How U.S. tariffs on steel could impact Island companies

An Island business that manufactures products using steel says tariffs imposed by the U.S. will hurt companies across the province but it's too soon to know to what extent.

"The big worry is that retaliation from Canada on this tariff would be followed by further escalation on the U.S. side," saidDavid Green, chief financial officer of Charlottetown's DME Group.

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"And then we would get caught up in some sort of trade war where our goods would be flying under this tariff, that would obviously have a very large impact on us."

His companymakes brewing equipment and other steel products, with the majority going to the U.S.

Obviously as an export heavy business we are affected by these tariffs and trade barriers. David Green

This week'sannouncement by the United States Secretary of Commerce of a 25 per centtariff on raw steel importsto the U.S. means any company that uses steel as part of its manufacturing process, like DMEGroup,can expect to spend more.

That's because manufacturers on both sides of the border will be forced to find new suppliers, Green said,and that means less competition among producers of raw steel.

And Canada did respond.Foreign Affairs MinisterChrystiaFreelandsaid Canada is hitting back with duties of up to $16.6 billionon some steel and aluminum productsand other goods from the U.S.

'Cooler heads will prevail' in NAFTAnegotiations

Green said it's unclear at this point what additional costs Island businesses could face but that it's "definitely concerning" in that if it continues to escalate it will no doubt impactmanufacturers.

Although no companies on P.E.I. produce raw steel, Green saidIsland companies using steel for manufacturing '"will be affected by this."

"Eighty per centof our products are exported outside of Canada, so obviously as an export heavy business we are affected by these tariffs and trade barriers."

Green says the further the tradedebates escalate, the more that will drive prices up for consumers.

But he adds that compared to elsewhere in Canada, like southern Ontario, B.C., and Alberta, the impact on P.E.I. is minimal for now.

"We're just hopeful that as NAFTA negotiations move forward, cooler heads will prevail," he said.

"And these tariffs can be reduced or removed and we can all just go back to working under a free trade agreement."

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