It was a quiet day for the world’s stock markets when Donald Trump landed in Quebec in early June 2018 to join other leaders at the G7 summit at Charlevoix.
His attendance had been an open question because of trade disputes with other G7 countries, including Canada, and the Dow Jones index took heart in the fact that he showed up.
Trump noticed the bump in activity and was overheard remarking that a president could make a lot of profit. It was a joke. Perhaps.
But it confirmed that he follows the money.
That seems the most likely explanation for his remarkable about-face late Monday, having announced heavy tariffs on Canada and Mexico imports on Saturday, then reversing himself two days later.
When markets opened on Monday, the fear of a trade war sent the most exposed stocks tumbling. General Motors ended the day 3.5-per-cent off its opening price; Alphabet, Google’s parent company, fell 6.8 per cent. By the end of the day, all three major U.S. indices were in negative territory, apparently heeding the warning from the National Association of Manufacturers that Trump’s plan for a 25-per-cent tariff would threaten the supply chains that have made U.S. manufacturing more competitive globally and would put American jobs at risk.
An analysis by S&P Global Mobility suggested the price of a US$25,000 car imported from Canada or Mexico would increase by $6,250 for American consumers, if the tariffs were enacted.
After shelving the plan for a month, Trump came as close to admitting that he’d been forced to back down as he’s ever likely to.
“If people wanted to play the game right, it would be 100-per cent-certain that they’d (Canada) become a state. But a lot of people don’t like to play the game because they don’t have the threshold of pain,” he said at a press conference in the Oval Office on Monday.
Yet, as Prime Minister Justin Trudeau told business leaders at the Canada-U.S. Economic Summit in Toronto on Friday, the threat to annex Canada “is a real thing”.
Trump is moving fast to obscure his weakness, not his strength
The deferral is not peace in our time, it just means Canada is no longer the top priority.
In the same Oval Office press conference, Trump talked about a deal with Ukraine to invest in rare earth minerals, in exchange for continued military aid.
The following day he was suggesting Israel should give Gaza to the U.S. to allow it to dismantle the terror infrastructure and develop a seaside resort.
By Thursday, he was imposing sanctions on the International Criminal Court for accusing Israeli Prime Minister Benjamin Netanyahu of war crimes.
A PBS interview with former Trump adviser, Steve Bannon, from 2019 suggests what is going on.
Bannon said the real opposition to Trump’s agenda is the media and “because they’re dumb and lazy” they are only able to focus on one thing at a time.
“All we have to do is flood the zone — every day we hit them with three things, they’ll bite on one and we’ll get all of our stuff done, bang, bang, bang.”
“We’ve got to start with muzzle velocity,” he said.
This has been precisely the script in Trump’s first few weeks: pardoning the January 6 rioters, deporting illegal immigrants, purging the FBI, freezing funds for USAID, ending birthright citizenship for those born to illegal immigrants and so on.
Trump is the classic developer on the make: he sees himself as the heir to Thomas Jefferson, who negotiated the Louisiana Purchase treaty with France in 1803; or William Seward, who negotiated the Alaska Purchase from Russia in 1867. He is an opportunist who wants to use America’s economic muscle to force property deals with Canada, Greenland and, now it seems, Gaza.
But he improvises constantly. The ultimate endgame would be to cripple Canada economically and force it to apply to become the 51 state.
In the meantime, the imposition of tariffs would generate revenue to help extend the 2017 tax cuts that are set to expire this year.
His broader agenda is to compel manufacturers to re-shore their operations in the U.S.
Any of these outcomes would be a win.
At the very least, the looming threat of tariffs forces allies to do what Trump wants. In this case, they can be used as leverage to gain more access for U.S. dairy producers when the United States-Mexico-Canada free trade deal is re-negotiated. Jamieson Greer, the U.S. trade representative nominee said this weekhe plans to accelerate those talks ahead of the planned 2026 deadline, and that dairy access and the method of calculating country-of-origin content in cars will be his top priorities.
On the border issue that has been used as the premise for this crisis, the spectre of economic carnage has forced Canada to recognize a very real problem with money laundering, international criminal gangs and fentanyl, even if there is little evidence that it is flooding across the southern border. Orders establishing fentanyl as a priority for Canada’s intelligence community, listing drug cartels as terror groups and putting more resources along the border can all be cited by Trump as evidence that he “won” (even if Canada’s recently deployed Black Hawk helicopters are said to be virtually useless at night because they don’t have infrared sensors).
This is something that Canada should have been doing without Trump’s threat to turn the country into Argentina on the 49th parallel.
The Canadian historian J.D.M. Stewart called the events of the past week “a cultural awakening”, a reminder that the nation has a distinct culture and history.
But if Canada is to maintain that distinction, it has to overcome the inertia that has characterized the decades of talk about building major projects, developing the Arctic and removing interprovincial trade barriers.
The current government has de facto cancelled two pipelines and a dozen oil sands and LNG projects.
Canada remains at the mercy of the U.S., a customer that receives a discount as a result because we have limited capacity to sell to anyone else.
If there are proponents for new pipelines that would reduce that dependency, their approval should be guaranteed and fast-tracked in the national interest.
The lights are too often at amber in this country; they need to be switched to green because Trump will be back.
China further tightened export controls on its critical minerals, as part of its retaliation to the 10-per-cent tariffs Trump announced last Saturday. As the U.S. Geological Survey’s mineral summary for 2024 illustrated, the U.S. is reliant on imports for more than half of the 50 or so non-fuel minerals it needs for its industry. China is the main source for 24 of those; Canada for 23.
Despite Trump’s protestations that America doesn’t need anything from Canada, his administration has clearly identified this country as a strategically important asset that should be acquired by hook or crook.
The Wall Street Journal reported this week that Trump’s CIA will have a greater focus on the Western Hemisphere, targeting countries “not traditionally considered adversaries” to give the president extra leverage in trade negotiations.
We may not have been traditionally considered an adversary, but we are now — and we should reciprocate that sentiment.
Fortunately, having faced resistance from investors and business the first time around, the president’s position is unlikely to get stronger.
He is moving fast to obscure his weakness, not his strength. Policy is coming down through executive orders and emergency powers, rather than legislation that he knows might not pass.
The Republicans have tenuous control of the Senate and a narrow majority in the House that is unlikely to be stronger after next year’s midterm elections.
Gallup rates Trump’s inaugural public approval of 47 per cent as the second lowest on record since 1953, “bettered” only by his own performance in 2017.
Canadians need to stand fast and take comfort in the favourite saying of one of Trump’s more illustrious predecessors, Abraham Lincoln: “‘And this too shall pass’. How much it expresses. How chastening in the hour of pride; how consoling in the depths of affliction.”
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