A deal at last

On Sept. 28 Canada and the U.S. finally agreed on terms for a new North American free trade agreement. The U.S.-Mexico-Canada Agreement (USMCA) replaces the previous NAFTA agreement. Commentators report that about 90 percent of NAFTA – a trade agreement that U.S. President Donald Trump labelled a “disaster” – remains intact.

But there are some significant issues. One would have hoped that tariffs on steel and aluminum imposed by the U.S., along with the Canadian counter-tariffs, would have been removed immediately after the agreement was reached – as a goodwill gesture, if nothing else. However, apparently the U.S. – and the ball is solidly in the U.S. court on this – won’t look at that until the agreement is actually ratified by each country’s elected officials.

Secondly, I think most Canadians were taken aback when the U.S. implemented the tariffs on so-called security grounds. As two countries that have long been close friends and allies, where our economies and militaries are extensively intertwined, what possible security issue could the U.S. have with Canada? We’re still not sure, but the new agreement does nothing to prevent the U.S. from citing security concerns to implement tariffs in the future.

However, in the end, I think most Canadians and Canadian manufacturers are happy that there is finally an agreement and they can get back to business. When the tariffs come off, it will be business as usual. The uncertainly over whether a deal would be reached or what it would look like along with the threat of further tariffs, on automobiles, put considerable stress on Canada’s business community and on everyday Canadians who wondered if they would still have jobs. While we may not entirely agree with the path going forward, at least there is a path.

In the HVAC/R and plumbing/mechanical industries, the uncertainty pushed prices up in some cases. Higher prices will likely stay in effect until tariffs come off. This period of turmoil created real pricing challenges, but some manufacturers and wholesalers managed to avoid increases by absorbing prices to some extent and/or having enough stock on hand to get through.

And maybe it’s just me, but I find the name of the new agreement curious. USMC is the acronym for the U.S. Marine Corps and is as common in the U.S. as RCMP – the Royal Canadian Mounted Police – is in Canada. While this may not be a “brand new deal” as Trump promised, he certainly got his wish in putting a U.S.-first spin on it.

For Canada, it’s not really an improvement over NAFTA, but thankfully it’s not much worse either. And a long-time friendship is strained.


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Supporting Women in Trades Conference
Nov. 6 - 7, 2018

1919 Upper Water St., Halifax, Nova Scotia. Please visit http://caf-fca.org/supporting-women-in-trades/.

CIPHEX West 2018
Nov. 7 - 8, 2018

BMO Centre, Stampede Park, Calgary, Alta. Please visit www.ciphexwest.ca or call 1-800-639-2427 for more information.

Canadian Hydronics Conference
Nov. 7 - 8, 2018

BMO Centre, Stampede Park, Calgary, Alta. Please visit www.ciphexwest.ca or call 1-800-639-2474 for more information.

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