Trump says the US doesn’t need Canadian cars, lumber or milk. Consumers may disagree
While Donald Trump was thinking about using “economic power” to get Canada, the US president-elect, at the same time, was also dismissing the importance of his country’s number 1 trade partner.
“We don’t need anything they have,” Trump said of Canada, during a news conference at his Mar-a-Lago estate in Florida earlier this week.
He rejected any reliance the United States might have on trade with its northern neighbor, seemingly ignoring that Canada’s exports to the US in 2023, for example, reached about $418.6 billion US, according to the US Census Bureau.
And Trump did not mention the estimated 4.4 million barrels of oil the US receives a day from Canada, according to the US Energy Information Administration, a little more than half of its total oil imports and its No. 1 import.
He entered the automobile, lumber and dairy industries, saying that the US could fill the great demand of Americans for these products.
But as statistics and experts suggest, US demand means Canada may not be easily replaced.
Automotive
Trump told reporters that in reference to Canada, the US doesn’t need “their own cars” and that it’s better to make them in Detroit.
Although Canada does not have its own mass-produced cars, it is home to plants from US-based automakers Ford, General Motors and Stellantis North America.
Because of its huge demand for cars, the US is the world’s largest exporter of cars – and Canada is one of its biggest suppliers. For example, more than 1.5 million vehicles will be produced in Canada by 2023, according to the Canadian Vehicle Manufacturers’ Association.
In a typical year, according to Flavio Volpe, president of the Association of Automotive Parts Manufacturers’ Association, about 80 percent of cars made in Canada are exported to the US.
So, can American car manufacturers, as Trump suggests, move all their plants to Canada, set up shop in their country and produce all their cars at home?
“Absolutely,” said Dimitry Anastakis, a professor of business history at the University of Toronto’s Rotman School of Management and an expert on the auto industry.
But there will be a big catch: the fragmentation of the North American auto industry, he said.
“It might help the American people and American manufacturers, but the cost of getting there would be so great that it could put the North American industry into recession,” he said. “These are supply chains that have been built for decades.”
American automakers are building plants in Canada to take advantage of low wages, low exchange rates and skilled workers. While moving all of Canada’s plants to the US would be a boon for workers in that country, it would also mean that costs for car buyers on both sides of the border would rise significantly, Anastakis said.
This week, US president-elect Donald Trump said the US does not need Canada’s auto industry, amid threats to use ‘economic power’ to nationalize Canada and impose a 25 per cent tariff on Canadian goods. But is it all talk? CBC’s Jennifer La Grassa talks to Dimitry Anastakis, a business professor at the University of Toronto, and Peter Frise, a professor of automotive engineering at the University of Windsor.
It could take years to rebuild their supply lines and be more expensive for American manufacturers, he said, because they have invested heavily in their Canadian operations.
“This is a talking point [Trump] in terms of ‘We can build them all here,’ like snapping your fingers, it’s not completely proven because of the way the industry has evolved over the last 60 years,” Anastakis said.
Volpe said American manufacturers would lose a lot by moving and building new plants in the US, something that would take years. “Creating our context—we’re comparing it to them—is a complete innovation,” he said.
Timber
According to the Washington, DC-based National Association of Home Builders, the domestic production of US softwood is not enough to meet the demand from the home building industry.
“To help fill this gap, the US relies on softwood lumber from Canada to meet our demand for lumber,” said the group’s president and CEO, Jim Tobin, in an emailed statement to CBC News.
The United States uses a lot of lumber, and most of it comes from Canada.
“The United States imports about 25 percent of Canada’s softwood lumber consumption, which is a large market share,” said Rajan Parajuli, associate professor of forestry economics and policy at NC State University in Raleigh, NC, in an email. on CBC news.
Parajuli said the US does not have the capacity to meet domestic needs.
But Trump said the US doesn’t need Canadian timber and that it has “huge timber fields” that he could restrict with an executive order.
However, Parajuli said it would be “very unlikely” that the US, without Canadian lumber, would be able to meet the demand. While the US has an adequate inventory of standing trees, the sawmill industry has a limited capacity and supply chain, he said.
In particular, the logging industry has been in decline over the past few decades, he said.
Russ Taylor, a BC-based forestry consultant, said Trump could loosen regulations to allow logging in America’s public forests, but more loggers, truck drivers and workers would be needed.
“Where are the jobs and skilled workers and capital going to come from? It doesn’t happen overnight.”
President-elect Donald Trump reiterated his problems with Canada on Tuesday, expressing concern about the Canadian military and asserting that the US is subsidizing the Canadian economy. He has decided to use the military in Canada, saying he will rely on ‘economic power’ when he returns to the Oval Office.
Taylor said Trump is also forgetting the processing aspect of the industry and that mills in the US are already operating at about 85 percent.
“Maybe you can push more lumber into US sawmills, but you won’t get much, you’ll make a profit,” he said.
But with about 25 percent of the lumber coming from Canada, increasing production by five or ten percent in the US means you’re “not even close” to meeting demand, Taylor said.
“So the bottom line is that the US needs Canadian lumber, period.”
Milk
In 2023, Canada exported an estimated 488 million Cdn of dairy products to the US, according to Agri-Food Canada.
But Trump said the US does not need Canadian dairy products, especially Canadian milk. And it’s true that Canada doesn’t sell much milk to the US – about $17 billion in 2023.
But there is a market for Canadian cheese, said Andrea Berti, president of the US-based Cheese Importers Association of America.
Berti said that the US imports a lot of cheese from sheep’s milk and goat’s milk made in Canada, products that are not very common in the US, because it tends to focus more on cheese made from cow’s milk.
“Goat milk is also produced in the US, but a small percentage. It is not enough to cover the US demand,” he said. “So we’re going to Canada for that reason.”
Berti said Americans are also turning to Canada for French-style cheeses, as well as Quebec-made cheeses, which are popular in specialty stores.
Donald Trump has also said that the United States is ‘subsidizing’ Canada to the tune of ‘$100B.’ Where does that number come from? And does Canada really get free travel from the US? Andrew Chang delves into the math, money and politics of the Canada-US trade relationship to find out how much – if any – of what Trump says is actually true. Images collected from Reuters, Getty Images, and The Canadian Press.
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