Submitted by G. William Streeter April 11, 2025
I woke up this morning feeling invigorated and ready to talk “Tariffs”. I do not take this lightly and a lot of thought has gone in to what I intend to share. Fortunately, over the last nine days I have taken three long road trips that gave me more than 20 hours in total to consider what now appears to me to be a time of major changes to the life the citizens of our country. I do not say this lightly, but I feel privileged because my work career gave me a perspective that few today may have.
In 1960, I went to work for the largest manufacturer of tires and rubber products in the world. They had eight manufacturing facilities in Canada and hundreds more around the world in more than 20 countries. Duties and tariffs were prominent in world trade, protecting the investment that those countries and companies had made. For more than two years of my early career in accounting, I was a duty drawback clerk. This involved the calculating of duties in products sold by our Canadian Export salespeople. I would take the specifications and formulas of the materials in a tire and determine the amount of duty that had been paid on the ingredients in each tire. I would then prepare a claim to the government to get the duty money returned to our company on all of the tires that we exported. It was not unlike what the Canadian and American car manufacturers are going through when they are saying today calculating tariffs based on vehicles being CUSMA compliant. No, I am not offering to help them.
The first major change came with the Auto Pact in 1965, that integrated the Canadian and the U.S. automotive industries. Suddenly, tires could move back and forth across the border duty free, as long as they were to be installed on new motor vehicles in our two countries. This meant that the ingredients that we imported would no longer be subject to duties so when a tire crossed the border, it was duty free. But what about those ingredients that we consumed for replacement tires for Canada and for tires we exported. Both countries agreed to not put duties on chemicals, ingredients, materials etc. used in the production of tires. We closed our Export Sales group and the U.S. handled this business. This meant there were no more Duty Drawback clerks, and I went on to other assignments.
Automobile plants became single model producers and far more efficient, with much large model quantities sold in both the U.S. and in Canada. Car plant tire contracts were highly valued by tire companies as they were high volumes of only one size. Yes, and the cost of producing cars decreased.
Our company had five tire plants, a food wrap plant, an air foam seating factory, a conveyor belt plant, a hose plant, a v-belt factory, a molded and extruded goods facility and a fabric mill in Canada in the 1970s meeting the needs of the Canadian market.
Then, in 1989, came the first Free Trade agreement with the U.S. For the tire and rubber industry in Canada this was the closest thing to a death knell that one can imagine. Tire plants of our’s and our competitors were closing, and factories of major brands were being acquired by offshore competitors. I am not going to name any of the companies but cities that had tire plants for decades saw them being shuttered, They were; Kitchener 2, Toronto 2, Whitby, Barrie, Calgary, Hamilton etc. In addition, v-belts, hose and conveyor belt plants, molded rubber products all closed in Canada.
I retired in 1998 after 38 years in the tire and rubber industry and spent the next 12 years dabbling in doing what some refer to as “double dipping”.
Today, there are two tire plants close to the 401 servicing automobile facilities that now have a questionable future. In Nova Scotia, one manufacturer has made major investments in innovative products for electric vehicles. Will these plants survive?
Now, let’s look at the “World of Manufacturing” in 2025. I believe that the U.S. is in no better shape today than we were in Canada in 1989 when the high volumes of the U.S. market made Canadian manufacturing inefficient with costs so high they could not survive. The U.S. is striking out with tariffs in an attempt to “survive”. They are right, but China is the enemy. Those that are going to be hurt by their actions are mostly U.S. allies unless they are close to China as well.
Let me explain!
We do not get the real facts on what is happening in China. Yes, there is mistreatment of workers in some of the remote areas; yes, freedom of speech is limited. But the quality of life for 1.4 billion people has improved faster there than anywhere else in the world in the past 50 years. I have visited there twice, the last time was in 2019.
FACTS
– The US is so far behind China their manufacturing will never catch up in productivity, innovation and hence they will never come close to matching them in manufacturing costs.
– Massive car plants in China are multiple times bigger than in Germany, and the US and the Chinese have robotic manufacturing that is driving costs down and productivity higher every year.
– The fact is that Chinas factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea, and Britain.
– Since 2020 China has increased its share of Global manufacturing from 6% to 32%.
– Huawei, the manufacturing conglomerate, manufacturing items from smart phones to auto parts, opened a research centre in Shanghai for 35,000 engineers, that has 10 times the space as Googles Headquarters in Mountain View, California.
– There are massive Petro chemical and refinery facilities being built to produce plastics, polyester, vinyl and TIRES.
Opinion: The U.S. will not catch up, no matter what they do.
CANADA: Our competitive advantage is our Land Mass.
– Our future Is Agriculture (food production) and our Natural Resources.
– We have 29 of the 31 metals that the world uses and needs.
– Our future is in how we harvest, process and deliver these products.
– And more importantly “who do we team up with”.
Who would you pick?
Three Choices only.
– China
– The European Community.
– The U S A.
NOW IS THE TIME TO DECIDE!
