Payback time starts on Canada Day.
That’s the day we get our own back on Donald Trump. That’s when we impose retaliatory tariffs on a raft of American imports – everything from steel to gherkins and Kentucky bourbon. That is our response to the ridiculous and punitive tariffs that President Trump has slapped on our steel and aluminum, using the ludicrous excuse that they threaten national security. But we’ll show them! We’ll make them bleed. Our national honour will be avenged. Canada, in the immortal words of Justin Trudeau, will not be pushed around.
On our nation’s 151st birthday, we stand on the brink of what could be the biggest trade war we’ve ever faced. But it would be wise to keep our war-fever in check. Trade wars seldom end at just one round of tit-for-tat. Sometimes they keep escalating until, like the First World War, the whole landscape lies in smoking ruins. And when the other guy has a cannon and you have a popgun, it’s not likely that your side is going to win.
“I believe Trump is a bear and we shouldn’t be poking him too much,” Bob Verwey, president of motorhome-seller Owasco, told a Commons committee earlier this week. “Please step quietly.” He’s worried about escalation and says his livelihood is on the line.
Robert Dimitrieff is caught in the crossfire, too. His company, Patriot Forge of Brantford, Ont., employs 250 people and makes specialty steel products for U.S. customers. Because it imports its steel from the U.S., the retaliatory tariffs mean the company will get clobbered twice – once when it imports the raw steel and again when it sells its products back to the U.S. They figure they’ll be out of business within months. “I am preparing for the worst and it’s not a good thing,” Mr Dimitrieff told the committee.
Most of us fell asleep during the lesson on tariffs in high school. We never thought of them as a matter of life or death. So here’s a very short refresher. Tariffs are designed to hurt the other guys, by making their exports more expensive. But for the same reason, they also hurt our side. They are generally irrational and mutually destructive. So when we hit back at Mr. Trump, we can end up hurting ourselves too. Jobs and businesses are destroyed.
Everyone is worried that this trade war could escalate to Car-mageddon. Car-mageddon is what happens if Mr. Trump goes nuclear: he retaliates by slapping a 25 per cent tariff on all cars made in Canada, including Fords and other American makes. That would add an average of US$5,800 to the cost of every car sold in the United States – almost US$45-billion annually. This would almost certainly shift much of our vehicle production south. Bye bye, Canadian auto industry; hello, recession. The TD Bank says a tariff of that magnitude could cost Canada 160,000 jobs – mostly in Ontario. John White, chief executive of the Canadian Automobile Dealers Association, says the result would be a “tsunami-like economic downturn.”
That’s a high price to pay for not being pushed around.
Managing the U.S. trade relationship – and averting smoking ruins – is now Mr. Trudeau’s most important job. The Canadian economy depends on it, as do his election hopes. It’s going to be a tricky act. People want him to stand up to the bully – but they also need him to be prudent. His efforts to date have not been a stunning success. NAFTA talks have gone nowhere. He took Ivanka to the theatre, but that didn’t help. Now he’s taxing imported U.S. pickles. Will that help? We’ll see. Our only consolation is that the rest of the world is equally perplexed about how to handle the vengeful two-year-old in Washington.
Everybody knows that Mr. Trump’s protectionist rhetoric is ignorant, hypocritical and deprived of facts. The only thing he’s good at is creating chaos. But so long as he’s around, we’re at his mercy.
Everybody has a different idea about what Canada should do (or should have done). Maybe we just should have asked Mr. Trump what he wanted and cut a deal. Maybe we should throw those dairy farmers under the bus. Or maybe we should just wait it out, until the crazy guy goes away and sanity prevails again. This seems to be quite a popular option. But that too is wishful thinking, according to people who know America well. This week, former prime minister Stephen Harper said that the new world order will be defined by by America-First politics and “rapid, unorthodox, populist political change.” In other words, Mr. Trump will go away but Trumpism is probably here to stay.
So happy Canada Day everybody. Enjoy the festivities, and don’t worry about a thing.