End-users in the automotive industry in Ohio to face impact of US-Canada trade war

Ohio is one among those many states in the US who are fearful about the impact of prospective US-Canada trade war. Since when the United States declared to impose additional 25 per cent tariff on steel and 10 per cent on aluminium that is imported from Canada to the US, Canadian Prime Minister Justin Trudeau warned to strike back hard. Almost immediately, Canada released its list of retaliatory tariffs which includes not only aluminium and steel but many other products which the US exports to Canada.

However, Canada accounts for about 38 per cent of Ohio’s export market, with Ohio sending Canada nearly US$19 billion worth of imports last year, from auto parts to furniture to soap.

For decades, the prospect of a trade war between the US and Canada had been like a unicorn invasion. But the recent high-wire debate over the renegotiation of NAFTA and Trump’s decision to impose additional tariffs on imported aluminium and steel on Mexico, Canada, and the EU has ignited tensions. While Canada is by far the leading trading partner with Ohio, the rest two are also involved in significant transactions with it.

Ohio imports semi-finished steel and aluminium auto parts from Canada and Mexico, helping to create Hondas and Chevrolets produced in the state. Hence, consumers in Ohio are likely to see an impact on the price as it would need to accommodate the tariffs. End users will see the impact as well on their bottom line.

Nevertheless, despite this possible impact, many companies are reasonable with their reactions. For example, Honda says, “While we anticipate that the tariffs will impact Honda’s operations and business partners, we are still in the process of accessing the specific impacts as well as possible strategies to mitigate any adverse effects on our customers, associates, suppliers, and dealers.”

Many of the companies in Ohio have also begun to gradually increase their products prices in expectations of the tariffs so that their consumers do not get a sudden shock. Tim Burga, president of the Ohio AFL-CIO, said his union appreciates “the concept of trying to balance the playing field,” but added: “the way in which the president has gone about this….is seemingly not terribly well thought out.”

Both Burga and Eric Burkland, president of the Ohio Manufacturers Association are of the opinion, “We don’t want to end up in a trade war with one of our closest allies.”