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Thomas StorringDirector – Economics and Statistics
Tel: 902-424-2410Email: thomas.storring@novascotia.ca

August 06, 2019
STUDY: IMPACT OF RECENT TARIFFS ON CANADA'S MERCHANDISE TRADE

Statistics Canada recently released a study on the impact of US tariffs on Canada's merchandise trade. On March 1, 2018, the United States announced tariffs of 25 per cent on Canadian steel products and 10 per cent on Canadian aluminum products that came into force on June 1st. In response, Canada announced on May 31st retaliatory tariffs on various products, including 25 per cent on imports of US steel products and 10 per cent on imports of US aluminum products. Canadian tariffs came into force on July 1, 2018. Both governments lifted their respective tariffs on May 20, 2019. Overall, these tariffs appear to have resulted in a rise in Canadian imports and exports of tariffed products after the announcements, followed by a downward trend in imports and exports when the tariffs were in effect.  

Canada's Exports of Steel to the United States

US tariffs appear to have reversed an upward trend in Canada's exports of steel to the United States. Exports of steel products increased in the two years prior to the introduction of the 25 per cent tariff. Prior to implementation, Canada's exports of steel to the United States increased 22.6 per cent from February 2018 (month before announcement) to May 2018 (month before implementation). Compared to the same months in 2017, the average monthly value of exports from March to May 2018 was up 30.3 per cent, . After implementation, exports of steel products to the United States decreased 37.8 per cent in June, before partially recovering in July (+14.5 per cent). An overall downward trend ended with the value of exports in May 2019 near a 10 year low. In June, the first month after tariffs were lifted, exports of steel products to the United States grew by 15.8 per cent.

Canada's Exports of Aluminum to the United States

Similar to steel, US tariffs appear to have reversed an upward trend in aluminum exports. Exports of aluminum products to the United States increased in the two years prior to the introduction of tariffs, with a rise in prices and volumes of aluminum products. Prior to implementation, Canada's exports to the United States increased 12.5 per cent from February to May 2018. Exports of aluminum products to the United States decreased in each of the first five months following the introduction of tariffs, before a slight recovery in November 2018. Canada's exports of aluminum products to the United States trended downward reaching the lowest level in more than 10 years in May 2019. In June, the first month after tariffs were lifted, exports of aluminum products to the United States increased 47.2 per cent.

Canada's Imports of US steel, Aluminum and Other Tariffed Products

Following the announcement of Canada’s retaliatory tariffs, imports of steel products from the United States rose 31.3 per cent in June but fell 38.3 per cent in July after tariffs were in force. Steel imports gradually declined a further 6.2 per cent from August 2018 to May 2019. After the tariffs were lifted, steel imports from the United States recovered 3.4 per cent in June 2019.

In June 2018, the month following the announcement of Canadian tariffs, imports of aluminum products from the United States increased 3.6 per cent.  After implementation, imports of aluminum products declined 5.8 per cent in July 2018. The average monthly value of imports from July 2018 to May 2019 was down 3.9 per cent compared to the monthly average for 2017. Despite the elimination of tariffs, there was a 3.9 per cent decline in aluminum imports from the United States in June 2019.

Similar to the trend seen in steel and aluminum products, total imports of other tariffed products increased after the announcement (+16.8 per cent in June) and fell after the tariffs were implemented (-22.0 per cent in July). From August 2018 to May 2019 imports of other tariffed products decreased 2.8 per cent, and fell a further 3.8 per cent in June, the first month after the tariffs were lifted.

Value of Collected Duties in Canada and the United States

Duties collected on Canada's imports of steel, aluminum and other tariffed products from the United States rose from a monthly average of $46.9 million in 2017 to $189.7 million after the retaliatory tariffs were applied. Duties collected by the United States rose from a monthly average of $24.2 million in 2017 to $205.0 million following the implementation of US tariffs.

Daily Release 



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