trade Representative Robert Lighthizer in Mexico City on Monday, before they make a joint public statement with Mexican Economy Minister Ildefonso Guajardo.
U.S. House Speaker Paul Ryan is among those urging Trump to back down from his tariff plan, and Canadian industry called on Freeland to keep pressing for the same. “I think we have to continue to push for an exemption,” Joseph Galimberti, president of the Canadian Steel Producers Association, said in an interview Monday.
INTERNATIONAL RESERVES
Department of Finance Canada. Ottawa, March 5, 2018. All 2018 Official International Reserves
The Department of Finance Canada announced today that Canada's official international reserves decreased by an amount equivalent to US$262 million during February to US$86,486 million.
Details on the level and composition of Canada's reserves as of February 28, 2018, as well as the major factors underlying the change in reserves, are provided below. All figures are in millions of US dollars unless otherwise noted.
| Millions of US dollars | |
|---|---|
| Securities | 72,716 |
| Deposits | 3,568 |
| Total securities and deposits (liquid reserves): | 76,284 |
| Gold | 0 |
| Special drawing rights (SDRs) | 8,134 |
| Reserve position in the IMF | 2,068 |
| Total: | |
| February 28, 2018 | 86,486 |
| January 31, 2018 | 86,748 |
| Net change: | -262 |
FULL DOCUMENT: https://www.fin.gc.ca/n18/18-012-eng.asp
AVIATION
The Globe and Mail. 5 Mar 2018. Bombardier workers vote in favour of Airbus reciprocity agreement. Bombardier workers approve Airbus reciprocity agreement. Deal lets employees go to and from Airbus without sacrificing pensions, all seniority
Bombardier Aerospace workers voted overwhelmingly in favour of a new reciprocity agreement on Sunday, as the manufacturer and Airbus SE continue to work toward finalizing their partnership to produce C Series aircraft.
The agreement would ensure that workers who switch from Bombardier Inc. to the future partnership, and vice-versa, will not lose their pensions and will keep most of their seniority benefits.
It would also ensure that workers who are laid off from one company will be given priority for future jobs at both.
Workers voted 92.3 per cent in favour of the letter of agreement during a meeting in Montreal on Sunday morning.
Union spokesman Dave Chartrand said the agreement will create bridges between the workers’ union, Bombardier and the new limited partnership once the enterprise is split into separate entities.
“What was important to us when the announcement was made … was to sit down with the company and the partnership and make sure that’s there’s labour mobility, so workers can go work for one company or the other depending on need,” he said.
Mr. Chartrand said the letter of agreement will be included in the collective bargaining agreements of both companies, as well as in future agreements once they are renegotiatied.
In a statement, Bombardier said it was pleased with the outcome of the vote, calling it “another important step towards closing the announced partnership with Airbus for the C Series aircraft.”
“This is good news for our unionized employees, who will keep their benefits even if they move from Bombardier to the C Series LP or vice versa,” the company said.
AGRICULTURE
The Globe and Mail. BLOOMBERG. 5 Mar 2018. Record yield looms for Brazil’s coffee farmers. Crop-forecasting agency says production could rise by 30%, which has helped take a toll on the commodity’s price
FABIANA BATISTA
It is impossible sell every year at high prices. It is part of the game.
FRANCISCO CESAR DI GIACOMO, BRAZILIAN COFFEE FARMER
As Brazilian farmer Francisco Cesar Di Giacomo surveys his fields, he plucks a pod off a nearby coffee tree and splits it open with a penknife. He points to the thin husk: a sign that the beans inside will be plump and robust.
Here in southern Minas Gerais, the mountainous state at the heart of the country’s coffee belt, there’s growing evidence that the looming crop will be enormous.
Mr. Di Giacomo, who runs two arabica farms with a combined area topping 130 hectares in Sao Goncalo do Sapucai municipality, expects a harvest of 3,200 bags, each weighing 60 kilograms. That would be a third more than last year. What’s more, he’s planted new trees recently and expects a crop of 5,000 bags in 2019.
The outlook for a big harvest was shared by farmers and traders during a field survey that spanned four days and more than 5,000 kilometres across the region. After years of higher domestic prices, well-funded farmers have invested generously in their plantations. Beneficial rains during the country’s summer aided bean development and trees are looking green and lush.
Brazil is the world’s biggest grower and exporter of the highly prized arabica beans. Growers in Minas Gerais are optimistic for the 2018 season, as most trees enter what’s typically the higheryielding half of a biennial crop cycle. The government’s cropforecasting agency, Conab, has said the country’s total coffee production, which also includes the robusta variety, could rise as much as 30 per cent to a record this year.
The supply outlook underscores why coffee is one of the worst performers in the Bloomberg Commodity Index over the past year. Arabica prices have slumped 15 per cent in the past 12 months to US$1.222 a pound on ICE Futures U.S. in New York.
Hedge funds are wagering on more declines. In the week ended Feb. 27, money managers had a net-short position of 56,520 futures and options, according to U.S. Commodity Futures Trading Commission data published on Friday. The figure, which measures the difference between bets on a price decline and wagers on a rise, has expanded 41 per cent since mid-January. The funds were last net-bullish in August.
Farmers are also positioning for lower prices.
Mr. Di Giacomo’s expectations for declines prompted him to sell all the inventories he had from his last harvest, and he’s already started forward sales of his 2018 crop. While the prices he’s fetching have dropped to about 460 reais ($182) a bag from 480 reais to 570 reais he got during the 2017 season, it’s still a good enough profit margin to lock in prices since his costs are range from 280 reais to 350 reais a bag, he said.
“It is impossible sell every year at high prices,” Mr. Di Giacomo said. “It is part of the game.”
Mr. Di Giacomo’s gamble could pay off since even farmers who ran into problems this year have been surprised by the resilience of their crops.
Take the case of Luiz Alberto Azevedo Levy, who’s a fourthgeneration coffee farmer in Machado municipality. Some of the one million coffee trees he cultivates got no rain from the end of January through mid-February and an electric failure hampered his irrigation system.
He expects to collect between 14,000 and 15,000 bags this year. But he’s been surprised by bigger crops before. During the previous high-yielding crop stage in 2016, he ended up with 3,000 more bags than predicted.
“It is so complex estimating the coffee harvest,” said Mr. Levy’s son and namesake Luiz Alberto Azevedo Levy Jr. “We always place a bet on the farm to see who is right.”
BUDGET
Department of Finance Canada. March 5, 2018. Minister Morneau Highlights Budget 2018 Plan for Middle Class Progress at SheEO
Toronto, Ontario – Making sure every Canadian has a real and fair chance at success is not just the right thing to do, it is the smart thing to do. Canada's future prosperity depends on it.
To face the challenges of today and tomorrow, the Government of Canada will need the hard work and creativity of all Canadians. In return, it needs to ensure the benefits of a growing economy are felt by more and more people—with good, well-paying jobs for the middle class and everyone working hard to join it.
Finance Minister Bill Morneau today spoke with innovative women entrepreneurs at the SheEO Summit in Toronto about how Budget 2018 advances the Government's plan for middle class progress with new investments to promote equality and create new opportunities for Canadians.
Minister Morneau also spoke about how investments in Budget 2018 take the steps needed to encourage the broader participation of women in the workforce and build an economy that works for everyone. This includes the new Employment Insurance Parental Sharing Benefit that would provide additional weeks of parental benefits when parents agree to share parental leave, including adoptive and same-sex couples.
Through Budget 2018, the Government is making historic investments in women and girls and people with intersecting identities. With Budget 2018, the Government proposes:
- A new Gender Results Framework to support equal opportunity for all Canadians, backed by new investments to achieve equality in the workforce and at home. A recent study by the Royal Bank of Canada estimates that closing the gender gap in labour force participation rates alone, over the next two decades, could boost gross domestic product by 4 per cent.
- Introducing a new Women Entrepreneurship Strategy to encourage greater participation by women in the economy, and help more women-owned companies grow into world-class businesses.
- To support the advancement of women in senior positions by publicly recognizing corporations that are committed to promoting women to senior management and board positions.
- A legislated "equal-pay-for-equal-work" regime in federally regulated sectors to the benefit of approximately 1.2 million employees.
- Launching a five-year pilot project, the Apprenticeship Incentive Grant for Women, to encourage women's increased representation in male-dominated and better-paid Red Seal trades.
Quote
"Canadian women and men work hard every day. They deserve to be equal partners in society and equal participants in the economy—our future prosperity depends on it. Through Budget 2018, our Government is striving for equality, so that everyone has the chance to contribute to and benefit from a growing economy."
- Bill Morneau, Minister of Finance
Quick Facts
Budget 2018 supports Toronto by proposing:
- To increase the amount of loans provided by the Rental Construction Financing Initiative from $2.5 billion to $3.75 billion over the next three years. This new funding is intended to support projects that address the needs of modest- and middle-income households struggling in expensive housing markets like the Greater Toronto Area. In total, this measure alone is expected to spur the construction of more than 14,000 new rental units across Canada.
- Renewed funding of $1.2 million over three years, starting in 2019–20, in support of the Gairdner Foundation. Based in Toronto, the Gairdner Foundation recognizes and rewards scientific excellence through the Canada Gairdner Awards, which are among the most prestigious biomedical prizes worldwide. This new funding would support the Foundation's activities, including Canadian and international outreach efforts to expand its reach and diversity.
FULL DOCUMENT: https://www.fin.gc.ca/n18/18-013-eng.asp
Canadian Heritage. 2018-03-05. Minister Joly to Make Announcement Regarding Budget 2018
MONTRÉAL – The Honourable Mélanie Joly, Minister of Canadian Heritage, on behalf of the Honourable Kirsty Duncan, Minister of Science and Minister of Sport and Persons with Disabilities, will be in Montréal on Tuesday to make an announcement regarding Budget 2018.
Employment and Social Development Canada. March 5, 2018. Budget 2018: Sharing parental leave for a stronger middle class
Brampton, Ontario - Canadian women and men deserve to be equal partners in society and equal participants in the economy. When we have gender equality both at home and at work, families thrive and our economy flourishes.
That is why today, the Honourable Patty Hajdu, Minister of Employment, Workforce Development and Labour, was in Brampton to highlight the Government of Canada’s new Employment Insurance (EI) parental sharing benefit to encourage both parents in two-parent families—including adoptive and same-sex couples—to share equally in the work of raising their kids. Soon, two-parent families who share parental leave could receive an additional five weeks of leave, making it easier for women to return to work sooner, if they choose.
This is part of the Government of Canada’s commitment to finally closing the gender wage gap in our country. This Government recognizes that part of this gap is due to the fact that caregiving duties disproportionately fall to women.
While a shift to more equal parenting is an important tool to reduce the gender wage gap, it must also be part of a broader array of policy tools, such as the Government’s investments in early learning and child care, better training and financing for learning, proactive pay equity, pay transparency, supporting women to enter highly-paid skilled trades and STEM positions, and the continued appointment of skilled, talented women to leadership positions.
When women have equal opportunities to succeed they can be powerful agents of change—driving strong economic growth and improving the quality of life for their families and their communities.
Quotes
“The gender wage gap in Canada has always persisted partly thanks to the fact that caregiving duties have historically fallen primarily to women. Promoting a more equal share of parenting duties so that more women can succeed in the workforce isn’t just the right thing to do, it’s the smart thing to do—our economy depends on it.”
– The Honourable Patty Hajdu, Minister of Employment, Workforce Development and Labour
“We’ve been talking about gender equality long enough. The time for action is now and Budget 2018 shows that we are committed to moving forward in supporting gender equality at home and at the workplace. The EI parental sharing benefit is just one of many ways our government is working to improve opportunities for women and support the middle class.”
– Raj Grewal, Member of Parliament for Brampton East
“As Canada’s ninth-largest city, Brampton is home to thousands of young families and the new EI Parental Sharing Benefit will undoubtedly assist these new parents. The early days of childhood are the most precious and parents should be able to focus on their babies without worrying about work or finances. Being able to share parental leave gives women more opportunities in the workforce. Raising kids is a shared responsibility and it’s time our parental benefits reflected that.”
– Linda Jeffrey, Mayor of Brampton
Ottawa, ON — The Honourable Kirsty Duncan, Minister of Science and Minister of Sport and Persons with Disabilities, along with the Honourable Bardish Chagger, Leader of the Government in the House of Commons and Minister of Small Business and Tourism, on March 6, 2018 will be at the University of Waterloo to discuss the single largest investment in basic science in Canadian history.
Media are also invited to attend an event that will include a panel conversation with the next generation of researchers and a science student competition hosted by the university.
Employment and Social Development Canada. March 5, 2018. Budget 2018: Sharing parental leave for a stronger middle class
Charlottetown, Prince Edward Island - Canadian women and men deserve to be equal partners in society and equal participants in the economy. When we have gender equality both at home and at work, families thrive and our economy flourishes.
That is why today, the Honourable Scott Brison, President of the Treasury Board, was in Charlottetown to highlight the Government of Canada’s new Employment Insurance (EI) parental sharing benefit to encourage both parents in two-parent families—including adoptive and same-sex couples—to share equally in the work of raising their kids. Soon, two-parent families who share parental leave could receive an additional five weeks of leave, making it easier for women to return to work sooner, if they choose.
This is part of the Government of Canada’s commitment to finally closing the gender wage gap in our country. This Government recognizes that part of this gap is due to the fact that caregiving duties disproportionately fall to women.
While a shift to more equal parenting is an important tool to reduce the gender wage gap, it must also be part of a broader array of policy tools, such as the Government’s investments in early learning and child care, better training and financing for learning, proactive pay equity, pay transparency, supporting women to enter highly-paid skilled trades and STEM positions, and the continued appointment of skilled, talented women to leadership positions.
When women have equal opportunities to succeed they can be powerful agents of change—driving strong economic growth and improving the quality of life for their families and their communities.
Quotes
“It has been proven time and time again around the world that inequality, and particularly inequality of opportunity, is bad for society and bad for the economy. If half of your of population is being held back, if half of your population isn’t being given the chance to fully contribute, that’s not only a human rights issue, it’s a social and economic issue.”
– The Honourable Scott Brison, President of the Treasury Board
Innovation, Science and Economic Development Canada. March 5, 2018. Minister Bains and Minister O’Regan to discuss Budget 2018
Ottawa, ON — The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, and the Honourable Seamus O’Regan, Minister of Veterans Affairs and Associate Minister of National Defence, on March 6, 2018 will be at Memorial University to discuss Canada’s 2018 budget.
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LGCJ.:
