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Canada can now breathe easier for being one of the two countries that President Donald Trump has offered provisional exemption from Metal Tariffs of 10% aluminium and 25% steel penalties.

The United States president signed proclamations on Thursday 8th of March 2018 slapping the aluminium and steel tariffs that will affect other countries within 15 days.

The announcement of possible tariffs on aluminium and steel imports came at a very difficult time for the Canadians.

And currently, the Great White North is engaged in what is seen as a battle over the North America Free Trade Agreement (NAFTA)’s future. It grew at 1.7% in the fourth quarter of year 2017, which is much lower than the previous 4%.

The stock market has declined by almost 5% and has stagnated within the last year.

Earlier, President Trump had announced that he would not impose the tariff on Mexico and Canada if fair NAFTA agreements were negotiated.

After the aerospace trade outbursts, fights over lumber and the time-to-time Trump’s verbal jabs at the country, Canadians don’t want to see their country getting into cross-border brawls.

What effects would the tariff have on Canada’s economy?

Imports on tariffs would hit the country very hard, Canada has been exporting around 90% of its steel to the US, which accounts for roughly 16% of the total imports and the largest from any country.

The country has also been exporting around 41% of aluminium that is used in the United States. Seems that Trump is mainly targeting China with the imports tariff, or at least that’s  what it looked like.

The US ranks as the 26th destination for Chinese steel goods, according to the International Trade Administration.

Today, publicly listed aluminium and steel companies in Canada are not of great significance. Large international corporations bought a large number of them in mid-2000s when demand for goods from china was high.

Effects the imports tariffs would have on the Canadian economy

The 10% tariff on aluminium and 25% tariff on steel would make goods in some sectors such as defence, auto, an aerospace more costly to produce and expensive to buy. 

The tariff would have highly affected both, Canadians and United States’ the interconnected supply chain of which both large and small companies are part of.

For example, the vehicles assembled in Canada feature parts from the US and vice versa.

Vehicles are shipped between these two countries until they are finally assembled.

The United States earlier claimed that the use of Canadian aluminium and steel in their manufacturing industry affected their national security.

That is seemingly baseless considering that Canada has been a steadfast ally of America.

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