Prime Minister Mark Carney caught a lot people off-guard last week when he said Canada was eliminating some of its retaliatory tariffs on U.S. goods.
He of the “Elbows up!” campaign slogan was accused by, among others, Manitoba Premier Wab Kinew and Opposition Leader Pierre Poilievre, of lowering his metaphorical weapon of choice without getting anything in return.
The critics’ reasoning was that the move didn’t result in the U.S. dropping its high tariffs on Canadian aluminum, steel, cars and car parts. Mr. Carney had to resort to defending himself with a tortured analogy about late-period hockey tactics when the score is close and “you want the puck.”
Others argued, and we agree, that eliminating tariffs on American goods that are compliant with the rules of the United States-Mexico-Canada free trade deal, as the United States had already done for Canadian goods, was sensible.
It was a garden-variety negotiating tactic designed to restart trade talks with the U.S., and it succeeded. It will also have the beneficial effect of lowering the cost in Canada of a lot of grocery and household items as the drop in tariffs works its way through the system.
Keller: Mark Carney had no choice but to go ‘elbows down’ – all our allies already have
More to the point though, tariffs on things such as orange juice, kitchen cloths and imitation jewellery were never going to bring the world’s biggest economy to its senses or its knees. Anyone who thinks otherwise is probably not the right person to manage Canada’s trade negotiations.
The only requirement for Canada’s negotiators is that they maintain a firm grip on the fact that this country’s reality is changing rapidly. Old assumptions are useless, and rah-rah hockey metaphors come nowhere near capturing the complexity and risk of a moment in which the governing principles of Canada’s two biggest trading partners appear to be merging.
Premier Kinew was correct when he said in June that Ottawa needs to spell out its strategy for dealing with Canada’s second-largest trading partner, China. That country’s tariffs on canola, seafood and pork, implemented in retaliation for Canada’s tariffs on Chinese electric vehicles, steel and aluminum, are hurting.
Fixing Ottawa’s strained relations with Beijing has become all the more critical because of Canada’s broken trust with the United States under President Donald Trump.
But Canada has to forget the dream that China might transform itself into a more liberal and open country through engagement with the West. It must also accept that the United States is becoming less liberal, and less open.
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The Trump administration is trying to assert its authority over the U.S. economy. This week, Mr. Trump attempted to fire a member of the board of the Federal Reserve in his relentless effort to control the body that sets the short-term policy rate for the world’s biggest reserve currency.
Last week, he took a step toward nationalizing the giant chip-maker, Intel, when the government bought a stake in the company. He has since signalled he’d like to do the same with other major companies. He tries to punish corporations that don’t support his agenda, and rewards those that do. He is working with red states like Texas to create more Republican seats in the House of Representatives, in order to rig future elections in his party’s favour. He accuses judges that rule against his executive orders of political bias, and he controls the Republicans in Congress with an authoritarian’s deft touch. Tariffs come and go at his personal whim.
We could go on. The bottom line is that, in the not very far off future, Canada could well be a mid-size power caught between two superpowers whose economies – a tense mix of feral capitalism and command economy – will have more in common with each other than with that of any western democracy, and whose leaders are ruthlessly transactional and completely unreliable the minute their interests shift.
Navigating this will require diplomatic skill, political courage and tenacity. Policies must focus on Canada’s interests and Canada’s interests alone. It will take time to procure trade deals, and there will be setbacks when either superpower’s leadership decides to flex its muscles. There will be few consistent rules, if any, for Ottawa to follow.
This is no game, in other words. Metaphors about the angle of an elbow relative to the playing surface are too smug by half. Canadians and their leaders need to talk about the emerging world order in a serious and adult manner. The puck stops here.