How U.S. tariffs on steel could impact Island companies
'We're just hopeful that as NAFTA negotiations move forward, cooler heads will prevail'
An Island business that manufactures products using steel says tariffs imposed by the U.S. will hurt companies across the province — but it's too soon to know to what extent.
"The big worry is that retaliation from Canada on this tariff would be followed by further escalation on the U.S. side," said David Green, chief financial officer of Charlottetown's DME Group.
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"And then we would get caught up in some sort of trade war where our goods would be flying under this tariff, that would obviously have a very large impact on us."
His company makes brewing equipment and other steel products, with the majority going to the U.S.
Obviously as an export heavy business we are affected by these tariffs and trade barriers.— David Green
This week's announcement by the United States Secretary of Commerce of a 25 per cent tariff on raw steel imports to the U.S. means any company that uses steel as part of its manufacturing process, like DME Group, can expect to spend more.
That's because manufacturers on both sides of the border will be forced to find new suppliers, Green said, and that means less competition among producers of raw steel.
And Canada did respond. Foreign Affairs Minister Chrystia Freeland said Canada is hitting back with duties of up to $16.6 billion on some steel and aluminum products and other goods from the U.S.
'Cooler heads will prevail' in NAFTA negotiations
Green said it's unclear at this point what additional costs Island businesses could face but that it's "definitely concerning" in that if it continues to escalate it will no doubt impact manufacturers.
Although no companies on P.E.I. produce raw steel, Green said Island companies using steel for manufacturing '"will be affected by this."
"Eighty per cent of our products are exported outside of Canada, so obviously as an export heavy business we are affected by these tariffs and trade barriers."
Green says the further the trade debates escalate, the more that will drive prices up for consumers.
But he adds that compared to elsewhere in Canada, like southern Ontario, B.C., and Alberta, the impact on P.E.I. is minimal — for now.
"We're just hopeful that as NAFTA negotiations move forward, cooler heads will prevail," he said.
"And these tariffs can be reduced or removed and we can all just go back to working under a free trade agreement."