MNI INTERVIEW: Long-Term Trump Tariff Is Biggest Canada Risk
MNI (OTTAWA)
Canadian Trucking Alliance President Stephen Laskowski told MNI the biggest threat from Donald Trump's tariffs isn't the stiff 25% rate but a prolonged trade fight that uproots the country's industrial base.
"What is the tipping point, in not just the amount of the tariff, but in the length of the tariff that drives investment from Canadian plants into American plants and shutters Canadian plants and by extension shutters trucking companies,” Laskowski said in an interview Monday. That was the day Trump declined to immediately impose a 25% tariff but said he may do so around Feb. 1.
Even before Trump’s return to office Canadian-based carriers were looking to invest in U.S. trucking companies and they will continue prioritizing their American footprints, Laskowski said. Haulers losing business in the U.S. will be forced to seek what they can in an already depressed Canadian market, he said.
"All these trucks that were going from Canada to the United States, they’re going to look for business just in Canada,” Laskowski said. “Canada’s economy is not robust right now, so now they flood the market and the business goes down and down.”
Amid debate about whether Trump's threats are a bluff forcing Canada to address concerns about border security and military spending, U.S. customers aren't waiting to find out. Last week saw an uptick in stockpiling as American companies rushed to bring goods from Canada ahead of any trade restrictions, Laskowski said. That’s unusual because January typically sees weaker freight demand, he added.
'A FRIGHTENING FUTURE'
While Trump claims the U.S. doesn't need anything from Canada Laskowski agreed with his own leaders who say that even amid tariffs, companies with integrated supply chains will continue importing. That means the main effect will be more American inflation, he said.
“Vice President Vance prior to the election had told stories of toasters. ‘If we have to pay more for toasters to have more jobs in America, then we’re going to pay more for toasters,’” Laskowski said. While this is expected to hurt both countries, tariffs also appear to be a strategy to assert U.S. dominance, Laskowski said. Trump’s use of the terms economic force and “manifest destiny” is troubling he said, alluding to American's original westward expansion and bids to spread north as well.
“That is a frightening future for Canada and a frightening future for our industry,” Laskowski said. “An introduction of a significant disruption in North-South trade as a result of a tariff would put us in a crisis -- or find me a stronger word than crisis and I’ll use it.”
Canada’s weaker dollar isn’t much of a cushion, and in the trucking industry it's raising some costs according to Laskowski. Trucking companies buy most of their tractors from the U.S. at prices from USD200,000 to USD275,000. “It gets very expensive,” he said.
Federal and provincial governments should boost capital cost allowances to encourage adoption of fuel-efficient trucks and other tax breaks such as better meal allowances, Laskowski said. This will help match any U.S. moves incentivizing similar investments in America. Canada must also position itself as a security partner, even with the northern border a lesser threat than Mexico's, he said. “There's a pilot project in the Peace Bridge with the advanced screening of trucks that go through an X-ray machine. That could be expanded to all borders to provide more security."