Illinois drafted in trade war

Trump's tariffs expected to boomerang on Rust Belt states

 Chicago's South Works steel plant has long been idle. (One Illinois/Edward McClelland)

Chicago's South Works steel plant has long been idle. (One Illinois/Edward McClelland)

By Mark Guarino

President Trump’s decision to impose metal tariffs on neighboring countries starting this month is expected to boomerang on Rust Belt states in the Midwest.

Illinois ranks high on the list of states that will be hardest hit by retaliatory tariffs imposed by the Canadian government starting July 1, according to an analysis by Business Insider. Using U.S. Census Bureau data on exports, more than $1 billion in goods to Canada from Illinois will fall under the new Canadian tariffs. Other states sitting atop the list include Ohio ($1.75 billion), Michigan ($1.17 billion), New York ($1.17 billion), and Pennsylvania ($1.14 billion).

Republican Gov. Bruce Rauner has not made public remarks about the announcement. A spokesperson did not respond to an emailed request for comment.

Illinois is the second-largest importer of steel in the United States, according to the Illinois Manufacturers Association. Vice President and COO Mark Denzler said the Canadian tariffs will have “a profound impact” on companies here.

“When you see those increased prices, that’s going to trickle down,” he said. “We use a lot in the auto industry and heavy equipment. And so that’s going to have a negative impact on a lot of manufacturers in Illinois as well.”

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"Trade wars are good, and easy to win."

President Donald Trump on Twitter (One Illinois/Ted Cox)

The retaliatory tariffs follow Trump’s announcement last week that he is imposing tariffs on imported steel and aluminum from the European Union, Canada, and Mexico. The tariffs are part of the president’s “America First” policy that insists that past trade deals have worked against the U.S. economy. “The United States has been taken advantage of for many decades on trade. Those days are over,” he said in a statement Thursday.

Canada is a major exporter of steel plate and coil steel used by manufacturing. The country accounts for about half of the raw aluminum imported by the United States and about a fifth of finished steel imports.

The U.S. tariffs — 25 percent on steel and 10 percent on aluminum — were originally announced in March, but Canada, Mexico, and the European Union were told they would have temporary exemptions. Last week the administration announced those exemptions would not be renewed.

On the day of that announcement, Canadian Prime Minister Justin Trudeau said that his country was imposing tariffs on $12.8 billion worth of U.S. goods, a wide-ranging list from steel to yogurt to mattresses. According to a statement from the country’s Department of Finance, the measures will remain in place “until the U.S. eliminates its trade-restrictive measures against Canada.”

The U.S. tariffs “will harm industries and workers on both sides of the Canada-US border and will disrupt supply chains that have made North American steel more competitive across the globe,” Trudeau said.

While the steel industry has received government protections against the tariffs, and has been adding jobs in Illinois and Ohio, other companies that rely on metals, such as auto companies, are warning that a trade war will ultimately hurt workers. Reuters reports that major U.S. manufacturers including Caterpillar, Ford Motor Co., Whirlpool, and Harley-Davidson have all reported that rising steel and aluminum prices will be passed on to consumers.

Some Republican lawmakers have described the Trump tariffs as unnecessarily isolationist. “This is dumb. Europe, Canada, and Mexico are not China, and you don’t treat allies the same way you treat opponents,” U.S. Sen. Ben Sasse of Nebraska said in a statement.

Likewise, U.S. Sen. Orrin Hatch of Utah released a statement saying the tariffs “will have damaging consequences for consumers, manufacturers and workers.

“We should build on our success in overhauling the nation's tax code with complementary trade policies that, rather than favoring one narrow industry, make all sectors of the US economy more competitive,” Hatch said.