For many Americans, the recent rise in inflation, caused by global supply chain issues, has become a major focal point for the start of 2022. However, just as things are starting to smooth out, the Canadian Trucker Protest, also called the “Freedom Convoy”, is threatening to disrupt supply chains further and increase inflation.
Quick Background: A convoy of Canadian truckers recently shut down the most important trade bridge between the USA and Canada in Ottawa to protest vaccination requirements and public health measures. For over a week, they have closed the key bridge connecting Canada to the U.S.
The bridge that they are blocking - the Ambassador Bridge - connects Ottawa and Detroit and carries over 25% of all trade between the two countries. That is roughly $360 million in cargo daily.
What Are Local Leaders Saying?
Detroit is home to some of the biggest American auto manufacturers in the country. Both Ford and Toyota have recently halted production at their facilities citing the protests as blocking the supplies they need to continue producing American made cars.
As production slows, jobs and hours get cut. Jeep has already had to cut shifts short in their factories in both the U.S. and Canada. GM has also had to cut shifts as the disruption in supply chains continue to limit the parts they need. For many local, hard working Americans, seeing job and hour cuts happen right as the economy is starting to recover from the pandemic is disheartening.
The Economic Toll
Recent projections estimate that the US auto industry faces losing as much as $988 million because of the blockade. But it's not just American made cars that will see negative effects. The Canada trucker blockade is likely to increase inflation in the United States because of decreasing supply and increasing demand.
Inflation can occur when prices rise due to increases in production costs, such as the price of raw materials or transportation costs. The Canadian Convoy is making both happen at the Canadian border. A surge in demand for products, or in this case a decrease in the supply of a product, can cause inflation as some consumers are willing to pay more for the product.
The longer these protests continue the greater the risk of increasing inflation in the United States. And that means, higher costs for food, higher gas prices, and more expensive American made products.
Learn more about the economic impacts of the Canadian Trucker Protests Here