Some readers reacted to my column about “Tumultuous times with Trump” by asking, “So what should Canada do?” There are not a lot of good options available when dealing with a U.S. leader who pays little heed to international trade laws, or to alliance considerations, or facts. Donald Trump’s disdain for Canada is as abhorrent as his unilateral concessions to Russian President Vladimir Putin.
Here are my suggestions:
1.After nine years of domestic neglect and global irrelevance, and now a government in limbo, Canada seems incapable of mounting a serious response to the provocations and threats by the mercurial U.S. president. An early federal election would be most welcome. Dramatic change is essential because of the deep rut we are in — sluggish economic growth and feeble security. Natural resources — our singular strength — have been squelched for more than a decade by blocked projects, excessive regulations, and will-o’-the- wisp climate fantasies. We must unleash our resource base and required transmission facilities to spur investment and create options to diversify our trade. Asian and European markets literally begged for access to our LNG but were rejected. Now the Americans are moving rapidly to fill the gap. Since we already subsidize our oil exports to the U.S., we should have no difficulty competing against them in Europe and Asia. And we need to augment security, especially in our Arctic.
2. Relationships are key to success in foreign affairs and are needed today. This was Brian Mulroney’s forte. He operated on the premise that the two most important functions for any Canadian prime minister are national unity and managing relations with the U.S. Mulroney established extraordinary access and influence with both Ronald Reagan and Reagan’s successor, George H.W. Bush, which yielded exceptional benefits for Canada: the Free Trade Agreement with Reagan and the acid rain accord (officially known as the Canada-United States Air Quality Agreement) and NAFTA with Bush, Sr. He persistently pushed Reagan on acid rain but to no avail. But because Bush was a summer resident in Maine, he had direct knowledge and concern about the damage caused by acid rain. The Senate majority leader, George Mitchell, a Democrat, was also from Maine. He helped secure the necessary Congressional support.
On NAFTA, when the U.S. Trade Representative, Carla Hills, tried to keep Canada out of the negotiations, Mulroney went over her head and made a persuasive pitch to president Bush, who overruled his cabinet colleague.
It may be difficult to establish a constructive relationship with a president who marches to an “America First” drum, but Canada must try, while building a network of support among select cabinet members and prominent Congressional representatives. Senior business leaders should vigorously support this effort.
3. Our premiers should concentrate on the governors of the 17 states for whom Canada is their major export market, as Ontario Premier Doug Ford did effectively at the recent governors’ meeting in Washington. Ford is commendably helping offset leadership uncertainty in Ottawa these days.
4. The government has presumably engaged top-flight U.S. trade lawyers to litigate the illegitimacy of Trump’s tariffs based on spurious, fact-free complaints, using the USMCA, the WTO and U.S. courts, as appropriate. Even though the chances of success may be remote with a “might is right” administration that openly flouts all international trade norms, the action can be worthwhile if only to challenge the crude narrative being aired by the Trump administration and its fellow travellers, and to rally public and media support. The threat of tariffs is already disrupting business and investment decisions in Canada.
5. When U.S. tariffs are implemented, Canada must be ready to deploy a rational and calibrated retaliation plan, preferably in concert with the EU, Japan and South Korea, for example.
6. Trump rants about “300 per cent tariffs on dairy exports to Canada.” In fact, dairy exports are subject to a mutually agreed quota, as are many U.S. farm products. Above the quota, tariffs can run to 200 or 300 per cent but, as no products are sold to Canada outside the quota, no exports really pay a high tariff. (The Trans-Pacific Partnership (TPP) provided an increase to the quota, but the U.S. refused to join this agreement.)
When it comes to actual numbers, the U.S. sold $756 million in dairy products to Canada in 2023 while Canada sold $293 million to the U.S. — numbers that directly contradict Trump’s concern about trade deficits.
7. We should not overreact to Trump’s condescending, even insulting remarks about Canada. He relishes the reaction, and it stimulates his MAGA base. Since he does not value the interdependence of our two economies, we should wage a war of fact, not emotion, to ensure that more Americans, especially those directly benefitting from our mutual economic relations, resist actions that will ultimately be damaging for consumers and producers in both countries. Five decades of mutual benefit should not be jettisoned by the zany impulses of one man.
As our Ambassador in Washington, Kirsten Hillman, diplomatically stated: “We need to be pragmatic and need to be able to find a path that helps the president achieve the goals he is trying to achieve in a manner that also benefits Canada.”
8. Trump’s position on trade deficits is deeply flawed. As Phil Gramm and Donald J. Boudreaux wrote in the Wall Street Journal: “Trade deficits don’t stifle growth, nor do trade surpluses foster it.” They concluded that, “Fixating on the trade deficit, an imagined problem, will only draw the matter into a trade war that could overpower the positive effects of the Trump economic program.” In concert with other allies and through top-level relationships, we should persist in making this case candidly to the administration.
9. Some say Trump’s verbal abuse and threats are simply a negotiating tactic used by the “Art of the Deal” master to strengthen America’s hand in a renegotiation of the USMCA. The problem is that his intensions are already convulsing market stability — the anchor for any economic growth plan.
10. Let’s hope our spectacular hockey win over the U.S. will inspire similar resolve and skill at the negotiating table.
National Post
Derek H. Burney is a former 30-year career diplomat who served as Ambassador to the United States of America from 1989 to 1993.