How will USA respond to Canada's terrible NAFTA demands? (split fm CF-188 Replacement)

[AirDet]

Nice try. China is WEST of BC. You can't fool me 

It could be east... it`s just a little further. :rofl:

 

[pbi]

Back on topic, however, Trump has a point. We can't cry integrated economy for steel and aluminum exports while on the other hand we supply manage and subsidize dairy and other farming industries.

I wonder what dairy farmers would think about this? We have lots of them in Ontario, especially here in the eastern regions. While Liberals are not usually all that strong outside urban areas, Tories traditionally draw a fair amount of support from rural voters, and as far as I know most dairy farmers and cheese producers are located in rural areas.

The US engages in the direct subsidization of its agricultural sector, under different historical legislations such as the Grain Futures Act, the Agricultural Marketing Act,  and  the Agricultural Adjustment Act, or the 2002 Farm Bill.
(Summary here at: https://en.wikipedia.org/wiki/Agricultural_subsidy#United_States
They don't often talk about it, but they do it. And, consider, their agricultural output in some sectors could probably flood ours out of existence. How much of a level playing field are Canadian farmers on when facing the US agriculture industry?

If we decide not to protect our agricultural sector, or subsidize them directly like the US does, what happens to those farmers (many of whom are struggling now) and the communities they live in? Not all farmers support supply management, but my sense is that most do because no government has ever really gotten rid of it.

This is always the dilemma of protectionism: it can provide stability, security and good jobs in the protected industries and thus in the communities those industries are in. But, it means that consumers end up paying more than if cheaper foreign good enter the country unrestricted.

Which is the more important result?

 

[Cdn Blackshirt]

I read an interesting counter-point to the "Trump is being mean to us" meme, which is easily regurgitated by Canadian media.

It basically broke down how little steel Canada actually produced vs the slightly-value add 'products' we shipped into the United States.

Same issue with Aluminum from Mexico.

Where they went with this was that at the end of the day, a huge portion of the raw material Canada uses for products which it then ships duty-free into the United States is in fact Chinese.

Same issue with aluminum coming in from Mexico.

Not sure if anyone has read about the $2 billion aluminum ingot pile in Northern Mexico, but the elephant in the room is this is all about China's cheating....it's just no one has the balls to call them on it.

 

[Altair]

I read an interesting counter-point to the "Trump is being mean to us" meme, which is easily regurgitated by Canadian media.

It basically broke down how little steel Canada actually produced vs the slightly-value add 'products' we shipped into the United States.

Same issue with Aluminum from Mexico.

Where they went with this was that at the end of the day, a huge portion of the raw material Canada uses for products which it then ships duty-free into the United States is in fact Chinese.

Same issue with aluminum coming in from Mexico.

Not sure if anyone has read about the $2 billion aluminum ingot pile in Northern Mexico, but the elephant in the room is this is all about China's cheating....it's just no one has the balls to call them on it.

http://business.financialpost.com/opinion/terence-corcoran-why-president-trump-is-on-the-right-side-of-the-steel-trade-war

Steel has also been a nationalist, subsidized and protected industry in many countries for most of the last 100 years, a status that’s been hard to shake. The recent crisis was triggered by the 2008 economic collapse, which saw steel demand plunge. As demand recovered after 2008, the global capacity to produce steel soared, most of it in China. The usual snapshot statistic shows 2016 steel-making capacity of 2,369 million metric tonnes (mmt) compared with demand of 1,628 mmt. The gap implies more 700 mmt of excess capacity, equal to almost double the combined annual steel production of all of North America, Japan and the EU.

That 700-mmt world steel capacity/production gap has grown from 542 mmt in 2012, the year the European Commission launched its “Action Plan” for a competitive steel industry.

Since then, the OECD has been at the forefront of attempts to resolve the growing capacity problem. Two years ago the OECD, at a “high-level meeting” on the issue, warned that “the global steel industry is currently in the midst of a serious crisis that is leading to considerable trade disturbances and escalating tensions between trading partners.”

As demand declined, world steel exports continued to rise. In response, the OECD said governments have “resorted to measures including import duty increases, government subsidies and other support measures, export incentives, trade finance, investment measures, import quotas, minimum import prices, and surveillance mechanisms. While these support measures might provide temporary relief, they do not provide long-lasting solutions to help the industry and can lead to further trade tensions between steel trading partners.”

I don't side with the conclusion of the article, but I am posting it for the raw stats.

There is a global glut of steel.  The problem here is the premise that trump is raising tariffs because of that. If that were the case, why would he eliminate them for a better deal on NAFTA? It undermines the entire rational behind the tariffs in the first place.

 

[FJAG]

http://business.financialpost.com/opinion/terence-corcoran-why-president-trump-is-on-the-right-side-of-the-steel-trade-war
I don't side with the conclusion of the article, but I am posting it for the raw stats.

There is a global glut of steel.  The problem here is the premise that trump is raising tariffs because of that. If that were the case, why would he eliminate them for a better deal on NAFTA? It undermines the entire rational behind the tariffs in the first place.

And therein lies the problem.

As I understood Trump, the issue is a strategic one in that the US requires a healthy Steel and Aluminum industry in order to ensure it's supply if and when dispute s with foreign producers choke supplies.

The long term intent with tariffs is to increase imported costs so that domestic producers can thrive and ramp up facilities and production. This, in part, (I think) is why there was such a fuss about the Gordie Howe bridge and the requirement that only US and/or Canadian and not Chinese steel be used.

The problem is that steel rarely goes to consumers as a raw product. It goes by way of manufactured products where the consumer doesn't know and care about content, only price. Adding tariffs does not ban imports, merely makes them more expensive. It's a game of shifting prices and tariffs which may or may not cause a ramping up of a domestic industry. If manufacturers can offset the higher prices by way of passing them off on the consumer then they still won't care where the steel comes from so long as it's the cheapest at that moment.

If one wants to guarantee that a strategic industry will survive then it is a bit risky to leave that at the whim of the capitalist marketplace. It's best done by nationalizing sufficient portions of the industry so as to meet ongoing and projected strategic needs. i.e. create a crown steel corporation and then mandate that all defence products, all national highway infrastructure, all federal construction projects use that corporation's product. It's counter intuitive to free enterprise but if the resource is truly a "strategic" one then it may be necessary.

The problem with Trump is that he has a large number of unofficial advisors who have their own special interests and agendas. He has just said that he likes to see two opposing viewpoints fought out and then he makes his decision. Quite frankly, Trump has neither the experience nor the intellectual depth to properly weigh conflicting arguments in order to determine what is in the nation's best interest. To call steel and aluminum a strategic asset and then consider it fine to leave a component in Canadian hands so long as there's a decent NAFTA agreement is contradictory. It shows that he is playing with negotiation positions--focusing on the art of the deal--rather than an actual strategic end state.

:cheers:

 

[Journeyman]

The problem with Trump is that....

That could be a never-ending sentence.    :nod:

 

[Oldgateboatdriver]

See my comments in yellow:

And therein lies the problem.

As I understood Trump, the issue is a strategic one in that the US requires a healthy Steel and Aluminum industry in order to ensure it's supply if and when dispute s with foreign producers choke supplies.

It does seem to be the original problem in Trump's sight. But it is incorrect.

Let's start with aluminium. It requires two main ingredients: Bauxite as the raw material and incredibly large amounts of electricity (Canada's largest producing province, Quebec, could - if it shut its aluminium smelters down, provide 30% of the whole of Ontario electricity needs. That's how much electricity is required). Bauxite is NOT mined in the USA, or Canada actually - only Jamaica mines some in North America - but comes mostly from Brazil, Australia and Indonesia. Moreover, at the actual aluminium production level, Canada produces 14% of the world aluminium, while the USA produces 3.5%. The US consumes, however, 20% of the world's aluminium, and we, Canada, make up 63% of its shortfall.

So two things here: First, there is no way in hell that the US can ramp up its aluminium production to the point of near self-sufficiency (heck, they already have a hard time generating the electricity they currently need, and couldn't do it without B.C., Manitoba and Quebec). They could, however, ramp up and work with Canada so that, between the two of us, we could make a self sufficient bloc for "national" security reasons. Anybody ever wondered why we have a fighter base at Bagotville? It was set up there during WWII specifically to protect the critical aluminium production facilities required for the war effort of Canada and the USA.

Steel is pretty close to the same situation: Between Canada and the USA, we mine enough iron ore and have enough smelters facilities to provide for BOTH of our needs, but without Canadian iron ore (Canada and he US mine almost exactly the same amount of iron ore, year in year out), the USA is short on ore for production. Similarly, the trade in finished product (read: steel) between the USA and Canada is a zero sum game. We export to the USA as much steel as we import from them - it's just that plants producing this steel product or that steel product, as the need may, be are in either one country or the other.

So the real "national security" aspects of these two specific product for the USA should actually direct the USA towards an integrated Canada/US open market, as is right now under NAFTA.

The long term intent with tariffs is to increase imported costs so that domestic producers can thrive and ramp up facilities and production. This, in part, (I think) is why there was such a fuss about the Gordie Howe bridge and the requirement that only US and/or Canadian and not Chinese steel be used.

The problem is that steel rarely goes to consumers as a raw product. It goes by way of manufactured products where the consumer doesn't know and care about content, only price. Adding tariffs does not ban imports, merely makes them more expensive. It's a game of shifting prices and tariffs which may or may not cause a ramping up of a domestic industry. If manufacturers can offset the higher prices by way of passing them off on the consumer then they still won't care where the steel comes from so long as it's the cheapest at that moment.

I think that "how" the product goes to the consumer is irrelevant. If the argument is national security, then it is the availability of the raw product to US manufacturers of products - principally defence related manufacturing - that matters.

If one wants to guarantee that a strategic industry will survive then it is a bit risky to leave that at the whim of the capitalist marketplace. It's best done by nationalizing sufficient portions of the industry so as to meet ongoing and projected strategic needs. i.e. create a crown steel corporation and then mandate that all defence products, all national highway infrastructure, all federal construction projects use that corporation's product. It's counter intuitive to free enterprise but if the resource is truly a "strategic" one then it may be necessary.

The day something in the USA is nationalized, even for strategic needs, is the day the end of times will occur.  ;D

The problem with Trump is that he has a large number of unofficial advisors who have their own special interests and agendas. He has just said that he likes to see two opposing viewpoints fought out and then he makes his decision. Quite frankly, Trump has neither the experience nor the intellectual depth to properly weigh conflicting arguments in order to determine what is in the nation's best interest. To call steel and aluminum a strategic asset and then consider it fine to leave a component in Canadian hands so long as there's a decent NAFTA agreement is contradictory. It shows that he is playing with negotiation positions--focusing on the art of the deal--rather than an actual strategic end state.

:cheers:

:cheers:

Personally, and considering the aluminium market parameters I outlined above, I have said, in jest, that our answer to President Trump should be to publicly state something like this:

"Oh my god! We never realized that our selling our aluminium to you was actually affecting your national security. We have had a unified front on the national defence of North America since WWII and the last thing we want is to negatively affect the USA's national security. So forget about this meagre 10/25% tariff. If our actions in providing you with steel and aluminium are negatively affecting your national security, we will immediately STOP selling you any aluminium, steel or even iron ore. You can thank us later!"

Then just watch as the US stock markets tank by 40% in one day.

;D

 

[tomahawk6]

It looks like Trump will look at trade with Canada and Mexico on a case by case basis.picking a trade war with countries interlocked with the US economy would be ill advised.

http://thehill.com/homenews/administration/377233-wh-mexico-canada-could-receive-tariff-exemptions

The White House said Wednesday it may exempt Mexico, Canada and other nations from President Trump's tariffs on steel and aluminum imports.

"There are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well, based on that process,” White House press secretary Sarah Huckabee Sanders told reporters, adding other nations could receive exemptions as well.

"That would be a case-by-case and country-by-country basis but it would be determined [by] whether or not there is a national security exemption," she said.

 

[FJAG]

. . .

Then just watch as the US stock markets tank by 40% in one day.

;D

What bothers me a lot is that I actually hold a dollar or two in US stocks. Every time the dollar drops my portfolio actually goes up based on the US stocks being worth more in Canadian dollars.

I actually hate seeing US stocks tanking because when they do . . . well it's kind of obvious.  :'(

:cheers:

 

[Pencil Tech]

See my comments in yellow:

Personally, and considering the aluminium market parameters I outlined above, I have said, in jest, that our answer to President Trump should be to publicly state something like this:

"Oh my god! We never realized that our selling our aluminium to you was actually affecting your national security. We have had a unified front on the national defence of North America since WWII and the last thing we want is to negatively affect the USA's national security. So forget about this meagre 10/25% tariff. If our actions in providing you with steel and aluminium are negatively affecting your national security, we will immediately STOP selling you any aluminium, steel or even iron ore. You can thank us later!"

Then just watch as the US stock markets tank by 40% in one day.

;D

Thanks for that. I really learned something.

 

[Good2Golf]

Don't miss out on the fact that it may not just be about steel and aluminum.  Nothing like a good threatened pendulum swing well across center to force relief from other thorns (dairy supply management and softwood, to name a few).

I do actually think there's more going on than an unrelated, sequential, one issue after another. 

:2c:

G2G

 

[Old Sweat]

In the 19th century the adage was to beware of the "Yankee trader."

For example, the Alaska boundary dispute.

https://en.wikipedia.org/wiki/Alaska_boundary_dispute

 

[pbi]

Interesting to see that Trump's economic advisor just quit. It must have been a very frustrating job. Trump never really seemed to pay any attention to any differing points of view on the US economy: he twice made wrong claims about the US-Canada trade surplus, which he could have corrected by checking the Dept of Commerce, or the Office of the Trade Representative, but for some reason chose not to.

I wonder what he bases his statements on?

 

[RangerRay]

I wonder what he bases his statements on?

Mind-melds with Alex Jones?

 

[Altair]

John Ivison: Trudeau's call to Trump credited with securing exemption from steel tariff: http://nationalpost.com/opinion/john-ivison-trudeaus-call-to-trump-credited-with-securing-exemption-from-steel-tariff

On Donald Trump’s threatened steel and aluminum tariffs, the Trudeau government has skillfully leveraged the network of contacts and allies built up over the past 18 months to secure Canada an exemption.

Last week, Trump suggested the 25 per cent tariff on steel and 10 per cent levy on aluminum would apply to all countries in order to protect national security. He was apparently convinced by Trade Secretary Wilbur Ross and Trade Director Peter Navarro that U.S. industry could only be protected by building a fortress around America to block trans-shipped Chinese metals

Over the weekend, Trudeau and his ministers set out to counter that message. The prime minister called close Trump ally, Blackstone Group CEO Steve Schwartzman, while Defence Minister Harjit Sajjan held conversations with his American counterpart James Mattis, pointing out that far from being a national security threat, Canada supplies the U.S. with much of the aluminum used in its fighter jets.

That call is said to have been important because, while national security was viewed as a bargaining chip by Navarro and Ross, it is taken far more seriously by veterans like Mattis, who appreciate the military supply chain links with Canada.

The case for Canada was also made by former prime minister Brian Mulroney to his friend Ross, while Trudeau reached out to opponents of tariffs like Tom Donohue, the chief executive of the U.S. Chamber of Commerce; Mitch McConnell, the U.S. Senate Majority Leader, and Paul Ryan, the Speaker of the U.S. House of Representatives.

However, the pivotal intervention seems to have been Trudeau’s call to Trump on Monday night. Trudeau told the president that he is planning to visit every steel town in Canada in the coming week, where he will reinforce the message that Canadian steel is made in Canada by Canadians.

For whatever reasons, Trump listens to Trudeau and the two have an easy-going, unthreatening relationship reminiscent of the school bully and class dweeb. The prime minister has shown admirable self-restraint in his exchanges with the mercurial Trump and Thursday was the pay-off for abasing himself before the alpha dog president at the White House last October.

Perhaps as important as Trudeau’s argument that Canada is a steadfast ally, integrated tightly into civilian and military supply chains, were American concerns about the impact of tariffs and the breakdown of NAFTA on the Mexican economy. Mexico may not be a national security threat now but it could well become one if its economy collapses.

Trump listens to trudeau,  one positive.

 

[GAP]

Hmmmm.....Trump enjoys his women sucking up.....maybe he''s just bi?

 

[Altair]

Hmmmm.....Trump enjoys his women sucking up.....maybe he''s just bi?

Chrystia Freeland probably has a more accurate take on Trumps change of heart.

Foreign Affairs Minister Chrystia Freeland today praised all-party, pan-Canadian efforts to secure Canada a temporary exemption from Donald Trump's steel tariffs.

Reacting to the decision by the U.S. president to "hold off" on imposing the duties on Mexico and Canada, Freeland said politicians of all stripes, stakeholders and businesses worked energetically to reach a positive outcome.

"This has been a true Team Canada effort," she said during a news conference in Toronto today.

http://www.cbc.ca/news/politics/trump-tariff-steel-1.4567730


Probably not bi.

 

[QV]

Interesting to see that Trump's economic advisor just quit. It must have been a very frustrating job. Trump never really seemed to pay any attention to any differing points of view on the US economy: he twice made wrong claims about the US-Canada trade surplus, which he could have corrected by checking the Dept of Commerce, or the Office of the Trade Representative, but for some reason chose not to.

I wonder what he bases his statements on?

You say that as if POTUS has just one economic advisor.  I suspect there is a whole team of advisors. 

 

[pbi]

You say that as if POTUS has just one economic advisor.  I suspect there is a whole team of advisors.

What I should have said, is Gary Cohn, the Chief Economic Advisor. Who, one would have thought, as "Chief" was the primary source of economic advice.

 

[FJAG]

You say that as if POTUS has just one economic advisor.  I suspect there is a whole team of advisors.

Actually it's not so much advisors but his cronies that he phones every evening to ask them if he's still doing a great job and to tell him what to do next. The man knows very little and therefore takes much advice. Whoever gets to him last and flatters him the most usually gets listened to the most.

:cheers: