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Politics

In Sault Sainte Marie, tariffs impact both sides of the border

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David Wilson
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https://flic.kr/p/9YkTTr

In May, the Trump Administration announced a 25 percent tariff on imported steel from Canada, the EU, and Mexico.

By July, Canada had hit back, putting in place its own retaliatory tariffs on steel.

Experts say those tariffs could be harmful to both the US and Canadian economies, and in one location, right on the US Canadian border, those impacts are already being felt.

The St. Mary’s River runs between Sault Sainte Marie Ontario and Sault Sainte Marie Michigan.

On the US side sits the Soo Locks, where iron ore from mines in Minnesota and the Upper Peninsula passes through, on its way to mills in the Lower Great Lakes

Soo Michigan has a population of roughly 14-thousand people. Soo Ontario has over 73-thousand people.

Jeff Holt is the Executive Director with the Sault Sainte Marie Economic Development Corporation in Michigan. He said the economies of the two Soos are tightly intertwined.

“We’ve found that our economy relies on the Soo Ontario and the Ontario market heavily. There are numbers that indicate 30-40% of our client’s income derives from the Canadian market.”

Holt said the steel tariffs remind him of lumber tariffs levied by Canada in the 1980’s.

“That has had a tremendous impact on our economy and the housing industry. I can see the steel tariff issue going down the same road.”

On the Canadian side are several steel refineries including Algoma Steel - the second largest steel refinery in the country.

Terry Sheehan is a Member of Canada’s Parliament and represents the Soo. He raises similar concerns.

“Our steel market is so integrated that we have realized that these American tariffs are not only going to hurt Canadian jobs but American jobs too.”

Sheehan said coal and iron ore mined in the states crosses to Canada where it is refined at companies like Algoma steel. Then it’s sent back to car manufacturers in the states.

“What that 25% tariff then becomes is a tax on Americans.”

Sheehan said in Soo, Ontario, the tariffs have already resulted in the temporary layoff of 40 employees at Tenaris Steel.

“This is the only place along the border where the Canadian city is bigger than the American city. So Sault Sainte Marie Michigan relies heavily on Sault Sainte Marie dollars. If we’re hurting, they’re hurting. It’s not good.”

Down the street from Sheehan sits the United Steelworkers 2251, which represents workers at Algoma Steel.

Michael Da Pratt is President of the Local 2251. He said the idea that the steel tariffs were in the interest of national security is absurd.

“I don’t see, quite frankly, how anybody could suggest that doing business with us affects national security.”

And, Da Pratt said, the tariffs don’t make sense in light of how integrated the two economies are.

“How many times will a tariff apply to a product that we may ship? Tariffs going for the commodity, however, the input costs will have costs associated with it too, so actually, it’ll make it no business available whatsoever between the two countries.”

Both Algoma Steel and Tenaris declined to comment for this story.

But, outside the Algoma Steel Soo factory, workers walking out during the change of shift were a little more talkative.

Mike Pinder is a furnaceman with Algoma Steel. He said he’s not worried about the tariffs.

“United States they need us more than we need them. At the end of the day, we’ll put tariffs on them, stalemate. It’ll all go back to normal again very soon. We haven’t wound down at all, we’re actually maximizing production.”

Michael LaFaive is with the Mackinac Center for Public Policy, a free market think tank. He said recent estimates and previous steel tariffs give us a good idea of what the impact of the new tariffs will be - and it’s not good.

“We know that the total state exports in Michigan that are flattened by the new tariffs exceed 2.3 billion dollars. About 1.1 million jobs in the state of Michigan alone are supported by free trade.”

But Mark Barker, the President of the Interlake Steamship Company, said he’s seeing a benefit. He said he’s seen pricing for steel increase.

“It’s lead to some positive feeling in the industry that steel pricing will stabilize.”

A spokesperson for United States Steel Corporation confirmed that the company was working to bring a steel mill in Granite City, Illinois back online, and cited the tariffs as the reason.

But, LaFaive said, the tariffs just aren’t sustainable.

“The political calculators in Washington who were arguing in favor of this may find that there is not a political long-term benefit to these tariffs and that joins the obvious no economic benefit over the long run. Or the short run either.”

Both sides of the Soo say an end to the trade war can’t come soon enough.