Our friends to the north, namely Canada, will feel the biggest burden of Trump’s new tariffs. Canada has been a strong ally on a number of issues including fighting terrorism. It is the largest exporter of steel and aluminum to the United States, supplying $7.2 billion of aluminum and $4.3 billion of steel to the United States last year. In goods and services, the United States runs a trade surplus with Canada, which buys $48 billion worth of U.S. automobiles and $40 billion of machinery, in addition to agricultural products.
Other countries affected by the steel and aluminum tariffs are United Kingdom, Germany, South Korea, Turkey and Japan. The United States already imposes a 2.5 percent tariff on the import of foreign cars and a 25 percent tariff on imported foreign trucks and commercial vans. The European Union charges a 10 percent tariff on imported U.S. cars. Large German automakers also have a sizable presence in the United States with BMW employing thousands of workers in South Carolina, Volkswagen employing thousands of workers in Tennessee and Hyundai and Kia employing thousands of workers in Alabama. All good paying American jobs.
Leaders around the world including from the EU and Canada are expressing grave concerns and have stated they may retaliate with their own tariffs on U.S. products. Some of you reading this column may wonder why this matters to people and companies in Central Illinois. My purpose in writing about this issue is to send a warning signal that these tariffs on steel and aluminum are the beginning of very bad trade policies that will lead to retaliation and begin affecting our farmers in Central Illinois from shipping their corn and beans, which they grow in abundance, overseas and face new tariffs from foreign countries.
Also, we need to remember that much of what Caterpillar manufactures in Central Illinois and other places in Illinois and around the country is exported some place in the world and could face huge tariffs from other countries. These types of trade wars will begin to affect the bottom line of profitability of Caterpillar and our friends in agriculture in ways that can be very dramatic.
In a much more practical sense, people need to realize how much aluminum is used for soda and beer production and the impact these tariffs on aluminum will have on the cost of those products to Americans. We hope Congress and the American people will send a message to the Trump Administration that the 25 percent tariff on steel and 10 percent tariff on aluminum will severely damage our good relationships with friends around the world and eventually damage important agricultural and business interests in Central Illinois and around the United States. This is a trade war we cannot win.