The North American Tariff Backfire
Even the United Steelworkers union has called the duties ‘harmful to workers.’
June 8, 2025 The Wall Street Journal
Canada’s Prime Minister Mark Carney has extended a somewhat unusual invitation to Mexico’s President Claudia Sheinbaum to attend the Group of Seven meeting later this month in Kananaskis, Alberta. Mexico has been a G-7 guest before, but is far from a regular at the annual confab.
The Carney outreach to Ms. Sheinbaum looks like a Canadian attempt to double-team President Trump on trade. It isn’t a bad idea. The U.S.-Mexico-Canada Agreement is up for review in 2026, and now’s a good time for the smaller partners, who are crucial to American competitiveness globally, to lay down some markers.
Yet Ms. Sheinbaum has hesitated to accept. Perhaps she senses the possibility that her presence with like-minded leaders on trade will backfire, further provoking a frustrated Tariff Man. Witness his reaction to the May 28 U.S. Court of International Trade ruling against his use of the International Emergency Economic Powers Act, or IEEPA, to impose tariffs. Two days after that decision he threw a hissy fit, doubling U.S. tariffs on steel and aluminum imports to 50%.
On the other hand the TACO trade narrative is gaining currency. That stands for “Trump always chickens out.” In the early months of his second administration he seemed to relish the power to declare high tariffs unilaterally. He could make countries bend the knee—or, as he said, kiss a part of his anatomy—for relief. Now he’s learning it was an illusion. He doesn’t even hold most of the cards in his bid to close the U.S. economy and make everything at home.
This isn’t because U.S. law limits the executive use of tariffs. It’s because the pain caused by higher duties is rippling across America and hurting him politically.
The higher steel tariffs weren’t yet in effect when Pete Hoekstra, the U.S. ambassador to Canada, gave a June 3 speech at the Empire Club in Toronto suggesting the U.S. was close to healing the relationship with its northern neighbor. Shortly thereafter the Toronto Sun cited unnamed sources saying a trade deal between the two sides is “imminent,” presumably to walk back, in some measure, the tariffs on Canadian steel and aluminum as well as the 25% tariffs on non-U.S. content of autos. In return Canada is expected to do something about its retaliatory tariffs, though Mr. Carney said Friday that Canada will take its time. Speculation is running hot that a deal with Mexico is also in the works, though it hasn’t retaliated.
If Mr. Trump is looking for a tariff off-ramp for North America, it isn’t out of magnanimity or respect for the USMCA, which he negotiated and signed. His tariffs are tax increases that firms or consumers have to eat in what until now has been a highly integrated continental economy. Narrowing profit margins, reduced competitiveness, higher household bills and fewer job openings aren’t good for his constituents.
Canadian retaliation has already cost U.S. exporters. U.S. exports to Canada subject to auto retaliation declined by 53% year over year in April, and U.S. exports subject to IEEPA retaliation declined by 13%, according to Dan Anthony at the Trade Partnership Worldwide in Washington. But retaliation is far from the biggest problem.
The Commerce Department says Canada sold $7.8 billion in steel to the U.S. in 2024, making it the largest single steel supplier to the U.S. That same year, the International Trade Commission says, Canada imported $5.36 billion in steel from the U.S. Like all trade, these were voluntary exchanges in the interest of wealth creation. According to international-trade lawyer Lewis Leibowitz in Washington, Canada specializes in flat-rolled steel products used by U.S. manufacturers in things like autos, trucks, containers, construction and capital machinery. In particular, U.S. customers demand Canadian thin-gauge steel sheet for such applications as carports and garage doors. This thin-gauge material doesn’t offer the same profit margins as heavier-gauge steel, so the U.S. hasn’t been interested in producing it.
Trump tariffs burden U.S. manufacturing. Excluding steel from China, U.S. importers paid roughly $524 million in steel tariffs in March and April 2025, according to Mr. Anthony. Canadian steel faced the most at $107 million and finished far ahead of second place Brazilian steel, generating $45 million in tariffs.
In 2020 researchers at Harvard and the University of California, Davis found roughly 1,000 new jobs in the production of new steel 20 months after the 2018 tariffs but around 75,000 fewer manufacturing jobs “attributable” to the tariffs by mid-2019.
Mr. Trump doesn’t even have the support of the United Steelworkers for his tariff insanity. Its president, David McCall, released an April 2 statement applauding a bipartisan Senate resolution calling to reverse the 25% tariffs on imports from Canada. Mr. McCall called the Trump duties “needless” and “harmful to workers on both sides of the border.”
That’s not a good look for an administration that bills itself as pro-worker. Maybe Mr. Carney should serve tacos in Kananaskis.
Write to O’Grady@wsj.com.