Prime Minister Mark Carney and U.S. President Donald Trump during their first official meeting at the White House in Washington, D.C., on May 6.Adrian Wyld/The Canadian Press
Donald Trump met Mark Carney in the Oval Octagon, and the takeaway on the evening news was that the Canadian Prime Minister told the U.S. President our country wasn’t for sale, everyone smiled and nobody got Zelenskyed. All in all, a good visit.
But watch Tuesday’s full press conference, which was a half-hour Trump monologue, and you get a sense of the problem Canada is facing. It transcends whether or not the President likes the PM. The problem is that Mr. Trump’s dreams are at odds with free trade between Canada and the U.S.
The good news is that, when it comes to turning his dreams into reality, Mr. Trump may have already lost the stomach for the fight. The stock market is certainly betting on it.
After “Liberation Day” on April 2, when the President slapped high tariffs on most countries, the S&P500 index plunged. But five weeks later, with the administration having delayed, deferred and signalled openness to walking back these and other tariffs, the index has reversed course. It closed Thursday just a fraction of a percentage point below where it was before L-Day.
Mark Carney’s trip to Washington is already a winner
Further cheering the market, Mr. Trump announced Thursday that the U.S. and Britain have reached a trade deal – which upon closer examination is mostly an agreement that some of the tariffs he imposed a few weeks ago will be lowered or removed.
In other words, the Trump administration is once again proudly announcing the undoing of some of what it had previously done. The market has taken it as one more sign that Mr. Trump, who declared trade war on the entire world barely more than a month ago, is trying to call it off.
That’s why the U.S. stock market is betting that, on trade, the President is mostly bark. It’s not an unreasonable wager.
But go watch the entire Trump-Carney press conference. The PM said almost nothing, which was wise. Mr. Trump, of course, had quite a lot to say. Nearly all of it was antithetical to global trade, and trade with Canada.
As I’ve written before, Mr. Trump has a gambler’s tell, and his is that he comes right out and tells everyone what he wants to do. He’s a pathological liar, but he’s remarkably honest when he’s in wish mode and blue-skying about how the world should be.
And blue-sky Donald thinks the U.S. shouldn’t import anything. He’s particularly fixated on manufactured goods. Sitting next to Mr. Carney, he returned to an idea that he’s expressed many times before: The U.S. should not be buying anything made in Canada.
“See, the conflict is” he said, in a moment of dream reveal, “we want to make our own cars. We don’t really want cars from Canada. We put tariffs on cars from Canada and at a certain point it won’t make economic sense for Canada to build those cars.
“And we don’t want steel from Canada, because we’re making our own steel and we’ve having massive steel plants being built right now as we speak … We don’t want Canadian aluminum and various other things, because we want to be able to do it ourselves.”
There was much more in this vein. He said there was nothing Mr. Carney could do to make him lower tariffs on Canada because that’s “just the way it is.” He said the U.S. didn’t need to do trade deals; it could simply set a tariff rate and countries could take it or leave it. And he said cutting off imports from China was a good thing, as it would save his country “a trillion dollars.”
In his mercantilist mind, when you buy something from overseas you lose money. So the less America trades, the richer Americans will be.
Stock market investors around the world continue to bet that these ravings will mostly remain in the realm of fantasy, and not become enduring U.S. policy.
But it’s still worth taking note of the fact that, when the most powerful man in the world drifts into blue-skying about a better world, he fantasizes about higher tariffs, no imports and an America that makes everything and needs nothing – particularly from Canada. The man dreams of a Götterdämmerung of global trade.
That fat lady may never sing, but it won’t be because Mr. Carney and Mr. Trump had a nice meeting. As the President has made abundantly clear, he’d like to stick a fork in free trade with Canada, and everywhere else.
What’s holding him back, and what will hopefully force him to keep walking back, are the American economy, American business, the American stock market and the American voter. In them we trust.