On February 1, Donald Trump signed an Executive Order authorizing 25% tariffs on all Canadian exports to the United States, except fuel, effective Tuesday, February 4. It also authorized 25% tariffs on Mexico. The “carve out” for fuel was only partial, with a ten percent tariff applied, presumably to lessen the impact on fuel prices in the United States. As recently as Thursday most commentators and advisors had been reassuring Canadians the tariffs wouldn’t happen or, if they did, would be much more selective and smaller. This, despite very clear messaging from Trump the tariffs were coming at the level implemented. The Executive Order also stated that if Canada or Mexico retaliates with their own tariffs the United States may increase the level of these tariffs.
The Government of Canada responded with 25% tariffs on a range of American products imported into Canada, as well as announcing additional tariffs on a much larger group of products effective in twenty one days.
On February 3, Trump announced a thirty day “pause” in the tariffs following conversations with Prime Minister Trudeau. This followed a similar deal with Mexico announced earlier in the day. Both these postponements were linked to “progress” in enhancing security at the U.S./Mexico/Canada border. In Canada’s case, it seems to be recognition of the border security initiatives the Canadian government announced last year, along with the appointment of a “Fentanyl Czar” and a commitment to increased cooperation between the two countries combatting drug smuggling at the northern border. How these tiny additions to the 2024 border security package would justify the threat and then removal of the nuclear option of a trade war remains a mystery and it’s hard not to feel Canada gave very little to achieve the pause. That said, Trump’s spokesperson, as well as the herd of devoted Trump supporters in the media, are trumpeting it as another great win for the President (right after beating up on little Colombia). Whatever I might think of that, it makes little sense to poke the bear at this point.
Now the conversation has turned to: “why are they doing this to us?”. Certainly, nothing in Trump’s statements justifies this level of action against Canada. The claims it is justified by the fentanyl epidemic in America, or the flow of undocumented immigrants into that country, simply don’t hold up when the data for Canada is consulted. Only a tiny percentage of fentanyl and undocumented immigrants come across the Canadian border, not to mention the flow in the other direction of undocumented immigrants, drugs and guns into Canada.
Trump also cites the trade imbalance between the two countries as part of his claim Canada is ripping off America. But, again, the data simply doesn’t support that. First, the numbers he quotes are wildly inconsistent with the facts even as documented by the United States government itself and, second, that doesn’t take any account for America’s huge surplus in services imported by Canada. Also, much of the disparity in goods is the result of America’s purchase of oil from Canada, oil it purchases at a significant discount by the way and, to be clear, America is not purchasing this oil because it wants to help Canada. It’s purchasing it because it makes good economic sense for America. If it wants to stop, it can and Canada will sell it elsewhere.
Some are now claiming America’s tariffs are designed to precipitate an early re-negotiation of the U.S./Canada/Mexico free trade agreement, although it’s not at all clear how that works. Why, if that is the goal, wouldn’t America simply have advised Canada and Mexico it wants to re-open the treaty early, allowing them to respond, perhaps positively, without the enormous disruption of a trade war? Also, with these actions, America is giving a clear signal to the world its signature on an agreement is worthless. What’s the point of negotiating an agreement with Donald Trump’s America if you don’t believe it will be honoured?
As someone who knows a fair bit about negotiations, I’m pretty sure this has little if anything to do with some kind of grand American negotiation strategy. It just doesn’t fit. At a minimum in any negotiation you want your opposite to have a good understanding of your objectives in the negotiations. Otherwise there is absolutely no path forward. And at this point Canadians are left to speculate on what the Americans want with almost no clarity coming from the other side.
From the day he won the election, Donald Trump has been saying he would like Canada to become the 51st state of the United States. I’m sure he does although I’m equally sure he hasn’t thought through the implications both for America and Canada, relying instead on some simplistic notion of “Manifest Destiny” or, more likely, fantasies of unlimited resources and water up north.
Canadians are experiencing a whole range of emotions in response to Trump’s aggression although I think anger, tinged with disappointment, has now become dominant. In one form or another, Canada has had a free trade agreement with the United States since the 1960’s. I remember the debates on the wisdom of linking ourselves so closely to the behemoth to our south; the concerns about Canadian sovereignty, Canadian culture, and Canadian values. But the first sixty years seemed to go pretty well, although the addition of Mexico in the 1990’s introduced new challenges and complexities for both Canada and the United States, and likely lit the spark that flared into American and, to some extent, Canadian opposition to free trade. But it is undeniable, although many try, that the North American free trade agreements led to economic growth and prosperity in all three countries. And for Canada at least, the fears about American hegemony faded until they were almost invisible.
It’s no exaggeration to say America and Canada have more in common than any other two sovereign nations in the world. And that commonality has lured Canadians into a dangerous disregard for the ultimate rules of relations between nations. First Lord Palmerston, and then Charles DeGaul, were clear that nations don’t have friends, just interests, and that, to the extent friendship does exist between two nations, it is never eternal. Because of the similarities between our two populations, our proximity, and the decades of peaceful, successful, co-dependence it’s not surprising Canadians lapsed into a rose tinted view of the relationship, something, by the way, the Americans never really did. At best, Canada was an afterthought, if any thought at all, a gentle, friendly and harmless giant to the north, one that could easily be dismissed with a stereotype of being the nice, but boring, cousin. The truth is Americans have never appreciated what an enormous advantage it was to have Canada on its northern border. Canada: safe, reliable and peaceful.
And if we needed any proof, the reactions south of the border to Trump’s outrageous provocations and insults provide it. Where are our American friends? The silence is deafening. Almost no American political leader (with the exception of the Governor of Michigan, Gretchen Whitmer) has voiced outrage over Trump’s behaviour and proposals. That’s also true for American columnists even in the most liberal American papers. Their criticism is almost exclusively focused on any potential damage to the United States of a resulting trade war. Not a word of solidarity with their Canadian friends, neighbours and cousins. So, Canada, it’s time to wake up.
No one is going to come to our rescue. Not the British Empire this time. Not our Commonwealth buddies. And certainly not NATO tip toeing around the vulgarian Trump. Yes, there will be statements. You know the kind: expressing concern, calling for dialogue, offering support for a rules based international order. And even these will tread oh so carefully around the fragile ego in the White House.
So, what should Canada do? For starters understand what we are dealing with. All efforts to find a reasonable, rational approach by America will fail. We are facing an insecure narcissist whose very existence depends upon endless validation and praise. Some may remember, shortly after Trump was elected, he was asked about Canada. He smiled and said something to the effect “we’re going to have some fun with Canada”. Most ignored it, but here we are. So, to be clear, there is no straight line forward. It’s not about border security; or trade imbalances; or defence spending; or claims American banks aren’t allowed to operate in Canada; or even about Canada becoming America’s fifty first state, and any effort to address any of these, whether through correcting misinformation or taking steps to seemingly address his imagined grievances will simply lead to new complaints; new lies and new exaggerations. As long as we play that game, we lose.
And the thirty day “reprieve” on tariffs is just that, a reprieve, leaving the threat ready to be resurrected as often as Trump wants. In other words, his “fun” with Canada could find us in a perpetual national crisis with each new threat causing us to ramp up our outrage and run frantically for cover. Eventually we’ll be exhausted and may even end up accepting things we should never accept.
There is a better way. It needs to be quietly and carefully developed and implemented. It may include playing for a bit of time to allow us to be better prepared to face each outrage, in which case the thirty day reprieve may be extended by months although most likely not years, but it also includes realizing the time will come when we must call his bluff. And, as any good negotiator knows, you don’t call a bluff unless you are ready to live with the worst possible outcome.
There’s another piece that no one is talking about: increasing spending on defence. Thus far, any discussion of this is around meeting the minimum NATO expectations and perhaps molifying Trump by doing so. But there’s a much more compelling reason for massively increasing Canada’s spending on defence: the actual military defence of our homeland. We have long realized there was a threat of some territorial dispute with a revanchist Russia, or China interested in the Northwest Passage. Well, now it’s time to add a new possible adversary and, as unthinkable as this would have been even a few weeks ago, America is on that list. As appalling as it is to acknowledge, it is not out of the question Donald Trump’s America could launch a military challenge to Canada’s sovereignty and, while even at the best of times it would be a David and Goliath contest, Canada must be prepared to respond militarily if necessary. That requires massive increases in the Defence budget and a refocussing Canada’s spending priorities. And it needs to happen quickly.
Mine is the last generation with any real connection to the Second World War. Prior to that war Canada was a largely rural country with a population of about ten million. Yet when challenged those people, my parents generation, rose and created one of the mightest militaries in the world, contributing greatly to the defeat of fascism and the victory of democracy.
They did it then. We can do it now.
Just sayin
GH
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