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Experts in logistics warn that tariffs imposed by both nations
will drive prices up and add an extra volume to an already
encumbered global trade network..
New tariffs the Trump administration recently imposed are part
of an effort to rebuild tariff revenue after the U.S. Supreme
Court struck down President Donald Trump's emergency-powers
tariffs in February and other temporary plans expired in July.
Nick Klein, vice president of sales and marketing in the Midwest
for international logistics company OEC Group, said new tariffs
imposed by both countries will continue driving up the cost of
goods in the state, as Canada is Illinois’ top trade partner –
exporting roughly $17.5 billion in goods to the nation annually.
“One [good] people might not think of is 80% of our potash,
which makes fertilizer, actually comes from Canada. And another
really big one is softwood that our home builders use,” Klein
said.
He also noted auto parts and production would be especially
impacted in the Midwest, as parts of a single vehicle often
cross the border multiple times before it's manufactured.
The Canadian countermeasure tariffs of 15%, 25% and 50% on U.S.
products, aimed at products and goods like steel, dairy,
appliances, agricultural equipment, pulp and paper, and
electronics.
Each product's rate is set to match the U.S. tariff on the same
goods, matching American tariffs on products dollar-for-dollar.
Klein said neither side has much to gain from the escalation,
but the U.S. may have more leverage to bring the tension to a
close.
“I don't see a comparable or close solution to replacing the
goods at the same cost we get from Canada,” Klein said. “We buy
70% of Canada's exports. I believe they need us in the short
term. They can't flip the switch and find people to buy this,
because again, it's the reverse. The shipping for them to sell
to other countries is going to be so much more so it'll make it
less competitive.”
He's not certain if the U.S. leverage is a positive for
consumers, but the dispute is likely to add to the strain on
logistics globally.
“With the water level down and moving vessels that are half the
size through the Panama Canal, we still have trouble with
Houthis, and in the Suez Canal, and then we've got backups
because of the tsunamis in Shanghai,” Klein said. “I think the
big problem with supply chain is our other options are not going
to be as close as our neighbor in Canada and not nearly as quick
and not nearly as inexpensive.”
Brett Rowland contributed to this story
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