U.S. companies fall silent on benefits of free trade in Trump’s second term
In his letter to Donald Trump, the president of the U.S. Chamber of Commerce was blunt in his opposition to tariffs. End free trade in North America, Tom Donohue warned in 2018, and the United States could lose 1.8 million jobs. The breadth of U.S. industry support for continental free trade ”is very impressive,” John Murphy, a senior vice-president at the chamber, told NPR.
That was then.
This year, Mr. Trump has returned to the White House even more determined to impose tariffs on neighbours and adversaries alike.
He has, however, received a very different reception from a U.S. business community that was once among Canada’s most reliable allies in defence of free trade. Mr. Trump has once again pledged to impose tariffs on goods from Canada and Mexico, likely beginning on Saturday.
Yet U.S. companies are, “on this topic, not saying anything,” said Dennis Darby, the president of Canadian Manufacturers & Exporters.
”I don’t know whether we’ve lost the support,” Mr. Darby said. But, he added, ”I think people are waiting.”
He expects corporate America to devote more energy and political capital to a looming renegotiation of the Canada-U.S.-Mexico Agreement.
Any such talks, however, are unlikely to begin for some time, while new tariffs could arrive by week’s end. “It’s certainly not going to be good for anyone, especially in the short term,” Mr. Darby said.
Mr. Trump returned to office armed with a slim victory in the popular vote and a determination to seize what he called a mandate to reverse American decline. He has repeatedly praised William McKinley, saying last week that the former president “made our country very rich through tariffs and through talent.”
Among Mr. Trump’s first acts in office was restoring McKinley’s name to the Alaskan mountain Denali. In hundreds of executive orders, he has sought to reshape social mores within the U.S., as well as the country’s international role.
Corporate America has shown little desire to stand against him, with major companies falling in line with mandates to dismantle offices for diversity, equity and inclusion – and few willing to loudly oppose the imposition of tariffs.
“The only thing you can do if you’re a really smart business person is say this is just plain crazy,” said Sen. Hassan Yussuff, a former president of the Canadian Labour Congress, and now a member of the Council on Canada-U.S. Relations created by Prime Minister Justin Trudeau in January.
But “there’s a lot of scared people, not prepared to speak up because they might face the President’s wrath,” he said.
The U.S. Chamber says its stance on tariffs remains unchanged. In a State of American Business address in mid-January, current chief executive Suzanne Clark warned that ”tariffs are a tax paid by Americans and their broad and indiscriminate use would stifle growth at the worst possible time.”
But she also emphasized co-operation with Mr. Trump on what she called the shared priority of fighting regulations, “as we did in President Trump’s first term.”
Other former defenders of free trade have said little. In 2018, 36 Republican senators signed a letter to Mr. Trump strongly defending North American free trade. The Globe and Mail reached out to each of those signatories who remain in office to ask if their views have changed. Only two responded.
Sen. Joni Ernst of Iowa said in a statement that she “always fights for Iowa farmers and knows that President Trump is the ultimate dealmaker.” The office of Chuck Grassley, who also represents Iowa, pointed to his recent comments to reporters in which he said he remains a supporter of free trade. But he said he was not ready to judge Mr. Trump’s “new approach to tariffs.”
“I’m not going to badmouth Trump in the meantime,” he said. “I’m going to hope it works.”
Individual companies, too, have restrained critical commentary. In 2018, Scott Wine, then the CEO of Polaris Inc., said he had been “very aggressive” in pushing against new tariffs that would hurt U.S. businesses. “Nobody thinks that’s the right thing to do,” he said.
In December, the company’s current CEO, Mike Speetzen, was more circumspect. “Who knows what’s going to happen,” he told a Morgan Stanley investor conference. “We’re not going to spend a lot of energy trying to worry about what could be.”
James Vena, the CEO of Union Pacific Corp., said he has been looking “at the entire package” from the new administration. If Mr. Trump imposes tariffs but also reduces regulatory burdens and cuts taxes, “that could be a lot of positive,” he said on a Jan. 23 earnings call.
“We’re just going to kind of hang in there and see how it plays out,” Scott Donnelly, CEO of Textron Inc., said on an earnings call last week.
One outlier has been Pittsburgh-headquartered aluminum producer Alcoa Corp., which has major smelting operations in Quebec.
“If there were to be tariffs on Canadian aluminum imports to the U.S., this would represent a threat to U.S. industrial competitiveness,” CEO William Oplinger said on an investor call last week.
A 25-per-cent tariff would raise annual costs by US$1.5-billion to US$2-billion on Alcoa’s U.S. customers alone, he said.
Flavio Volpe, president of the Canadian Automotive Parts Manufacturers’ Association, likened the effect of the proposed tariffs on the auto industry to the Ambassador Bridge blockade in 2022 that briefly halted carmaking from Ontario to Kentucky.
“Nobody has modelled the American President taking aim at American prosperity,” he said.
But as U.S. companies begin to reckon with diminished revenues, he anticipates many of them will protest the impact on “the profitability and prosperity of their business.”
With a report from Matt Lundy
This article was first reported by The Globe and Mail
