Canada and Mexico got another month's reprieve this week as President Trump exempted both from previously announced steel and aluminum tariffs for another month. When asked about this recently, U.S. Commerce Secretary Wilbur Ross said that the negotiations were continuing, particularly around NAFTA, where speculation has been mounting that a deal is close to being done. Technically, all exemptions now are temporary, but President Trump has indicated that exemptions could become permanent in the context of a renegotiated NAFTA.
There has been some reporting recently that ties the macro topic of trade negotiations into a practical example: A suspension bridge — the Ambassador Bridge — that connects Detroit with Windsor, Ontario. More than 25 percent of all the merchandise trade between the U.S. and Canada crosses that bridge, to the tune of about $100 billion annually. For context, that figure is just under the entire amount of trade the U.S. does with the U.K. annually.
The bridge was built in 1929 and has the interesting distinction of being a very public infrastructure link that happens to be privately owned. Due to its age and the increasing trade volume between the two countries, it needs to be replaced. And as it happens, both the private bridge owner and the Canadian government are planning to build new bridges. To bring Canada's favorite pastime into the mix, the proposed Canadian bridge is being called the “Gordie" after the Canadian hockey star who spent most of his professional career with the Detroit Red Wings.
We all know that most bridges contain a lot of steel — and this is where the situation gets even more interesting. The private owners of the Ambassador Bridge are asking the administration to rescind a waiver issued in 2012 to the requirement that Canadian bridges must be constructed of U.S.-produced steel. And, to make things more complicated, one of the bidders on the construction contract is Aecon Group Inc., a Canadian company that is currently under consideration to be acquired by a Chinese firm.
My View: With all the back-and-forth controversy going on right now regarding trade, it's hard to believe we're talking about potentially suspending “Buy America" rules to allow a Canadian-domiciled company owned by a Chinese entity to build a bridge honoring an athlete who is a hero on both sides of the border. Honestly, if that were a movie plot it would be so far-fetched it might not even get made. I guess it shows that we're living in times where the old adage is truer than ever — you just can't make this stuff up.
For more City National commentary, subscribe to our newsletters.
If we can help you with any Foreign Exchange needs, please email email@example.com or call (800) 447 4133.
|The information in this report was compiled by the staff at City National Bank from data and sources believed to be reliable but City National Bank makes no representation as to the accuracy or completeness of the information. The opinions expressed, together with any estimate or projection given, constitute the judgment of the author as of the date of the report. City National Bank has no obligation to update, modify or amend this report or to otherwise notify a reader in the event any information stated, opinion expressed, matter discussed, estimate or projection changes or is determined to be inaccurate. This report is intended to be a source of general information. It is not to be construed as an offer, or solicitation of an offer, to buy or sell any financial instrument. It should not be relied upon as specific investment advice directed to the reader’s specific investment objectives. Any financial instrument discussed in this report may not be suitable for the reader. Each reader must make his or her own investment decision, using an independent advisor if prudent, based on his or her own investment objective and financial situation. Prices and availability of financial instruments are subject to change without notice. Financial instruments denominated in a foreign currency are subject to exchange rate risk in addition to the risk of the investment. City National Bank (and its clients or associated persons) may, at times, engage in transactions in a manner inconsistent with this report and, with respect to particular securities and financial instruments discussed, may buy from or sell to clients or others on a principal basis. Past performance is not necessarily an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.|