Trade

It’s complicated: Trump’s trade tiff with Canada

On the campaign trail, Donald Trump had two targets: Mexico and China. The two, he said, were outsmarting America at every turn and leveraging the rules of bad trade deals and a weak White House to undercut American jobs. Canada, for the most part, nary received a mention.

But as President Trump closes in on his 100th day in office, Ottawa has become a prime target for his derision, with long-standing trade irritants taking on new life as the president’s stalking horse.

On dairy, Trump championed the complaints of some 90 Wisconsin dairy farmers to openly decry the motivations of his country’s closest trading partner. On lumber, the president declared that his country had been treated “unfairly” by the Canadians, and imposed a 20 percent import tax that may yet go up.

“Canada has been very rough on the United States. Everyone thinks of Canada as being wonderful — so do I, I love Canada — but they’ve outsmarted out politicians for many years,” Trump told a pool of reporters at the signing of an executive order on agriculture on Tuesday, deviating from his prepared script in the process.

The complicated thing is that Trump’s complaints on his much-maligned North American Free Trade Agreement aren’t new. In fact, they’ve been talking points from the Canadian left for years.

Trump’s insistence that D.C. has been “outsmarted” by the wily operators in Ottawa might be funny for trade critics north of the border, who have contended for years that Canada has always gotten the raw end of the deal.

Jack Layton, erstwhile leader of the New Democratic Party who died in 2011, spoke to left-wing magazine Canadian Dimension in 2003 to outline his policy on NAFTA, which he would frequently describe as the “softwood sell-out.”

“But maybe then we’ll get their attention.”

“If we said we’re going to put an export tax on our energy exports to the U.S. in retaliation for their excessive grain subsidies, their softwood lumber policy, demolishing the auto pact, anti-dumping of steel. Will they be pissed off? Absolutely,” Layton said.

“But maybe then we’ll get their attention.”

While Layton’s politics couldn’t be more at-odds with Trump’s — his successor, Thomas Mulcair, has repeatedly called the U.S. president a “fascist” — Trump appears to be taking a page out of his playbook.

News emerged on Wednesday that the White House was drafting an executive order that would yank America out of NAFTA, even before official notice to re-negotiate the deal had been filed.

Domestically, Trump has had trouble getting much of his agenda off the ground. Healthcare reform seems stalled, perhaps perpetually. Refreshing the tax code has yet to formally begin but may be ultimately out of the president’s control, as headwinds on the capitol may take his plans in a different direction than intended. Even his much-vaulted border wall is stalled by political gridlock by an apoplectic Mexico City.

Trade, then, seems like something that Trump can claim victory on in the short-term.

But while Trump’s comments over the past week have suggested some urgency in making movement on the Canadian trade files, Washington has yet to actually serve notice that it intends to renegotiate NAFTA.

Announcing an intention to withdraw from NAFTA triggers a six-month waiting window before action can be taken. Announcing intention to renegotiate takes just three months.

The media war — complete with early-morning tweets — coupled with Trump’s 20 percent lumber tariff, which would pull hundreds of millions from the pockets of Canadian wood companies in the short-term, is no doubt about applying pressure on Ottawa ahead of the impending re-negotiation announcement.

“We want to expand our export markets, so we’re now opening up the Asia possibility.”

Foreign Affairs Minister Chrystia Freeland, who has notably kept her grip on the file instead of passing it off to the more-junior Minister of International Trade François-Philippe Champagne, told reporters on a conference call from Germany on Wednesday that “I am absolutely firm and absolutely tough and strong.”

Canada has already threatened litigation over the softwood lumber tariffs, rejected Washington’s assertions on dairy, and have welcomed a renegotiation on NAFTA — underscoring in the process that there are Canadian complaints within the massive trade deal, as well.

In fact, Canada just slapped a 276 percent tariff on American-made drywall, alleging that American industry had been dumping the product into the Canadian market.

Through the cross-border sniping, ministers have quietly snuck away to the seat of American power to meet with Trump’s team, including senior advisor Jared Kushner and chief strategist Steve Bannon, to try and navigate the muddy waters.

But if the president is truly intent on making America great again — that is, bringing jobs back to the resource and manufacturing sector along the northern border — the next two targets may be oil and cars.

On automotives, a tightly-linked supply chain, made possible by provisions in NAFTA that forbid duties on many parts shipped across the border, securing some 120,000 jobs in Canada.

On oil, Trump has also attacked the energy provisions of NAFTA — just one of the many reasons why the deal is a “disaster,” according to the president.

But it’s unclear just what else Trump expects to get from Canada. Under the deal, Canada must not lessen the proportion of oil it exports to America — the current proportion is around 70 percent, although much of that oil is bought back by Canada after it is refined.

 

But it’s unclear just what else Trump expects to get from Canada.

Meanwhile, Canada is taking other meetings, as well: In China.

At a press conference with reporters on Tuesday, Natural Resources Minister Jim Carr touted a pipeline of senior Canadian politicians heading to China as evidence that his government is looking for new opportunities on other continents.

“We want to expand our export markets, so we’re now opening up the Asia possibility,” Carr, who is heading to China in June, told reporters.

Over the next week, Canadian officials are said to be meeting with their Chinese counterparts in closed-door meetings in Ottawa to try and make headway on a proposed Canada-China free-trade agreement, which could rapidly turn the fast-growing Communist nation into America’s rival for access to low-cost Canadian oil and lumber.

 

Cover: Photo by Chris Wattie/Reuters

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