Business

If there is a trade war with Canada, what does it mean for Whatcom's economy?

Raspberries are sorted on a harvester on a Whatcom County farm. Whatcom County has a booming blueberry industry and the county's largest harvests is raspberries. Blueberry farmers are concerned a tariff would hurt that industry, while raspberry farmers are considering asking for protection from international markets to increase prices.
Raspberries are sorted on a harvester on a Whatcom County farm. Whatcom County has a booming blueberry industry and the county's largest harvests is raspberries. Blueberry farmers are concerned a tariff would hurt that industry, while raspberry farmers are considering asking for protection from international markets to increase prices. The Bellingham Herald file

The beginning of what looks like a trade war with Canada and Mexico may create some uncertainty in the Whatcom economy, particularly for the businesses that export products.

With the announcement Thursday that the U.S. is imposing tariffs on aluminum and steel imports from Canada, Mexico and Europe, those countries responded with tariffs of their own. However, it appears most of Whatcom County's main products avoided making Mexico's and Canada's tariffs lists.

The first impact locally might be seen at Whatcom County's border crossings, but it is unclear how much, said Laurie Trautman, director at Western Washington University's Border Policy Research Institute. The newly imposed countermeasure tariffs by Canada could mean fewer shipments, but there are so many mixed loads that it could mean less volume but not necessarily fewer trucks.

Canada's new list of tariffs are on a variety of U.S. products totaling $12.8 billion, including plywood, steel, aluminum, railway construction material, coffee and maple syrup.

Complicating matters further is that U.S., Canada and Mexico are in the middle of NAFTA negotiations, Trautman said. If that deal falls apart, she said it could impact Whatcom County in a variety of ways, including labor mobility, a weaker Canadian dollar and fewer goods crossing the border.

The federal government's decision to impose tariffs on aluminum from Canada, Mexico and Europe isn't solving the main problem of dumping in the U.S. market, according to Alcoa, which operates the Intalco aluminum smelter near Ferndale.

In a written statement, Alcoa said "The administration's decision to apply tariffs on vital trading partners, including Canada, is unfortunate and does not address Chinese overcapacity. Alcoa asks the U.S. government to remove tariffs from fair-trading partners and work with its allies to address Chinese overcapacity, the root cause of the aluminum industry's challenges."

If a trade war with Canada does ramp up, it will also impact the Whatcom economy in other ways, said James McCafferty, a director at the Center for Economic and Business Research at Western.

During a joint press conference with the Prime Minister of Sweden on March 6, 2018, President Trump reiterated his plan to implement tariffs on steel and aluminum and talks about engining in trade wars with other countries.

"Uncertainty in any business leads to all sorts of attempts at managing it," McCafferty said. "Reduction of trade flows, sourcing, production and price are all levelers that could be pulled in a variety of ways. That is short-term. Long-term, capital investment and business activity location can be impacted."

What is exported into Canada?

There's a wide variety of products and commodities going through the Whatcom County border each day, according to a study based on data from Whatcom Council of Governments and put together by the Port of Bellingham.

According to the study, the top products going northbound and southbound through the Whatcom borders were vehicles, raw wood, finished wood products, agriculture and mineral products.

John Michener, an economic development specialist for the Port of Bellingham, said a lot of local companies also ship things across the border, naming Hempler's, Superfeet and Barlean's as examples.

Two Whatcom harvests on different sides of tariff debate

There are winners and losers when tariffs are imposed on different products, and Whatcom County has two major examples that illustrate the complexity of the issue.

Whatcom County has a booming blueberry industry. Canada hasn't imposed a tariff on blueberries, but if it did it would have a devastating impact on Whatcom County's industry, said Alan Schreiber of the Washington Blueberry Commission. That's because Canada is Whatcom County's biggest export partner when it comes to blueberries.

One of Whatcom County's largest harvests is raspberries. While local farmers do sell to some Asian markets, much of the focus is on the domestic market, said Henry Bierlink, executive director of the Washington Red Raspberry Commission. They've actually been exploring options on trying to slow the dumping of raspberries by other countries into the U.S., which he said has hurt farmers by keeping raspberry prices low. Those options include lobbying for tariffs on imported raspberries.

Wood tariffs also something to watch

Finished wood products was not on Canada's list of tariffs Thursday, but it is something to keep an eye on because it would impact Whatcom County. This area, particularly in Sumas, has several companies that take raw Canadian wood, create finished products and ship them back to Canada, said Michener.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz
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