A man holds the Canada flag on a hockey stick at the Canada/U.S. solidarity rally at Peace Arch Park in Surrey, B.C., on April 5.Nav Rahi/The Globe and Mail
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
What’s the endgame of Canada’s Trump-induced economic nationalism? Is it a short-term leverage with the U.S. administration in bilateral trade negotiations? Or the start of an anti-American protectionist movement that will be a boon to cronyism?
If the former, while understandable and possibly helpful, it must be limited, strategic and short-lived. If the latter, it should be stopped in its tracks.
Canada’s retaliation against President Trump’s tariff threat began with tactics that grabbed headlines and the attention of the U.S. administration. Ontario Premier Doug Ford removed U.S. wine and spirits from the province’s liquor stores, as have many other provincial premiers, cancelled Ontario’s deal with Elon Musk’s Starlink for rural high-speed internet, and threatened to impose tariffs on U.S. electricity exports.
Such action has been bolstered by populist anti-American rallying cries likening Canada’s circumstances to a war. Jagmeet Singh, leader of the federal NDP, tapped this line of thinking when he proposed resurrecting victory bonds sold in the First and Second World Wars, a sentimental idea time passed long ago given Canada can efficiently raise public monies through our capital markets.
As soon as Canada’s new Prime Minister Mark Carney took office, he shook his political fist at the U.S. administration by ordering a review of Canada’s $19-billion deal with the U.S. firm Lockheed Martin Corp to buy F-35 fighter jets for the Royal Canadian Air Force.
Such measured acts wrapped in populist rhetoric that satisfies the public’s demand for a response can be quickly reversed (see Ontario tariffs on electricity exports to the U.S.) should it turn out that President Trump is just punking us and the world on tariffs.
Yet our nationalist rhetoric has cut a path to more worrisome consequences that have seen governments shunning U.S. firms that invest here, create jobs here, spur innovation here and are needed to support economic growth.
Ontario has imposed new restrictions on its procurement policies, restricting U.S. businesses with less than 250 employees in Canada from bidding on provincial contracts. Why firms with 100 employees or 25 even don’t measure up is unclear.
“Should [U.S.] tariffs be lifted,” reads the restriction, “this Policy would be assessed and may be adjusted or rescinded.” “May?” If tariffs are lifted restrictions should be rescinded, period. Ontario’s Minister of Energy, Stephen Lecce, has now asked the province’s energy sector to follow the province’s example.
In British Columbia the provincial government has implemented a similar procurement policy to Ontario’s. So has Nova Scotia’s government, with the added twist of “actively seeking options to cancel existing contracts.”
Such restrictions have morphed into something menacing at the municipal level in Toronto.
Led by former NDP MP and now Toronto Mayor Olivia Chow, the city has adopted an economic action plan barring city staff from hiring U.S. rideshare companies Uber UBER-N and Lyft LYFT-Q while prohibiting U.S.-owned businesses from bidding on many if not most city contracts, 10 per cent of which U.S. firms won in the past. Toronto’s government has declared “American-based suppliers may be deemed ineligible to bid on new competitive contracts when it is in the City’s best interest.”
The City of Toronto is also instructing staff not to do city business with Amazon.
This is not the same as suggesting consumers buy Canadian apples over American apples. These are policies that hurt Canadians employed at U.S. firms operating in Canada and opens the door to the kind of political cronyism that costs taxpayers more money, corrupts the contract bidding process and ultimately undermines innovation by restricting who gets to play based on where a firm’s head office is.
Uber, for instance, employs 500 at its Toronto offices and has more than 180,000 Canadian drivers serving millions of people in this country. Amazon’s downtown Toronto offices are staffed by more than 3,000, and it employs tens of thousands across the country. Importantly, Amazon helps Canadian online businesses thrive, delivers critical cloud services to corporate Canada and should be seen as an important ally arguing against tariffs with direct channels of communication to the White House.
A 2019 Statistics Canada report pegs the number of Canadians employed at U.S. owned firms at almost 1.5 million. That amounts to roughly 7 per cent of the entire Canadian workforce. In dollar terms, U.S. foreign direct investment in 2022 totalled $26.1-billion, or roughly 36.5 per cent of all foreign direct investment in Canada.
President Trump’s tariff madness rightly provokes angry responses from Canadian governments, but those impulses are badly misdirected when they target fellow Canadians working for U.S. firms, signal to American investors they are unwelcome and create government procurement policies that open doors to political cronyism that runs contrary to the public interest.
Donald Trump is the problem, not fellow Canadians working for U.S. firms.