Question

Read the following articles on the impending trade war between US and Canada and comment on the effects on businesses on both sides of the border as a result of new US imposed tariffs and retaliatory action by Canada.

Column: In a trade war with Canada, Illinois — and Chicago — would be a casualty

President Donald Trump is teeing up a trade war with Canada, and the state of Illinois, along with the Chicago area, could get bloodied should this cross-border confrontation escalate.

This week the administration imposed a tariff on Canada's softwood lumber, used primarily for home building. It is also threatening to take action against Canadian dairy farmers for what the administration views as unfair business practices.

The full impact of these actions is just sinking in, but already Trump's harsh rhetoric toward our northern neighbor is rattling Illinois businesspeople. To say the least, they don't want trouble, disruptions or hard feelings upsetting a traditionally smooth and profitable relationship.

The full impact of these actions is just sinking in, but already Trump's harsh rhetoric toward our northern neighbor is rattling Illinois businesspeople. To say the least, they don't want trouble, disruptions or hard feelings upsetting a traditionally smooth and profitable relationship.

"Picking a fight with our state's largest foreign trading partner is disturbing for Illinois," Greg Baise, CEO of the Illinois Manufacturers Association, which represents 4,000 member companies, wrote in an email to me.

Illinois and Canada definitely share a multitude of commercial interests.

Last year, the state's companies shipped nearly $16 billion worth of goods to Canada and performed $2.7 billion in services to customers in that country,

according to Canadian and U.S. government data.

Topping that list is equipment and machinery, which accounted for 30 percent of products sent to Canada. That's followed by goods linked to energy, 19 percent; transportation, 12 percent; chemical, mineral and metals, 18 percent; agriculture, 8 percent; and other goods, 13 percent.

It's a pretty representative sampling of Illinois' major commercial interests.

What's more, the Chicago area hosts over 200 Canadian companies. In addition to BMO Harris, there's Canadian National Railway, Manulife Real Estate and Bombardier transportation.

Right now, Canadian-owned CIBC is making a play to acquire PrivateBancorp, a regional commercial and consumer lender.

Canadian outposts employ thousands of workers — regular folks benefiting from healthy trade relations with Canada. Statewide, 344,300 jobs depend on U.S.-Canada trade and investment, according to the Canadian government.

They are a hearty people too.

Apparently, not even our state's changing and occasionally intemperate climate discourages Canadians from visiting Chicago and other Illinois regions throughout the year. In 2016, touring Canadians spent $307 million on Illinois vacations, the Canadian government reports.

With all this at stake, there's little wonder why state and local business leaders are jittery about the Trump administration's eagerness to blast Canada. That's especially true because Trump is angry over lingering issues like lumber and dairy that have been debated and managed for decades between the two countries and periodically resolved before the World Trade Organization.

Some expect Trump's bluster is merely a page from his "art of the deal" playbook and that he's trying to soften up Canada for future negotiations involving the North American Free Trade Agreement.

Nonetheless, the impact of a 20 percent tariff on Canadian soft lumber could be felt right away. The Washington, D.C.-based National Association of Home Builders says the tariff will raise the price of new home construction by at least $3,000 per home and will have a chilling effect on housing starts and related construction employment.

John Cruickshank, recently named consul general of Canada in Chicago, says the impact of the tariff already is being felt and, if it continues, will hurt housing in the Chicago area and throughout the Midwest.

"It's immediately harmful to American interests, including Illinois," he says. "Try to build a house in Illinois and you are facing a Trump lumber tax."

(A Toronto native, Cruickshank is no stranger to this area, having been at the Chicago Sun-Times for seven years, serving as editor and then publisher, before leaving in 2007.)

What other fallout could occur?

In the extreme, Canada could push back and impose fees, tariffs or just make it more difficult for U.S. goods, including products originating from Illinois, to enter Canada. Moreover, frosty relations can chill the Canadian interests' desire to invest in or expand their Chicago-area and Illinois companies.

If Canadians are made to feel less welcome, it could also damage tourism.

Some people, including President Trump, believe Canada needs the U.S. market more than the other way around. But Illinois, for example, imported $25 billion worth of products from Canada last year.

Keep in mind that the bulk of these goods are related to energy, chemicals, plastics and other industrial uses — the basic stuff that helps the state's economy stay on track.

Those I spoke to about this issue hope the trade war talk and threats cool down, and U.S.-Canadian relations quickly become less contentious.

Trump's concerns didn't merit the actions launched this week by his administration, which now has fearful Illinois companies thinking of ways to protect themselves and their Canadian business partners.

It's just like the anthem says: "O Canada, we stand on guard for thee."

Answer 1

Ans

The tariffs are going to harm both countries.States like illions are going to be affected more as they have deep trade relations with Canada. Tariffs have already raised prices of homes in USA. Illions imported 25 billion worth products from Canada which are used as rawmaterials. So it will demage whole industry.candanian tourists may not visit USA leading to losses to Americans.in illions alone 344300 jobs depend on USA Canada trade and investment.They will be lost due to confrontation .On the other hand Canada will loose due to less lumber, milk, plastics, chemical etc exports to usa. This will led to loss in jobs in Canada also. Its companies can't invest in USA and take benefit of higher profits and opportunities in usa. In both countries products and inputs will become costly due to trade war as domestic highcost producers replace foreign efficient producers. This will also affect comparative advantage of nations. We hope trumph acts intelligently and avoids confrontation.