Trump’s trade policies may lack logic, but they also reflect a serious paradigm shift

Open this photo in gallery:

There may be no more hazardous exercise for a Canadian newspaper columnist these days than attempting to interpret Donald Trump’s trade policies. To suggest that there might be some logic behind his moves to undo the rules of the global trading system that he insists have been skewed against the United States is to invite accusations of gaslighting on behalf of the most mendacious, immoral and incompetent U.S. President of the past 250 years.

Here it goes anyway.

Most Canadian critics of Mr. Trump’s trade policies, especially those of the diehard anti-American variety, generally focus on the President’s mental (un)fitness, vindictiveness and apparent economic illiteracy. They depict a megalomaniac consumed by power and a pathological need to control and humiliate others who sees the state as little more than a vehicle for the enrichment of himself, his friends and a select few sycophants. Anyone outside this circle, starting with Prime Minister Mark Carney, is wasting his or her time trying to satisfy Mr. Trump’s incoherent and irrational demands. So, elbows up all the way.

“Mr. Trump’s tariff offensive has a clear purpose: to demonstrate who is dominant and who must submit,” former federal finance minister Chrystia Freeland wrote this week in a New York Times op-ed. “It is about whether Canada is willing to go from being an ally and partner, in a relationship governed by treaties and rules, to being a vassal.”

Such characterizations of the U.S. President’s motivations are not wrong. But by focusing too much on Mr. Trump’s idiosyncrasies, they underemphasize the seismic shift in economic thinking that is under way in the United States in response to the excesses, imbalances and inequalities wrought by globalization.

Trump’s tariffs have sparked a lobbying frenzy in Washington that’s only growing stronger

Critics accuse Mr. Trump of turning his back on the postwar rules-based international order that the United States did more than any other country to create, and which delivered decades of rising standards of living and relative peace. But such critiques obscure the very design flaws in the international order that enabled a rival hegemon to game the system all while undermining the liberal democratic consensus that we no longer take for granted.

While Canada and other U.S. allies are collateral damage in Mr. Trump’s trade wars, the all-consuming objective of U.S. policy in the Trump era remains restoring U.S. global economic primacy in the face of the threat posed by an undemocratic and unfriendly China. This reorientation of U.S. economic policy began in the first Trump administration, continued to take root during Joe Biden’s one-term presidency and has intensified in the past 18 months.

In a speech last month, U.S. Treasury Secretary Scott Bessent described the “structural vulnerabilities” that the U.S. allowed to accumulate as successive administrations went all-in on freer trade. “We assumed that closer integration would result in a greater convergence of interests. That supply chains would function in every crisis. Low prices would compensate for lost capacity. And, above all, that other countries would treat our firms as fairly as we had treated theirs,” Mr. Bessent said. “Those assumptions failed to materialize.”

For decades, the United States indulged free riders that hid under its defence umbrella and protected selected sectors of their home markets from U.S. competition based on 18^th-century economic theories according to which unilateral market opening was always in America’s best interest. Those days are over.

Efficiency is no longer the main objective of U.S. economic policy; the latter is henceforth inseparable from national security policy. “It begins with the capacity to build, invent, finance and scale the industries that will define the next century,” Mr. Bessent explained, with artificial intelligence topping the list. “And America must lead in each of them.”

Robyn Urback: Carney would rather concede to Trump than risk short-term economic pain

For Canada, the reality is stark. Mr. Carney clearly understands this even if he has not been fully upfront with Canadians about the kinds of adjustments we will need to make to adapt to the new world order. Hedging our bets through trade diversification will only go so far.

“Over time, aligning with American trade, investment technology and regulatory standards may well become a requirement to maintaining broad access to U.S. consumers, investment money and the dollar system,” Mohamed El-Erian, a professor at the Wharton School and former chair of Barack Obama’s Global Development Council, wrote recently.

“Fence-sitting by middle powers attempting to better navigate U.S supply chain tensions, or even offer an alternative, will become increasingly costly. This is true not just for the effort by the BRICS (Brazil, Russia, India, China and South Africa) to strengthen linkages in developing countries but also for Canada’s recent responses to Mr. Trump’s tariff war against it.”

There are bigger forces at work here. It is not all about Mr. Trump. We should stop telling Canadians it is.