Free trade in North America is dead. Even if the tariffs levied this week are eventually brought down, any new trade deal with the U.S. can never be trusted, at least while President Donald Trump is in the White House. Canada must operate as if it doesn’t share a border with the largest economic power in history. Much of the wealth generated in Canada comes from this simple geography, masking the true damage of this country’s anti-business delusions.
Whatever the official reason — the flow of fentanyl and migrants into the U.S. — given for the Americans bringing in 25 per cent tariffs on most Canadian (and Mexican) goods, Trump’s goals are to restructure manufacturing, so that more production is done south of the border.
This was made evident in the reasoning for giving a 30-day reprieve on tariffs levied against the auto sector, which came at the request, not of Canada, but of carmakers, Stellantis, Ford and General Motors. The reason given by White House Press Secretary Karoline Leavitt on Wednesday was “so they are not at an economic disadvantage” when another round of tariffs are levied in April.
But Leavitt also said that relocating production remains, as she put it, “the ultimate goal,” and that Trump himself made the point directly to the automakers. “He told them that they should get on it, start investing, start moving production here to the United States of America, where they will pay no tariff,” she said.
Hardly surprising, as Trump has been very clear about his overarching goals with tariffs and trade. Speaking to the World Economic Forum (of all places!) in January, he openly declared his intent to launch worldwide trade wars.
“My message to every business in the world is very simple: Come make your product in America, and we will give you among the lowest taxes of any nation on Earth.”
Making the U.S. attractive for investment is good policy, a laudable goal, but then Trump followed with this: “But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff — differing amounts, but a tariff …”
Tariffs, which Trump said “will direct hundreds of billions of dollars and even trillions of dollars into our treasury to strengthen our economy and pay down debt.”
If the Americans want to damage their own economy by raising costs on their citizens, as tariffs are a tax paid by importers, not exporters as Trump suggests, eschewing the advantages and savings to be gained from global supply chains and from importing goods that can be more efficiently produced elsewhere, that is their choice.
But let’s not pretend that by abrogating the free trade deal that Trump himself signed, the president is only or even primarily concerned with what is, by all accounts, a minuscule flow of fentanyl from Canada to the United States. That’s not to say that Canada’s fentanyl problem, including being a hub for drug lords, isn’t a growing concern, and Canadian leaders do themselves no favours by pretending the problem doesn’t exist.
However, no amount of helicopters and drones monitoring the border, fentanyl czars appointed, or major drug busts completed, would appear to matter to the U.S. administration.
On Monday, American Commerce Secretary Howard Lutnick applauded Canada’s and Mexico’s efforts in stopping migrants at the border, but said more was needed on fentanyl. On Tuesday, he agreed the Canadians had made good offers that could lead to a deal, noting “I think there’s some room.” But by “room,” he didn’t mean the Americans would start respecting the trade agreement that was, again, signed by Trump, only that they would potentially lower the amount of the levy.
It remains unclear as ever what Trump wants. He has variously complained about restrictions on American banks operating in Canada, on this country’s supply management programs, and Canada’s lacklustre defence expenditures, all of which Trump has used to justify the tariffs.
Government sources told the Wall Street Journal this week that, while the president is, as the paper summarized, “legitimately concerned about fentanyl deaths,” bringing in the tariffs is also “a way to reset the trading relationship with the continental neighbors before renegotiating the U.S.-Mexico-Canada Agreement.”
Given that in the U.S. only Congress is permitted to levy tariffs, except in narrow cases of national security threats, using border security is a convenient reason to do what Trump clearly wants to do anyway.
And yet, what is most disappointing is not Trump’s tariffs, but how utterly unprepared Canada’s government has been in reacting to a threat that could be seen from miles away.
Instead of moving quickly to knock down internal trade barriers, deregulate the energy industry and slash taxes to make Canada an attractive place to invest, the federal Liberals have shuttered Parliament, announced billions for a high speed rail line and promised to double funding for the CBC.
Absolute insanity. These are the behaviours of a government that does not believe a prosperous Canada is essential.
Now, contrast Ottawa’s approach to the economy with Trump’s domestic agenda.
In his speech to congress on Tuesday, he talked of slashing taxes and regulations and, most embarrassingly for Canada, Trump outlined his plan to “drill baby drill.” He talked of “a gigantic natural gas pipeline in Alaska, among the largest in the world, where Japan, South Korea and other nations want to be our partner with investments of trillions of dollars each.”
Prime Minister Justin Trudeau has turned away several countries looking to import our natural gas, opportunities we must never give up again.
If Canadian leaders talked like Trump on the economy, it would be inspiring, and if they acted on it, managing the threat of tariffs would be as easy as swatting away a fly.
National Post