This month/week/day/minute in #Tariffs– a subject historically characterized by rational thought, measured policy, business + govt in harmony (if biased by corporate lobbyists, union & farm groups etc); the #TrumpEffect = replace that w threats, false facts, seat-of-your pants “Policy”.
Implication: Businesses must learn to predict the unpredictable, rationally deal w the irrational. Dollar stores’ options are limited by their name/ positioning. Your cost structure is no longer your own- and the P (‘Political’) in PESTL-C external factors (those a business does NOT control) has taken on huge impact.
Tariffs, quotas, trade restrictions, sanctions, embargos have long been a government tool to protect public safety (non Tata Nano’s here pls, nor Chinese pet food laced w plastics or children’s toys made w toxins,…), ecological protection ( a bit late in the case of for Emerald Ash, Zebra Mussels, etc ) national security**, domestic manufacturing & farming.
The lines between those ‘legit’ reasons for trade barriers can be fuzzy; Canada’s Massey Commission started protecting Canada’s broadcast content to build national unity/ bonds, yet ended up being a de-facto trade barrier stalling a cultural invasion long enough to nurture what became a globally competitive Canadian Content (ie CanCon) industry in comedy, stage entertainment, music, …
To use the ‘national security’ trump card & slam your #1 trading partner with seat-of-your-pants tariffs on Aluminum & Steel for passenger automobiles – in an industry already thoroughly integrated continent-wide, is not only a betrayal of the spirit of NAFTA, it’s harmful to a North American auto sector that must compete against autos from Germany, Japan, Brazil, Korea.
Mr Orange has a more viable argument against Canada’s dairy industry; an effective lobbying group has stalled a tide of cheap US dairy imports, securing for Canadian dairy farmers more stable incomes than earned by sibling pork / beef producers. US milk producers need not meet our less well known ‘behind the curtain’ standards of practise for milk, making ours safer & more nutritious. wrt a ‘Public Safety’ argument, should a nation protect …..Mothers Milk? imo yes, you might argue that ‘s pretty fundamental.
On this side of the border: If you were the Dollarama #retail chain, what would you do? You might assume most of their store goods come from India or China, but many are shipped from the USA.
What if you’re Gildan, Roots, Canada Goose? Will your textile items next get the tariff attention of Mr Orange? Canadian labour costs may be higher than those of the USA – and Higher Cost of Goods nations are rarely see new tariffs by an importing nation – but we’re in uncharted waters. There is no rational reason for what Mr Orange is doing to global trade and diplomatic relations.
Also at risk: infrastructure contract bidders: Bombardier (transit cars), Aecon, SNC Lavalin,… Boeing-bought American politicians got POTUS to whack Bombardier with a ludicrous 292% penalty on its C-Series passenger jet; though eventually overturned by a red-faced court (yes; we DO need an objective ‘dispute resolution mechanism; in trade deals!), don’t expevct an end to the trump trade tirade any time soon.
Uncharted waters indeed.
Steven Litt
