The main problem with the response from Canadian politicians in response to Donald Trump is that they clearly don’t listen.
You hear that in the responses that Canadian politicians offer in response to Trump’s tariff threats.
“It would be bad for Canada, but it would also be bad for American consumers,” Prime Minister Justin Trudeau said of Trump’s tariff threats.
Of course, Canadian politicians, economists and media pundits believe this to be true. The problem is that Trump and his team simply don’t believe that to be true.
This is something that was laid clear when Howard Lutnick, Trump’s pick for Commerce Secretary, appeared before the Senate Commerce Committee.
“This is not inflationary,” Lutnick said. “The two top countries with tariffs, India and China, to have the most tariffs and no inflation. It is just nonsense that tariffs cause inflation.”
You can scoff at what Lutnick said in his appearance, but this is a man who has not only run a major financial firm doing global deals but also rebuilt the firm after it was almost wiped out on 9/11. Trump is also surrounded by other successful people from the business world who are also believers in tariffs as a way to boost the American economy.
Dispute this idea all you want, but it’s crucial to understand where they are coming from if you want to be successful in dealing with the Trump administration.
“We need to grow domestic manufacturing,” Lutnick said to Michigan Senator Gary Peters on Wednesday. “As you said, Michigan is one of the great places where we build things and the car manufacturing went to Canada, went to Mexico. It is important that that come back to Michigan and come back to Ohio.”
To accomplish this, Lutnick said that the United States would use tariffs. Not the 25% which is aimed at taking on issues around the border, but lower-level tariffs aimed at moving production south.
If we show up in Washington with a message that tariffs are bad because they will make things less affordable for American consumers and the people we are speaking with fundamentally don’t believe that, then it won’t matter. The people around Trump have a different view of how tariffs work than what is generally considered the orthodoxy among economists, and we need to understand that going into any meetings with decision makers in Washington.
Sadly, it seems that most political leaders in Canada are either resembling the old general fighting the last war or are actively looking to do open battle with the Trump administration and America’s might.
The Americans are looking to realign how the American economy works and how global trading systems work. Much of that is driven by a desire to counter moves by China which is looking to expand its sphere of influence and flex its muscle on the world stage.
If you are wondering why the Trump administration is talking about taking over the Panama Canal or Greenland, then you need to understand the moves China has made in those regions.
For Canada, the issue is more complex.
We need to ensure we are aligned with Washington and not Beijing. That we are being fair trading partners with the Americans and not unduly picking fights with our biggest trading partners.
For years, under Republican and Democrat administrations, the list of trade irritants has been the same. Dairy, cultural protectionism, protection of our banks and other industries that we have full access to.
Yet, we have also seen the Trudeau government pass bills such as the Digital Sales Tax, the Online News Act and the Online Streaming Act. All three bills were opposed by the Biden administration and are fully opposed by Trump’s team.
We have taken the relationship with Washington for granted for far too long. We need to become smarter in how we engage going forward.