Geographic Impact of Tariffs on Canada-US Cross-Border Trade


What will be the geographic impacts of tariffs announced by the US on Canadian steel and aluminum exports on May 31, 2018, and of Canadian countermeasures announced the same day? CPCS’s Veiko Parming and Chelsea Gurr mapped out the impacts by state and province.

The map shows the value of cross-border exports of commodities affected by the tariffs, for 2017 (USD) – by province or state of origin. As shown, the greatest impact of the tariffs and counter-tariffs will be on the Great Lakes region, specifically the Canadian provinces of Ontario and Quebec, and the US states of Ohio, Illinois, Pennsylvania, New York, and Michigan. Supply chains in this region are closely integrated across the border, especially in the automobile and auto parts industry. This means the impact of tariffs will be felt multiple times in the same supply chain, as parts cross the border back-and-forth for value added manufacturing.

The tariffs will be most acutely felt in Ontario and Quebec, with $5.5 B. and $5.7 B. in exports of affected commodities, respectively. Furthermore, 93% of Ontario steel exports and 91% of Quebec aluminum exports are destined to customers south of the border.

The impact will also be significant in US Great Lakes states. The share of steel and aluminum exports destined to Canada (as opposed to other countries) is 41% for Pennsylvania exports, 44% for Michigan, 48% for Ohio, and 53% for New York. The Canadian countermeasures also impose tariffs on various agri-food products, equipment, chemicals, and other goods. As shown, exports to Canada of affected commodities have been growing significantly over the last five years – by as much as 98% for Missouri.

US tariffs went into effect immediately on June 1, 2018, while Canadian countermeasures are anticipated to take effect on July 1, 2018, allowing for a 2-week comment period until June 15.