In an opinion piece featured in the Globe and Mail, Linamar CEO Linda Hasenfratz warns that US President Donald Trump’s newly levied tariffs on Canadian goods coming into the country could have a catastrophic economic impact.
In fact, Hasenfratz argues, they could trigger a full blown recession.
Hasenfratz also notes that the tariffs have backfired. Softwood lumber duties imposed just over a year ago have increased lumber prices in the US and US consumers, Hasenfratz says, are now paying 20 per cent more for building supplies.
The duties on Canadian steel and aluminum are similarly set to impact the US industries that use metal in their products – industries that employ 4.5 million American workers.
The tariffs mean that US industries and consumers will face higher costs for the products they need, Hasenfratz says. “We are already hearing stories of American industry suffering thanks to these higher costs, or losing business thanks to retaliatory tariffs introduced by countries in response to the tariffs imposed on them,” she writes. The ultimate result – layoffs for US workers, and a constriction of industrial investment in new product development and innovation.
With Trump now considering tariffs on automobiles and auto parts, Hasenfratz warns that if he goes ahead, “the cost to be borne by industry players would be enormous, forcing a substantial price increase to consumers and a collapse of the auto industry rivalling that seen in 2009. This would almost certainly tip the economy into a major recession, or depression, and trigger massive layoffs in the United States.”
A related article in the Globe points out that the North American auto industry is already feeling tangible negative effects from merely the possibility of auto-sector tariffs: one Canadian auto parts maker has stalled new investments, another has been holding daily management meetings for months, and a US parts company “has frozen capital spending and clamped down on purchases of raw materials.”
The threatened tariffs, this article says, could result in the loss of 120,000 Canadian auto-sector jobs and even cause a recession – echoing Hasenfratz’s opinion in her article.
In that article, Hasenfratz proposes a simple solution for the US administration; don’t move ahead with the new auto-sector tariffs, and roll back the other duties that have already been imposed on metals.
“We need to stop fighting and start solving,” Hasenfratz says by way of wrapping up her argument. “We need to finish the NAFTA discussions in a fair way and get back to trading with each other, not punishing each other. We need to get rid of recently imposed tariffs and not impose new ones.
“Mr. Trump can stop this recession from coming by doing all of this quickly. Or, he can continue down this road and be remembered for all history as the instigator of The Great Trump Recession.”