US-Canada trade war tests deep manufacturing ties between Detroit and Windsor
In the first of two reports from the US state of Michigan and the Canadian province of Ontario, CNA looks at what is at stake for manufacturers as Canada’s retaliatory tariffs on US goods take effect on Sep 8.
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DETROIT/WINDSOR: Around US$2 billion worth of goods cross between the United States and Canada every day, with the corridor between Detroit, Michigan and Windsor, Ontario, serving as one of the most important gateways for that trade.
For generations, manufacturers on both sides of the border – from vehicles to metals and machinery – have relied on each other for materials, parts and customers.
Those economic ties are being tested as the US-Canada trade war escalates, with Canadian retaliatory tariffs set to take effect next week.
Canada will impose counter-tariffs of 15, 25 and 50 per cent on C$27.6 billion (US$20 billion) worth of US imports from Sep 8, matching US tariffs on Canadian products.
The tariffs will cover sectors including steel and aluminium, dairy, appliances, agricultural equipment, pulp and paper, plastics and electronics.
Canada’s move follows Washington’s decision to impose tariffs of 50 per cent on C$27.6 billion worth of Canadian goods.
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VITAL CROSS-BORDER SUPPLY CHAINS
Detroit remains one of the centres of North America’s automotive industry, with the region producing more than 1.7 million vehicles a year.
Many of the parts and materials used in those vehicles come from Canada.
The Canada Border Services Agency describes Windsor-Detroit as the country’s most important trade corridor, carrying about 30 per cent of Canada-US trade by truck.
One Detroit aluminium supplier, which asked not to be named, said the trade dispute was making it more difficult to do business across the border.
The company has been supplying manufacturers for more than 75 years.
“We’ve always had a good relationship with a lot of Canadian aluminium mills. And it’s becoming more difficult from a price point to work with them,” a representative told CNA.
Its biggest concern is what happens if tariffs make it increasingly difficult to source the materials it needs.
“Best-case scenario, I would say, we go back to the good old days. We forget any of this ever happened,” the representative added.
“Worst-case scenario is everything dries up. Eventually, it might come to the point where we cannot source a lot of our material that we rely on.”
A NEW BRIDGE AMID TRADE TENSIONS
Few things illustrate the connection between Detroit and Windsor better than the Gordie Howe International Bridge.
Named after the late Canadian ice hockey star, the 2.5km bridge opened to traffic on Jul 27, providing a new crossing between Detroit and Windsor.
Across the bridge in Windsor, Canadian manufacturers face many of the same concerns as their American counterparts.
Cavalier Tool & Manufacturing has spent more than 50 years making moulds used by American companies to manufacture products ranging from washing machines to motorcycles.
Its international business manager Chris Vander Park said the biggest problem is uncertainty over how much it will cost to do business from one day to the next.
“What we don’t know is what tomorrow looks like. That’s the damaging part. It’s hard to get a customer, let alone to keep a customer.”
Industry leaders fear that an escalating trade war could weaken manufacturing on both sides of the border.
Nicole Vlanich, executive director of the Canadian Association of Mold Makers, warned that low-cost countries could benefit if business is lost.
“Once the business goes, it’s gone. And low-cost countries are really the only winner. And as much as we’re a Canadian association that represents the Canadian industry, we very much believe in North American manufacturing,” she said.
For manufacturers in Detroit and Windsor, the dispute shows how difficult it can be to hurt one economy without affecting the other.
Source: CNA/mp(oc)
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