There may be no better person in all of North America who understands the effects of U.S. tariffs on Canadian steel than Tim Clutterbuck.
President of ASW Steel in Welland, Ont., Clutterbuck has watched his business plunge after the Trump administration imposed import duties on steel from Canada last summer to balance what it labels an unfair playing field.
“It has had a significant effect, since 90 percent of our sales are in the U.S.,” Clutterbuck said a few days ago, estimating he will ship 3,000 fewer loads of steel to his company’s Pittsburgh plant this year, while Welland’s 125 employees are working reduced shifts.
But every week or so, the Ontario resident ventures south to the Fort Erie headquarters of the Peace Bridge Authority, where he serves as vice chairman and the Trudeau government’s representative. There, he has watched a slow and steady decline of commercial traffic across the span linking the U.S. and Canada – made only worse in recent months by the drastic reduction in shipments of Canadian steel.
“It’s been a pretty dramatic thing for me,” he said. “Because when I put on my Peace Bridge hat, we’re noticing a drop in traffic. We budget pretty conservatively, but we did not anticipate such a drop in commercial traffic.”
Though a $100 million project to rehabilitate the bridge is now two-thirds completed, Clutterbuck does not think construction has contributed to the decline because of the authority’s extensive mitigation measures. He still views it as the best traffic conduit between Toronto and the northeastern U.S.
Peace Bridge Authority General Manager Ron Rienas reports truck traffic down a significant 2 percent this year compared to 2017, while car crossings have remained the same. That 2 percent decline in truck traffic translates into almost $300,000 in lost revenue, he said. He added that truck crossings are also down 2 percent at the Lewiston-Queenston Bridge while cars are up 4 percent.
The new tariffs appear to have accentuated a downward spiral in commercial traffic since the heady days of the 1990s, when soaring traffic levels sparked serious discussion – and even artists’ conceptions – of a new international span between Fort Erie and Buffalo. Now, statistics show truck traffic across the entire northern border at 35 percent less than in 2000. At the Peace Bridge, trucks are down 19 percent and cars 39 percent.
Rienas says the authority gauges comparisons against 2000, the last year before the terrorist attacks of 2001 and the ensuing travel restrictions. The continuing drop is a major reason why tolls were hiked last Jan. 1.
“If we had the same volume as always we would not have had to increase tolls,” he said. “The money has to come from somewhere.”
Rienas also noted that new ways of doing business are now reflected at places like the Peace Bridge. While Canada remains the top export market for the U.S., he says, it has dropped to third in imports to the U.S., behind China and Mexico. Imports from Mexico in 2016 represented 13 percent of all goods flowing into the U.S., Rienas said, up from 6 percent in 1990. Mexico now exports more to the U.S. than Canada does.
“This shift in global trade patterns has a direct impact on border crossings between Canada and the U.S.,” Rienas said. “Clearly, imports from China enter the U.S. at seaports, and imports from Mexico are nowhere near the Peace Bridge.”
Now it appears the tariff effects are being felt in Canada, on the Peace Bridge, and in the United States, too. John Young, executive vice president and chief operating officer of Welded Tube in Lackawanna, recalls high hopes about locating at the former Bethlehem Steel plant. Proximity to its Welland-based parent company loomed as a major plus. But he has furloughed 25 employees – 20 percent of his hourly workforce.
He says Welded Tube’s hopes for expansion will now have to wait.
“Right now, that’s on the back burner,” he said. “A lot of other things are taking priority.”
Young said the company’s Welland plant has also laid off 45 employees, while the Lackawanna facility has offset costs and is surviving. Still, he said the tariffs have “changed everything.”
“We have no intentions of walking away, but it’s affected our business in Lackawanna,” he said.
Even though President Trump and Prime Minister Justin Trudeau signed an updated version of the North American Free Trade Agreement in October, the tariffs instituted in July are not affected. Duties of 25 percent are still attached to steel crossing the Peace Bridge and other northern border points.
At an October news conference following approval of the revised trade pact, Trump said the tariffs will remain in place “until such time as we can do something that would be different – like quotas, perhaps – so that our industry is protected. We are not going to allow our steel industry to disappear.”
But at the same event, Trudeau sounded anxious to reach a deal.
“Moving forward on eliminating the tariffs on steel and aluminum remains a priority for us, for Mexico, and is something the Americans have indicated they are more than willing to work on,” he said then.
Clutterbuck, who is expected to lead the Peace Bridge Authority again in 2019 when the chairmanship rotates to the Canadian delegation, said he expects at least the tariff-caused decline in traffic to someday ease.
“Things ebb and flow, that’s just the way it is and you have to deal with these adversities,” he said. “But it is one of those things you don’t expect.
“I believe cooler heads will prevail,” he added.
All of this leads Rienas to recall the major push for a new bridge beginning three decades ago. Western New York’s population is not significantly increasing, he noted, and the continuing decline in crossings justifies the decisions of 2011 and 2012 to scrap the idea of a new bridge.
“It’s been eight years; traffic has declined even further,” he said, adding the authority might have been forced to raise tolls by unsustainable amounts had it proceeded with a new crossing.
The redecking project underway will preserve the Peace Bridge – completed in 1927 – for another 65 to 70 years, he added.
“The traffic numbers are not there to justify a new bridge,” he said. “Do I see anything in the next decade to change that? No.”