June 19, 2018
Canada is considering all options, including providing financial aid to the auto industry, to cope up with possible U.S. tariffs, a senior federal minister said, even as officials expressed doubt Washington would follow through with a threat to impose the punitive measures.
U.S. President Donald Trump last month said he might impose tariffs of up to 25 per cent on foreign-built automobiles, which could cause major economic damage to Canada and a heavily integrated North American industry.
After Trump slapped tariffs on Canadian steel and aluminum on May 31, government ministers promised to support the sectors, and Innovation Minister Navdeep Bains told Reuters the same kind of aid could be ready for the auto industry.
“We’re examining all options… our view is that if any such action is taken, we’re going to support our workers,” he said in an interview with Reuters last week.
“The message I would convey to the auto sector workers is – we have your backs.”
The bill could run into billions of dollars, depending on the extent of government support for the industry, which represents about 500,000 direct and indirect jobs and contributes around $80 billion to the economy a year.
Last year, Ottawa responded with a package worth $867 million after the United States imposed tariffs on softwood lumber exports.
A Scotiabank analysis released Friday said steel and auto tariffs would knock growth in Canada down to 1.2 per cent in 2020 from 2.1 per cent in 2018, enough to force the Bank of Canada to cut rates.