The Trump administration knows that nobody wins from trade wars and so will likely adopt a “somewhat measured” approach to imposing crippling tariffs on Canada, said Derek Burney, a former Canadian ambassador in Washington in conversation with John Ivison.
But he says the new president will react badly to Canada’s “pathetic performance” on defence spending.
“Trump will not stand for that. We’ve got to get our act together on that one,” he said.
Trump was re-elected as president on Tuesday, tapping into what Burney said is a “very sour mood” in the U.S.
But he said, while there are significant risks, Canadians should not overreact.
“The USMCA (United States-Mexico-Canada) trade agreement was negotiated by Trump (and) I would think any tariff that they impose unilaterally on Canada would violate that agreement. So, I don’t think we should start tearing our hair out too soon until we have an opportunity to see who the new players in the cabinet are going to be….Trump and his team are going to adopt a somewhat measured approach to trade,” said Burney, who was also former chief of staff to Prime Minister Brian Mulroney when the Canada-U.S. free trade agreement was struck in 1988.
“It’s not a one-way street. Trump says ‘tariff’ is the most beautiful word in the dictionary but anyone knows from history that that’s not the case. If you start imposing tariffs and retaliating with more tariffs, everybody loses, nobody wins. So, I think we’ve got to be alert and we’ve got to insist that the USMCA terms are lived up to.” he said. “The Americans have destroyed the (World Trade Organization’s) dispute settlement mechanism by not appointing judges to the appeal panel. Well, that wasn’t Trump. That was Biden. And it’s gone on for more than four years. It’s completely shattered any enforcement prospects of the WTO. The big thing we’ve got to hang our hat on is the dispute settlement mechanism of the USMCA. It says the Americans explicitly cannot avoid appointing people to rosters to adjudicate those panels.”
However, while Trump may not impose across-the-board tariffs as he has promised, Canada does have vulnerabilities – in particular, its failure to hit NATO’s two per cent spending target on defence, legislation that takes supply management off the table in future trade negotiations and the tax on digital giants recently passed by the Liberal government.
“I think our biggest vulnerability with the Americans is our pathetic performance on defence. This notion that we’re going to meet the NATO commitment within eight years is ridiculous. Trump will not stand for that. We should never forget that national security is more important in America now than it ever was under previous administrations that I dealt with. We’ve got to get our act together on this one. I mean, it’s just pathetic – our military is being described as hopelessly obsolete by American experts. That is not a good position of strength to begin any negotiation,” Burney said.
Despite Trump’s noted hostility towards alliances, Burney said he does not think he will pull out of NATO.
“I think that the Congress would stop that. The House may be a bit wacky but the Senate is still a stable of normal opinion. I don’t think anything that rash will happen. I worry about Ukraine. I worry about Taiwan with good reason. But I don’t see anything disastrous on the NATO front as long as countries make their commitments. And Canada is one of the biggest bloody delinquents.”
He said that supply management is another weakness when it comes to trade negotiations.
“We gave up a little in NAFTA, we gave up a little more in the USMCA, but we’re still talking about trivial modifications. We got something back from the Americans on sugar and sugar containing products. That’s a game that’s gone on for years, but I think we’re vulnerable and we’ve got to be ready.
He said the bill being considered in Parliament that protects the dairy, poultry and egg industries in future negotiations “makes no sense whatsoever.”
[email protected]
Twitter.com/IvisonJ
Get more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what’s really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here.