Ontario Premier on Tariffs

Investment Analysis Clubs Macro Economic Trends and Risks
41

I thought Ford was an United States automobile manufacture. Why are you guys always negotiating with the wrong people. :stuck_out_tongue_winking_eye:

42

The spin offered by the evening CBS “news”: Lutnick said words to the effect TIG, “broke” Ford (denigrated as “some guy in Ontario”). He is the best negotiator the world has ever seen. It’s not chaos. It’s a plan so brilliant that peons don’t understand it, he said. That is the same blowoff I heard from “JCs” repeatedly: “I know things you don’t know” and “I understand things you don’t understand”, without ever explaining what those “things” were. That was the blowoff I received from the head of the marketing department at the pump seal company, who then implemented my idea, a year later.

Notice Lutnick says electricity that Ford was going to surcharge was “American”, ignoring that the electricity is produced in Canada.

Steve…watching “the ugly American” in all his “glory”

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43

Canadian tariffs that will likely topple or come down.

  • Dairy: Canada imposes tariffs as high as 270% on milk, 245% on cheese, and 298% on butter to protect its domestic dairy industry. These rates apply to imports exceeding specific quotas.

  • Poultry and Eggs: Tariffs include 238% on chicken and 163% on eggs, also part of supply management to limit foreign competition.

  • Lumber: Softwood lumber from the U.S. has faced tariffs averaging around 14.5%, though this varies with market conditions and ongoing trade disputes.

  • Wheat and Barley: Tariffs can reach 94% for wheat and 57% for barley seed outside quota limits.

  • Metals: Historically, Canada has applied tariffs like 25% on steel and 45% on aluminum

44

Yup, those numbers are about right. TIG approved the USMCA allowing them. So, what’s your point?

Steve

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45

They will.come down one way or the other. It is in Canada’s interest to bring them down voluntarily.

46

The USMCA is up for scheduled renewal/renegotiation next year. Why not address these issues, in a rational manner, like civilized human beings then? Why carry on like a spoiled brat throwing a temper tantrum, and show the world that his signature on a contract doesn’t mean squat?

Steve

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47

Next year is too late. Deficit reduction and Expense reduction has already started.

Time is now.

48

If that was true, why is “Job #1” more tax cuts for the “JCs”? In the late 90s, there was a “pay go” rule. You want a tax cut? You find the spending cuts to cover it. You want to increase spending? You identify a specific revenue stream to pay for it. It worked.

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Steve

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49

The number one country we import steel from is Canada.

Here in the wee hours tariffs against Canada just heated up in this war.

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50

Trump campaigned on tax cuts, millions of small and med size businesses voted for it.

On the other hand 2019 Govt spending was $4.5T. It is trending to $7T. Ridiculous !

Delete Delete Delete

51

Small and med size businesses do not vote. We are a republic so only people are allowed to vote. You need to understand how the United States works.

Yep and Trump governed over the biggest increase in history.

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52

There are two kinds of people, natural (flesh and bones) people and statutory people that might not vote but have a voice in elections. This was ratified by the SCOTUS.

Business did vote, if indirectly.

The Captain

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53

And, the number one country Canada imports steel from is the US. The number one country Canada imports aluminum products from is the US.

DB2

54

Tariffs both ways just milks the industry and taxpayers pay the price.

The Captain

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55

And, FWIW, the US has more leverage (as we witnessed here).

US imports from Canada, some $420 billion
$420/$29,000 = 1.4% of GDP
Canada imports from US, some $480 billion
$480/$2,500 = 19% of GDP

Leverage ratio of 14

DB2

56

Well, even the Journal gets it:

https://www.wsj.com/opinion/donald-trump-tariffs-canada-doug-ford-trade-war-ba0c6147?mod=hp_opin_pos_1

How Do You Like the Trade War Now?

Trump is furious that Canada won’t take his tariffs lying down.

President Trump wanted a trade war with the world, and Americans are getting it, good and hard. Stock prices continued to decline on Tuesday amid the latest Canada-U.S. tariff tift-for-tat. By the end of the day the two sides were talking about a temporary truce, but who knows which side of the tariff bed Mr. Trump will wake up on Wednesday?

North Americans awakened Monday to the news that Ontario premier Doug Ford said he was raising the price of his province’s electricity exports to the U.S. by 25% in response to Mr. Trump’s on-and-off 25% tariffs on Canada. That’s a hit to consumers in the U.S. Midwest and Northeast.

Mr. Trump went ballistic, even by his standards. Canada “must immediately drop their Anti-American Farmer Tariff of 250% to 390% on various U.S. dairy products,” Mr. Trump said on Truth Social. He said he’d double his metals tariffs on Canada to 50%. And oh, “the only thing that makes sense is for Canada to become our cherished Fifty First State.”
Nice of him to concede, if obliquely, that his trade war with Canada makes no sense. … The U.S. sources about two-thirds of its primary aluminum and 60% of scrap aluminum imports from Canada.

This is not from “a columnist, this is the Editorial Board of the Wall Street Journal”.

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57

So, one of the arguments against tariffs is that it will raise consumer prices here. With the tariffs that the Canadian government have, why aren’t the Canadian people upset with the higher costs they are paying?

58

Probably not all Canadians do accept tariffs, but overall they’re seen as better than the alternative: many see tariffs as a necessary trade-off for economic stability and job security. One thing to note is that these are all targeted tariffs and not blanket percentages across the entire economy.

Pete

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59

I understand that. It just seems to me that tariffs of 200% to close to 300% are ridiculously high.

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60

One answer: because these tariffs don’t affect daily life in the way the average US person might assume.

Why?

  1. Most Canadians don’t directly feel tariffs since these tariffs apply only to imports above set quotas. Canada allows a certain amount of foreign dairy, poultry, and other goods at lower tariffs. Once imports exceed the limit, the ultra-high tariffs kick in, discouraging large-scale foreign competition. Because of this, most of what’s sold in Canada is already Canadian-made, and so Canadians don’t often see foreign alternatives that would be much cheaper. If they don’t see a cheaper option, they don’t feel like they’re overpaying.

  2. More so even than in the US, farmers and rural communities are powerful lobby groups. Agriculture is a big deal in Canada, especially in Quebec and Ontario, where dairy farming is a major industry. The supply management system (which relies on high tariffs) ensures stable incomes for farmers. Without it, Canadian farmers could struggle against cheaper imports from the U.S. or Europe. Farmers have political influence, and parties (especially the ruling ones) are reluctant to anger them by removing tariffs.

  3. Tariffs are framed as economic protection, not price gouging. The government presents tariffs as a way to protect Canadian jobs and prevent market volatility. Without tariffs, the market could see wild price swings—like in the U.S., where dairy farmers sometimes overproduce, leading to plummeting prices and government bailouts. The idea of paying more for locally produced, high-quality goods is often viewed as a fair trade-off for stability.

  4. Canadians are used to a high-cost economy (we have high cost healthcare, high cost education, etc., but we look at low grocery prices as our right). Compared to us in the US, Canadians already expect to pay more for many things, like gas, alcohol, cell phone plans, and housing. Since Canadians have never experienced ultra-low dairy, egg, or poultry prices like in the U.S., they don’t feel like they’re being overcharged.

  5. The alternative wouldn’t necessarily save Canadians money. If Canada removed these high tariffs, foreign imports might become cheaper, but it could devastate the domestic industry. If Canadian farmers went out of business, Canada would become dependent on imports, and foreign producers could eventually raise prices once competition is eliminated. Supply chain risks (like COVID-19 disruptions) also highlight the importance of local production.

  6. The system has worked for decades (‘if it ain’t broke, don’t fix it’). The supply management model has been in place since the 1970s, and while some criticize it, there’s no major public outcry. Other issues (housing costs, healthcare, and taxes) tend to be bigger concerns for most people.

Would Canadians support removing these tariffs?

Probably not—polls consistently show that most Canadians support supply management, even if they complain about high grocery prices. Unless public frustration grows significantly, the high tariffs are unlikely to change anytime soon.

Pete

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