In the weeks following President Donald Trump’s announcement that the U.S. would be implementing tariffs on Canadian steel and aluminum, a war of words between Trump and Canadian Prime Minister Justin Trudeau has opened up the potential for a trade war between the two countries, posing concerns for the promotional industry.
Trump announced a 25% import tariff on Canadian steel and a 10% import tariff on aluminum from the Great White North, effective in early June. Trudeau responded quickly, calling the tariffs “unacceptable” and announcing that his country would react with retaliatory ones. He also said he would have an honest conversation with Trump about the tariffs at the following week’s Group of 7 (G7) Summit in Charlevoix, QC.
After the Summit, which welcomed leaders from Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S., Trudeau held a press conference, in which he stated that he had had a blunt discussion with Trump during the event about the tariffs. He reiterated that the tariffs were “insulting,” primarily since Trump cited U.S. national security as a reason to implement them, and that they would not be helpful during renegotiation of the North American Free Trade Agreement (NAFTA). He also doubled down on his promise to impose retaliatory measures, stating, “Canadians, we’re polite, we’re reasonable, but we also will not be pushed around.”
Trump immediately responded by tweet, stating the U.S. would not be signing the G7 communique, the traditional agreement among the member countries at the conclusion of the annual event.
Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!— Donald J. Trump (@realDonaldTrump) June 9, 2018
He also expressed frustration at Trudeau's comments during the news conference.
PM Justin Trudeau of Canada acted so meek and mild during our @G7 meetings only to give a news conference after I left saying that, “US Tariffs were kind of insulting” and he “will not be pushed around.” Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!— Donald J. Trump (@realDonaldTrump) June 9, 2018
On the lengthy list of products for which Canada is proposing reciprocal tariffs are pizza, maple syrup, mattresses and, most notably for the promo industry, ballpoint pens, felt-tip pens, bobbins, chocolate, licorice candy, toffee, printed postcards, plastic bags and playing cards.
During a news conference this week following his trip to Singapore to meet with North Korea’s Kim Jong-Un, Trump said Canada’s retaliatory measures would hurt its economy, though he reiterated that he and Trudeau “still have a good relationship.”
So what does all this mean for relations between long-time trade partners U.S. and Canada, particularly as they continue NAFTA negotiations? And what will current and future tariffs mean for the promotional industry? We asked promo firms from across Canada to weigh in.
Scott Shippam, president of Shippam & Associates (asi/325850), Winnipeg, MB: “Trump increasing tariffs in Canada will force us to reevaluate our own tariff policies into the U.S. Canadians cannot be bullied into accepting whatever Trump wants to impose and not counter with our own increases. We have steel and manufacturing clients that have already indicated they’ll be cutting their promotional budget due to the unexpected market they face. I assume an increase in steel and aluminum will also increase some prices to promotional items from our suppliers. I believe any tariff increases will affect our industry as it’s very sensitive to economic changes. Now that the U.S. has opened this can of worms, more is to come.”
Russell Bird, promotional product expert at The Promo Addict (asi/302225), Sherwood Park, AB: “I think Trump is posturing to re-negotiate NAFTA and that it’s likely little more than that. I think it will have a big impact on companies in both Canada and the U.S. in the short term, but in the long term things will likely go back to mostly how they were. I have some customers in the steel business and from what I’ve seen, it’s still business as usual for them. With the Canadian dollar where it is, our focus is to usually buy our products from Canadian suppliers anyway, so if the tariffs do trickle down to our industry the impact will be minimal.”
Len Kushner, vice president sales & marketing at DRIVE Sportswear (asi/183613), Calgary, AB: “Liberals will lobby and accomplish nothing. In Canada, we have a leader who’s never had a real job, knows nothing of the plight of the average Canadian, and has broken constitutional laws and subsequently denied what he did was unethical. Obama accomplished nothing. The Donald, on the other hand, has unemployment under 4% while the left wing media throws him under the bus. Frankly, I’m tired of democratic countries being led to slaughter by those who feel free enterprise is wrong. Canada and the U.S. represent what the rest of the world wished they could be. But the more we draw lines in the sand, the further behind we become. Both countries have been built through cooperation with each other, and we share the longest unguarded border in the world. Surely we can come up with a compromise without involving an industry such as ours, which depends almost entirely on imports from China.”
Ann Baiden, president of Innovatex Solutions Inc. (asi/231194), Richmond Hill, ON: “Some of what we’re seeing is just negotiating tactics in an attempt to reach the best deal. However, it could become ugly quickly if it turns into an all-out trade war. The U.S. is taking a hard line on trade with everyone, not just Canada. It’s definitely in the best interest of the promotional products industry that they work out the trade deals. Canada has already retaliated by proposing tariffs on promotional items such as pens and playing cards. This will lead to increased prices. We will also see price increases due to NAFTA changes. Currently, we’re able to promote Canadian-made products to our clients looking to ship to U.S. events by offsetting some of the higher labor costs with the duty savings under NAFTA. The Canadian dollar is already declining and will continue to slump if President Trump dissolves NAFTA. The combination of a declining dollar, increased prices and a slowing economy could all lead to decreased spending on promotional products.”
Danny Braunstein, vice president of sales & business development at Talbot Promo (asi/341500), London, ON: “We’re really in uncharted waters with the pending trade war. It’s difficult to know at this stage how much is posturing and how much is negotiation, but it’s certainly had a negative impact on the U.S./Canadian relationship and it looks like it’s about to get much worse. Tariffs on steel and aluminum will have a significant impact on the manufacturing sector, and Trump has made it clear that he has his sights set on the Canadian auto sector as well. From the promo industry’s perspective, I think we can expect suppliers to feel the pinch first as the cost of manufacturing rises. Those increases will trickle down to distributors and ultimately to the client. If it becomes cost-prohibitive to source product cross-border, it will also affect the quality and variety of the product offering to the end-user. From a business perspective, we’re certainly watching closely, but it’s very difficult to do any sort of planning as it seems to be changing on a daily basis.”