David Paterson, Ontario's trade representative in Washington, said Canada is in for a “tough time for a period” as tariffs take effect on both sides of the border.Laura Stone/The Globe and Mail
Sitting in a cafe beside the Canadian Embassy in Washington, David Paterson, Ontario’s trade representative, said Canada is in for a “tough time for a period” as tariffs take effect on both sides of the border. But he doesn’t think it’s time to panic. In fact, he said Canada may be able use the outcome of the nascent trade war to their advantage.
Here is an edited transcript of Mr. Paterson’s discussion with The Globe and Mail on Tuesday over coffee and, of course, maple-flavoured donuts. The transcript has been edited and cut down for length.
How do you think Canada can get out of the tariff war?
I think it’ll take a bit of time, and we have to absorb probably additional tariffs on top of the 25 per cent that have been put forward.
The next phase here will really be dictated around the reaction of the stock market and the reaction of U.S. business.
It’s going to be critical to see how much Americans are willing to now come forward and stand up saying, “This is not what we thought we were signing up for.” And so that’s an important thing before we can solve this issue. The new U.S. Trade Representative, Jamieson Greer, has said that one of his top priorities is to pull ahead the renegotiation of the United States-Mexico-Canada Agreement. From our perspective, there are a number of things that do need to be done to fix the USMCA. There’s some features to that that I think could be attractive as a deal that’s unique in North America to get us through this really difficult period.
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What do you think President Trump ultimately wants?
It’s in plain sight. I think he wants to make America great again, and his definition of that is to bring manufacturing back to the heartland of the United States, and he thinks tariffs will be the main way to do that. But he also wants to fix the deficit, and so he wants to lower taxes and keep them low. So he wants to do a lot of things that are difficult and contradictory.
I think it was very important, from the President’s perspective, to have the tariffs in place just before his joint address to Congress and show Americans that he’s on track for the things he wants to do, and tariffs are just one part of that. To us, they’re everything, but to him, they’re just a tool.
It feels like we’re panicking. Should we be panicking?
We shouldn’t be panicking at all. We should be confident that we can get through it and that we’re resilient people. I think there is a very good outcome of this in the short term, in that the provinces are now taking – certainly Ontario is – taking strong action to remove internal trade barriers. So that’s a good thing. This is an opportunity for us to shift more of our growing economy into intangible goods, goods that are IP-backed and digital.
But we also recognize the federal government has to solve this issue, because they hold the cards on trade and trade agreements, the border, fentanyl, and I think there’s more work to be done in those areas.
If you take what the White House says at face value, they seem satisfied with what we’ve done of the border but the fentanyl issue keeps cropping up. However, the Canadian statistics show it’s a relatively minor problem coming from our country. So how do you negotiate with someone who won’t accept that explanation?
First of all, I think we have to look beyond this current 25-per-cent tariff and any others that are to follow, and understand they’re part of a broader agenda than only fentanyl. I think there’s a good chance, in my opinion, that the reason to start with fentanyl was to make sure that the lawyers are satisfied with the utilization of the emergency powers as an enabler for the tariffs, because the tariffs are illegal unless they’re empowered by a special act.
We think it’s an emergency in Canada, too, and we think that fentanyl is coming from the United States to Canada and killing Canadians as well. And so we have a mutual interest in dealing with that.
Just lastly, how significant do you think a change of leadership at the federal level is going to impact how President Trump sees our country and treats us going forward?
It’s definitely an opportunity for Canada to have that change. It will be up to the next leader, whoever that is, to differentiate and signal that, number one, you’re strong and you’re standing up for Canada. And number two, that you still think we can resolve this. I hope that they add the second piece.