Tariffs On Steel And Aluminum Will Hit Canada Hard
ARI SHAPIRO, HOST:
We've talked about the potential domestic impact of these tariffs. Now we're going to turn to Canada, the U.S.'s No. 1 trading partner. It's also the top exporter of steel and aluminum to the U.S. Mark Warner is a trade lawyer based in Toronto, and he joins us now. Welcome.
MARK WARNER: Thanks for having me.
SHAPIRO: How is this news being received in Canada?
WARNER: Well, I think it's being received with a sense of panic. I think there's always a sense in Canada that we're your best friend and your closest neighbor. And we don't like it when we're on the receiving end of any trade frictions at all. So I think panic would not be an exaggeration.
SHAPIRO: Yeah, panic is a strong word. So what specifically are people panicked about? What are they afraid is going to happen?
WARNER: Well, they're afraid, I guess, in the first instance, if steel is hit with this 25 percent tariff, that that might actually lead to a loss of jobs in Canada. And I think this is a notion that any Canadian government would have to respond in kind. And there's just a sense when you're a smaller player - we're 10 percent the size of the United States in population and economy. I think everyone knows that in a tit-for-tat trade war we will pay the price as well.
SHAPIRO: President Trump connected these tariffs to NAFTA in tweets this morning, the North American Free Trade Agreement. He said, tariffs on steel and aluminum will only come off if new and fair NAFTA agreement is signed. There are negotiations over NAFTA right now. You've been involved in past trade negotiations. How do you think this threat of tariffs is likely affecting the negotiators who are trying to work through the details of the NAFTA agreement?
WARNER: Well, it's going to obviously affect the mood in the room. I think that this particular round of negotiations ongoing in Mexico City was never meant to be, like, a big round in terms of dealing with the big outstanding issues. So I think they'll continue to tinker along with this easier stuff that they were dealing with already. But across the table, I'm sure there are a lot of pursed lips and sharp exchanges. But I think that - I think the professional negotiators will very much try to keep the two tracks as separate as possible to the extent that they can. That being said, as long as their political masters are connecting it, there's a limit to how much they can do that.
SHAPIRO: There have been a lot of questions about whether and how the tariffs are going to be implemented. President Trump is using national security as the rationale here. Explain what that means and why it's important.
WARNER: Well, basically, it's important because if this were challenged in the World Trade Organization, the United States would have to defend the use of these tariffs under the national security exemption to the WTO agreements. That's never actually really been litigated before in the WTO. And it really is quite incendiary because, of course, to the extent that the United States were to prevail, that would be a license for every other country to do the same thing.
And if the United States were to lose, then I think the world trading world has always assumed that that would be tremendously politically unpopular in the United States and could lead to the United States pulling out of the World Trade Organization. So for that reason the use of the national security exemption, whether under Eisenhower or Reagan or under Clinton, has always been regarded by the world trading system as something of a neutron bomb.
SHAPIRO: I know you're a trade lawyer, not a fortune teller, but how likely do you think it is that these tariffs will actually go into effect?
WARNER: I think the tariffs in some form will go into effect globally. I'm still - you know, as we sit here talking now, I'm not sure that there won't be some form of an exemption given to Canada and to - maybe to Mexico. There's another way in which we can be - Canada can be exempted, and that's through the exemption of specific industries or product lines. And I just - when I look at what the president did around the Keystone XL pipeline last year, he threatened to make sure that only American steel could be used in the construction of the Keystone pipeline. And then when the executive order was written, it made it clear that Canadian steel qualified as American steel.
So I'm thinking that there's ways somewhere in the middle where he can make it look like the tariffs are applying to Canada and it can be narrowly constructed, although with each passing hour that seems more unlikely.
SHAPIRO: Mark Warner, thanks so much for joining us.
WARNER: You're welcome. Thanks for having me.
SHAPIRO: He's a trade lawyer who represents clients in the U.S. and Canada, and we spoke with him in Toronto. Transcript provided by NPR, Copyright NPR.