Canada is Wisconsin’s most important international trade partner, by far.
In 2017, Wisconsin businesses exported $6.89 billion worth of goods to Canada. The second highest export destination for state businesses was Mexico at $3.2 billion. Wisconsin imports from Canada in 2017 totaled $4.25 billion, so the state had a trade surplus of about $2.64 billion last year with Canada.
Considering that, it’s troublesome to see tensions rising between President Donald Trump’s administration and Canada over trade issues.
Making good on a major campaign pledge, Trump is taking a tough stand on trade, using tariffs to address what he says are “unfair” trade deals for the United States.
In March, the Trump administration imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum imports. Canada and Mexico were initially exempt pending a renegotiation of the North American Free Trade Agreement. But after seeing little progress there, Trump imposed the steel and aluminum tariffs on Canada, Mexico and the European Union on May 31.
Earlier this year, Trump also instructed the U.S. Trade Representative to apply tariffs of $50 billion on Chinese goods.
Leaders of the countries the tariffs were imposed upon were critical and threatened retaliatory tariffs, sparking fears of a trade war. But Trump isn’t concerned about that.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted in March. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
It’s not surprising to see Trump get into a trade dispute with China, but who anticipated a fight with Canada?
At a press conference after the recent G7 meetings in Quebec, Canadian Prime Minister Justin Trudeau said it was “kind of insulting” for Trump to use national security concerns as a justification for the steel and aluminum tariffs. He said Canada would respond with retaliatory “equivalent tariffs.”
Trump, as he usually does, punched back, on Twitter saying Trudeau was being “very dishonest and weak.”
Trump said the U.S. tariffs on Canadian steel and aluminum were in response to steep tariffs Canada levies on dairy products. He used a figure of 270 percent, a claim that Politifact called “mostly true.”
“Not fair to our farmers,” Trump said on Twitter.
Still, U.S. farmers exported about $227 million in dairy goods to Canada last year, compared to $113 million in dairy imports from Canada, a 2-to-1 U.S. dairy trade surplus, according to Bloomberg.
Overall, the U.S. had a $2.76 billion trade surplus from Canada last year.
Despite Trump’s rhetoric, history shows trade wars have often been disruptive.
A prolonged trade fight with Canada could hurt Wisconsin’s economy.