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May 16, 2017

Trump’s trade tantrums spell trouble for Trudeau

Donald Trump's "unhinged rhetoric" over trade agreement is creating headaches for Canada, writes senior television news executive Louis Cooper.

Trump NAFTA Trudeau

The political, economic and social connections between Canada and the United States of America are being kicked and stomped on. 

Canada’s Liberal Prime Minister, Justin Trudeau — son of a former Canadian PM, Pierre Trudeau — has been in office for a little more than a year.

South of the 49th parallel, Donald Trump has been the US president for a little more than 100 days.

The primary elephant in the room between the two nations is the North American Free Trade Agreement (NAFTA). It was supposed to make trade — that is, the exchange of goods and material between Canada, the US and Mexico (the latter also a signatory to NAFTA) — easier and maybe even cheaper for all concerned. NAFTA was also supposed to make it easier for certain goods to cross the three borders, faster and with less officialdom and paperwork.

And for a good many years it did just that, and all three countries did benefit from the arrangement. Then the US elected Donald Trump as President, and the man who liked making deals as a private citizen tried the same approach in his new role. In essence, Trump seems to want to either re-negotiate or scrap NAFTA.

I say seems because, depending on who he last talked to, Trump has a slightly different spin on the future of NAFTA.

It has been suggested by Canadian opinion writers, that Trump, as a frustrated President — blocked on Obamacare, forced to retreat on funding for a border wall, backed down on labelling China a “currency manipulator” and stalled by Congress on renegotiating on NAFTA — was searching for a thunderbolt to “celebrate” his first 100 days as President.

In a divided White House, the anti-trade-deal faction were reportedly pushing Trump to withdraw from NAFTA. It wasn’t until after a hastily prepared presentation by, among others, Agriculture Secretary Sonny Perdue, which included a map showing which areas of the US would be most affected by pulling out of NAFTA, that everyone realised those areas overlapped with people who had voted for Trump.

Trump later said he changed his mind on terminating NAFTA after speaking with Trudeau. That wasn’t the impression of the Prime Minister’s Office.

Back in Ottawa, Trudeau staffers were saying Trump told Trudeau he was “very much” considering re-negotiating the trade deal. Then there was the phone call between the two leaders about softwood lumber. President Trump had been surprised to learn that US tariffs would cause substantial job losses in Canada. Later reports talked of a cutbacks in home building in the US because the softwood lumber tariffs would add around $US3000 to the cost of a house.

People wouldn’t buy the house and US builders would be left without an income source.

For the moment, Canada is sticking to its “script”– it objects to the tariffs, and is ignoring the rhetoric. The nub of the softwood lumber dispute is that the bulk of Canada’s softwood lumber comes from forests owned by the federal government. In the US, the lumber comes from mostly privately held land and is more expensive. The US believes Canada’s softwood lumber is “subsidised” because it comes from government-held lands; an impression mostly caused by the fact Canadian lumber is cheaper.

Then there was the dairy dispute. Trump was in Wisconsin when he heard the story about that state’s long-ailing dairy industry. Wisconsin farmers had found a way into a corner of Canada’s protected dairy market, until Canada’s dairy boards undercut Wisconsin prices.

Trump saw it all as Canadian cheating pushing US farms out of business. It was pure and simple politics: Trump could be shown as standing up for beleaguered farmers.

A former Canadian ambassador to the US, has voiced fear that Trump is tailoring his remarks as “a bit of a shakedown”.

The Canadian government of Justin Trudeau can’t tangle with Trump the Tweeter, but Canada and US business leaders have to start talking out about the impact of “unhinged rhetoric”.

As the former ambassador noted: “Mr. Trump and Mr. Trudeau are talking. As long as the channels are open at the top, we’ve got a reasonable shot at keeping this on the road.”

*This article initially appeared in John Menadue’s Pearls and Irritations

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8 comments

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8 thoughts on “Trump’s trade tantrums spell trouble for Trudeau

  1. Wayne Robinson

    ‘NAFTA was also supposed to make it easier for certain goods to cross the three borders, faster and with less officialdom and paperwork’.

    Come again? I thought there were only two borders, Mexico/America and America/Canada. When did Canada and Mexico get a border?

    1. Keith1

      I guess that border is the United States itself. This is part of the unfairness of it all – the other two have the USA between them – they don’t have to build a wall.

    2. Zarathrusta

      Goods still pass a Canada / Mexico border if they arrive directly by plane I suppose, or it could be referring to the separate Canada / Alaska border as the third. Don’t expect rational from the US at the moment.

      1. Wayne Robinson

        Or I suppose another possibility is that the western American states had seceded from the Union and joined Canada, giving Canada a border with Mexico (I might have missed it, I generally just skim the newspapers).

        It would make the Great Wall of Trump expensive though. Trump would need to extend the wall along the western states and then along the Canadian border.

  2. Charlie Chaplin

    “The nub of the softwood lumber dispute is that the bulk of Canada’s softwood lumber comes from forests owned by the federal government. In the US, the lumber comes from mostly privately held land and is more expensive. The US believes Canada’s softwood lumber is “subsidised” because it comes from government-held lands; AN IMPRESSION MOSTLY CREATED BY THE FACT CANADIAN LUMBER IS CHEAPER.” (My emphasis)

    WOW! And there it is, folks, the lie at the heart of all free trade rhetoric: “private” doesn’t equal “competitive”, and the Americans know it!

    1. Gavin Moodie

      No private enterprise is not necessarily more competitive than public provision. And capitalism has bigly waste in bankruptcies.

      But in this case the yanks argue that Canadian governments subsidise lumber by not charging enough to log on Crown land. USA forrest owners sell logging rights by auction while Canadian governments sell logging rights by tender. Included in the tenders are responsibilities to maintain access roads, fire abatement, pest control, etc. which are more complicated to cost than a simple auction price.

      Nonetheless, the World Trade Organisation has ruled in Canada’s favour a few times.

  3. AR

    Pity anyone with so long a border with the Benighted States under the current regime, esp with about 77% of the population living within 100 miles of that fracture line.
    Good luck Justin.

    1. Gavin Moodie

      Indeed, and I think about 75% of our ‘foreign’ trade is with the USA.

      I am starting to think Canada’s relations with the USA during Trump’s administration will have to be like Finland’s relations with the Soviet Union during the cold war. Basically, we’ll have to comply with as much as our bigly bully insists.

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