By Ray Rivers
January 31st, 2926
BURLINGTON, ON
One day Canadians may actually be thanking Donald Trump for slamming Canada with tariffs and shaking us into standing up for Canada. CUSMA re-negotiations won’t be completed this year, but it is unlikely it’ll be anything like previous ‘free trade’ deals. And this past year has been one of economic uncertainty which we’d all like to move past.
The South Korean automotive giant Hyundai had once made cars in Canada. But with the implementation of the 1989 Canada/US free trade agreement, unlike Japanese car makers Toyota and Honda, it left only to set up operations in the USA.
So, just last week the Carney government released information that signifies the potential return of Hyundai. The details have yet to be released of a memorandum (MoU) with the South Korean government, but it sounds like Hyundai and other South Korean industrial giants are expected to bring their operations over here. In the mix are other potential manufacturing opportunities including Canada’s new submarines, EV batteries and vehicles, satellites, AI and nuclear technology.
Algoma Steel has begun to use “arc” based technology in its steel plant in Sault St. Marie.
This announcement comes on the heels of a partnership agreement between Sudbury’s Algoma steel and the Hanwha Ocean submarine maker for a quarter billion dollar investment in Algoma and a long term term profit-sharing agreement. Algoma had recently been forced to close down some of its older operations and lay off staff, in part because of the 50% Trump tariffs on steel products from Canada.
This agreement, should it pan out as expected, embodies the kind of message that Mr. Carney had previewed with his well received Davos address. Middle nations finding their own way to economic welfare and security out from the control of their powerful and more autocratic neighbours.
The intention is for the Canadian Navy to have a fleet of12 submarines.
Ending free trade with America may well be the best thing Canadians will have done for their economic future. One door opens when another shuts.
Ray Rivers, a Gazette Contributing Editor, writes regularly applying his more than 25 years as a federal bureaucrat to his thinking. Rivers was once a candidate for provincial office in Burlington. He was the founder of the Burlington citizen committee on sustainability at a time when climate warming was a hotly debated subject. Ray has a post graduate degree in economics that he earned at the University of Ottawa. Tweet @rayzrivers
Background links:
Video – MoU – Korea Agreement – More Agreement – Algoma –
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Trump doesn’t appear to want to buy cars, or a lot of things from anyone, including us, and he taxes everything he does buy. He has said he wants to make all the cars sold in the US.
Some things Trump needs and wants he has been stealing lately. Or threatening others with the same treatment.
500,000 cars is a lot, and a lot of cars are sold in the US every year, including by Hyundai. Did Rod not read the Graham comment, or did I miss something?
And Gary, where is your interest survey to judge Ray? The friends you tout are only making the same piling-on tone and say no sensible argument. Their intention in my opinion is to set up Michael to use a totally out of proportion financial example to make all the proposed projects and the dollars involved as worthless and bad business.
One thing Ray consistently suggests is that the world economy is radically changed. The way things worked before Trump is not the political economy of before, and international investment risk planning does not spin around the US scale all the time.
The the old standard rules used to determine what is a “good deal” and what is a “bad deal”, according to Michael, have to be refashioned, around what Carney, and Ray, speaks to as the middle power size nations, to find their own existence among themselves.
This can involve smaller scale deals, project capital structure cost and risk sharing, long timelines and commitments, and a lot of possible novelty in decisions. This risk and cost sharing by the partners is what makes it possible to deliver the scale wanted and needed.
I don’t think that Algoma, its investment in new technology, and Algoma workers think the added investment, the location needing the jobs, and the future idea of confidence, will think it as, Michael does,not a deal with our biggest trading partner, and most concerning a bad deal..
He prefers it seems, more dealing with Trump, our biggest trading friend, for a good deal.
Why would Korea or anyone else open an automobile plant in Canada. They wouldn’t be able to sell them to the world’s largest free market right next door. Does that sound logical to you?
Wow. Judging by the interest shown your column to date, it ranks lower than Melania’s new movie. I thought I would write this just so your publisher wouldn’t shut you down for lack of interest. Otherwise, what are friends for?
I doubt that Hyundai will be building a car plant here!
They just opened a megaplant that will produce 500,000 cars a year in Savanna Georgia and an EV battery plant soon also in Georgia.
Liberals love promoting MOU’s, how about some real contracts, with real terms with real results.
Firstly, this is standard fair when any country procures defense equipment, nothing special here, its called Industrial and Technological Benefits or ITB. So when country A sells defense equipment to country B, the seller, Country A has to make an investment or ITB into Country B. This has gone on for decades and is part of any large military procurement.
In this case Hanwha says it will purchase up to $50M in steel from Algoma if Canada buys their subs. To put this in perspective it’s a small order for a steel company when their annual revenue is 2.4 Billion! Canada’s trade with the US is $900 Billion, so let’s get real about a “potential order” for $50 million. I would note this commitment to Algoma obligates the Canadian’s to purchase subs, buy infrastructure and maintenance from Hanwha for the lifecycle of the subs – likely a 30 year commitment and billions of dollars to Hanwha!
The other part of the deal is that Hanwha will invest up to $250 million in Algoma to produce a new beam mill, and Algoma will be required to pay Hanwha 3% of net sales for the next 10 years.
To put this in perspective, under the Carney Liberals $84 Billion in investment left Canada between January and May 2025. So in the next few months the Liberals need to announce 360 of these deals to make up for the investment flowing out of Canada!
With the information available, it looks like Canadians are on the hook to Hanwha for billions over a very only time for a relatively minor steel order. Not a good deal.
In summary, another MOU, a big press release about very little, no jobs and no deal with our biggest trading partner, and most concerning a bad deal.