How The Trade Conflict Between Canada and The United States Affects The Product in Canada

There is no room for doubt that the relationship between Canada and the United States is the most unique one among the world. These two countries, one is more powerful than the other, represent for the word which is interdependent and co-operate with each other. However, in recent years, this relationship has been broken since the governments of the United States start increasing tariff tax on Canada exports products. Trade conflict between these two countries becomes a controversial, and these problems have significant impact on lumber and moto industries of Canada. This report will analyze how high tariff affects the product in Canada in general and lumber, moto industries in particular.

For imported product as a whole, according to Coyne (2018), instead of using tit-for-tat method to fight back the American, the government of Canada plan to decrease tax of the same products from other nations so that they could sell inside Canada and exports their products to others except the United States. The method would have positive influence on the Canada’s economic since there will be a wide range of product with variety of price for customer to choose. Therefore, they could purchase items that suite with their income and interests. According to the Daily (2018), products from other nations import and export to Canada rose with $18.5 Million and $12.5 Million in May. On the other hand, if Canada just keep the tax the same, resulting in an increasing in the price of ingredients, raw materials and facilities suppliers. As a result, the price of product would be rose and if the salary of citizens does not increase, this could lead to inflation. According to the Daily (2018), when comparing the average exchange rate just in a month from April to May the Canada dollar lost 0.8 cent relative to the American dollar.

For moto industries, in 2016, “$63 billion of exported products of Canada was from auto industry and 96% of that was from the United States ”. However, with the recent situation, increasing tariff in steel and aluminum, it would have a significant impact on this manufacturing. According to The Daily (2018), “Sales in the transportation equipment industry declined 1.9% to $10.6 billion, following a 2.4% decrease in April”. The primarily reason is that the sale of motor vehicles and vehicles parts were reduced by 6.6% and 3.7% in May. For cities of Canada where auto is the main industry, this issue could easily change those places become a “ghost town” since activities related to vehicles is slowed or even closed down. Besides, people who earn their living rely on this firm is worried that sooner or later they would become an unemployed. According to Layaga, the auto sector in Canada not only the leading exports but also the one that supply direct and indirect jobs for around 500000 Canadian. It will be a difficulty for them to look for an alternative job with their skill set and the wage that they receive might not as high as the present one.