By Colin Meyn, VTDigger
WASHINGTON — Tensions between the United States and key allies reached new heights over the weekend as President Donald Trump attacked Canadian Prime Minister Justin Trudeau for retaliating against a new set of tariffs.
After leaving the G-7 conference with world leaders in a Quebec resort town Saturday, Trump called Trudeau “very dishonest and weak” in a tweet.
Earlier this month, Trump imposed tariffs on imports of steel and aluminum from Canada and other American allies, a reversal from a previous indication that those countries would have an opportunity to avoid the tariffs.
Trudeau, who hosted the major diplomatic convention, has called the move an insult to the countries’ historically close relationship, and Canada responded by compiling a long list of new tariffs on American products.
A chilling of trade between the U.S. and Canada could have major implications for Vermont.
According to the U.S Trade Representative, exports to Canada are a major factor in the Vermont economy. Vermont exported $1.2 billion in goods to Canada in 2016 — more than a third of the total international exports.
Canadian authorities have vowed to match the value of the steel and aluminum tariffs the United States imposed with tariffs on a wide-ranging list of products — from toilet paper to condiments to maple syrup.
Consumers and businesses in Vermont and elsewhere could end up feeling the brunt of the volley of new tariffs between the two countries in their wallets.
Rep. Peter Welch, D-Vt., called Trump’s remarks over the weekend “astonishing” in an interview Monday. “At minimum it’s extremely disruptive and destabilizing,” he said.
Trump has garnered opposition from both sides of the political spectrum for his recent actions against allies, Welch said. Welch does not see a strategy behind the president’s recent tensions with Canada, instead viewing it as “personal pique.”
Trump has so far established new tariffs under a law that empowers the president to do so in the event of a national emergency. Welch was skeptical, saying the president is abusing his authority.
Sen. Patrick Leahy, D-Vt., laid the responsibility for the feud on Trump.
“There is no doubt the President’s rash words and actions harm Vermonters and Canadians alike,” he said in a statement Monday, June 11.
“In the case of tariffs, the Republicans are apparently willing to stand aside while the President abuses the national security exception to settle personal grudges with the leader of one of our closest allies, at the expense of the American people,” Leahy said.
It is possible American consumers will feel the brunt of those Canadian tariffs. However, the exact impact on shoppers in the United States is one of the looming questions, according to Vermont economist Jeffrey Carr.
“I don’t think anybody knows what that’s going to be at this particular juncture, particularly with all the hot air going back and forth across the border,” Carr said.
The tariffs Canada imposes on American goods will have an impact on the full supply chain that goes into bringing a product to consumers — from those who source the raw materials, to those who process them, to distributors and wholesalers.
Those involved with the supply chain will have to decide how to manage the costs of the new tariffs in the Canadian market: how much of the financial hit do they absorb, and how much do they pass on to customers in the form of higher prices?
Carr said the mounting trade tensions are a downward drag on an economy.
The US imposed steel and aluminum tariffs on imports from Canada, the European Union and others earlier this month. The Canadian tariffs on American goods, however, are not set to take effect until July 1.
Trump has raised issue with what he says are unfair trade relationships. According to 2017 figures, the U.S. imports more goods from Canada than Canada does from the United States. However, Canada also imports services from the United States.
Gov. Phil Scott, who has consistently been a vocal advocate for maintaining the North American Free Trade Agreement — an arrangement Trump has threatened to abolish — said last week his administration has remained concerned about economic ties at the northern border.
He met with some Canadian officials in Boston at a recent event on a separate issue, but the conversation included discussion of the new tariffs, he said.
“They understand that we in Vermont value that relationship with Canada and we want to again come to some conclusion on that so that we can continue our trade with our largest trading partner,” Scott said.