Containers are unloaded at the Port of Montreal on July 20, 2017 in Montreal.Ryan Remiorz/The Canadian Press
Prime Minister Justin Trudeau on Tuesday was once again trumpeting the (mostly) united front of the federal government and the premiers in responding to Donald Trump’s threat of imposing economy-crippling tariffs on Canada as early as Feb. 1.
“Of course, if the president does choose to proceed with tariffs on Canada, Canada will respond,” Mr. Trudeau told reporters. “And everything is on the table.”
Which rather raises the question of what he (and others) mean by “everything.” Clearly, the table-setting includes oil and natural gas exports to the United States, as Foreign Minister Mélanie Joly has stated.
But what about Quebec’s aluminum and electricity exports? Are those on Ottawa’s table, and if so, what might be Quebec Premier François Legault’s thoughts?
On Tuesday, Mr. Trudeau saluted Ontario Premier Doug Ford’s “unwavering commitment” to working together on the tariff question. But might Mr. Ford’s commitment waver just a titch if Ottawa were to contemplate a ban on shipping auto parts to the United States?
As we said last week, there is some short-term merit in artful vagueness, but banning exports would be folly. Sooner or later, Mr. Trudeau will need to spell out who will bear the pain of retaliation. That onus extends to those seeking to replace Mr. Trudeau as Liberal leader, and as prime minister.
Mark Carney, for one, echoed Mr. Trudeau’s rhetoric in a press release on Monday, saying there can be “no cards off the table.” Mr. Carney should turn those cards face up and reveal what he is willing to sacrifice, and what he is not.
Mr. Carney, at least, does not mince words on the impact of a tariff war: it is a lose-lose proposition that will be hard on workers and Canadian families.
The same cannot be said of Liberal leadership rival Chrystia Freeland, who (at the very least) gave a muddled view of how tariffs work in an opinion piece in The Toronto Star. In that piece, she wrote that American companies paying Canadian tariffs would give Ottawa $150-billion that could be distributed to middle- and lower-income households.
“Being smart also means understanding that tariffs work both ways. President Trump intends to fill America’s coffers with tariff revenues. We can do the same. Dollar-for-dollar retaliation could generate up to $150-billion over one year – representing 161 per cent of the Canadian government’s corporate tax revenue in 2022-2023,” Ms. Freeland wrote. “If we are forced to retaliate, the $150-billion that Americans will pay to sell their goods to Canada is $150-billion we could use to help Canadians and businesses weather this essential fight. Just half of that revenue could provide nearly $2,700 in relief to every Canadian making less than $150,000 per year.”
On its face, Ms. Freeland would seem to be echoing Donald Trump’s wrongheaded view that foreign exporters bear the cost of tariffs. That is almost never the case, particularly for smaller countries such as Canada – domestic businesses (or their Canadian customers) will pay the bill.
One would presume Ms. Freeland is well aware of that fact, making her intimation of a $150-billion windfall all the more perplexing. When asked for a response, her campaign said that it is correct to say that Americans are paying “because Trump would be putting tariffs on Canadian goods in the first place,” while acknowledging “everyone pays in a tariff war.” Further explanation is merited.
Ms. Freeland owes it to Liberal voters, and other Canadians, to clarify her position on tariffs, including why it would be desirable to take $150-billion from Canadian businesses that import American goods and redistribute it to individuals. As she herself notes, that sum dwarfs the federal government’s current corporate income-tax revenue (projected to be $86.8-billion for the current fiscal year).
Lastly, Conservative Leader Pierre Poilievre needs to lay out his own approach to dealing with Mr. Trump’s tariff crisis. In a Thursday press conference, he declined to say whether he opposed barring energy exports, instead listing what he sees as failed Liberal economic policies. However well-founded his critique, Mr. Poilievre must tell Canadians how he would deal with Mr. Trump’s tariffs.
A federal election campaign could be under way in little more than two months. The time for artful dodging is done. Mr. Poilievre and those who aim to win the Liberal leadership must be clear with Canadians on their plan to deal with Mr. Trump. Those are the table stakes.