Donald Trump boards Air Force One as he departs West Palm Beach, Fla., on Feb. 2.Kevin Lamarque/Reuters
It didn’t take long for U.S. President Donald Trump to let slip that the 25-per-cent tariffs he imposed on Canada to demand action against fentanyl and migrants weren’t really about that.
On Saturday, he signed an executive order stating tariffs were needed to respond to a border emergency. On Sunday, he posted a blast on social media falsely claiming the U.S. is subsidizing Canada by hundreds of billions of dollars and it should become the 51st state.
By now it should be obvious: The U.S. President intends to use tariffs as a constant cudgel held over the heads of his trading partners – especially his neighbours.
There will be no way to satisfy all his demands. He will keep using them in a predatory manner.
That is the nature of the Trump shock.
It’s not just a pressure tactic to demand border measures and not just a trade war. It is a redefining of the United States’ relationship with the world – and especially with its neighbours. It will reshape Canada, too.
Last week, Mr. Trump’s pick for Commerce Secretary, Howard Lutnick, told U.S. senators at a confirmation hearing that another round of tariffs would follow this one as the U.S. seeks to renegotiate trade concessions.
The best hope for Canada in fighting a trade war with Trump may lie in U.S. courts
Now Mr. Trump has made the first wave real. The devastating impact will ripple through North America: lost jobs, lost incomes and disrupted economies.
No wonder we hear the sudden revival of economic nationalism in Canada, and sentiments of anti-Americanism not seen since the 1970s.
Prime Minister Justin Trudeau’s call to “Buy Canadian” might be the most popular thing he’s said in a long time. Social media is full of calls to boycott U.S. goods. But Mr. Trump’s shock will have to push Canada into longer term efforts to reduce dependence on the U.S.
In 1971, another U.S. president, Richard Nixon, shocked the world by removing the U.S. dollar from the gold standard that had underpinned the international monetary system, and setting 10-per-cent tariffs on imported goods.
But the “Nixon shock” was a deliberate, specific and explicitly temporary effort to reshape the United States’ economic relations with the world, aimed at resetting its terms of trade. “This import tax is a temporary action and it isn’t directed against any other country,” Mr. Nixon said then. In four months, the tariffs were gone.
Now Mr. Trump has a bigger set of tariffs with a more amorphous goal in mind.
He also wants to rearrange terms of trade for the U.S. But this time it is a shakedown, aimed especially at neighbours – Canada and Mexico – in a bid to convince producers to move investment and jobs into the U.S. Beyond that, he wants to use tariffs as leverage to obtain various concessions, repeatedly – a constant tool in the U.S. arsenal. The constant threats are part of the shakedown.
The flimsiness of the excuse invoked on Saturday to apply tariffs on Canada was particularly obvious to anyone who cared to look.
The United States isn’t moved by Mr. Trudeau’s protest that Canada is the source of less than 1 per cent of the fentanyl smuggled into the U.S., or migrants sneaking in. But it’s also not willing to be satisfied – the Canadian willingness to beef up border security was ignored.
There isn’t even much in the way of specific negotiations on that. Finance Minister Dominic LeBlanc spoke to Mr. Lutnick Saturday and Foreign Affairs Minister Mélanie Joly spoke to U.S. Secretary of State Marco Rubio, according to a Canadian government source. The Globe and Mail is not identifying the source because they were not authorized to speak publicly about the matter.
At one point, according to the source, Mr. Lutnick suggested that U.S. tariffs might eventually be removed when U.S. overdose deaths go down – which probably won’t be soon and certainly won’t be closely related to anything Canada does.
It’s not clear if those officials know what Mr. Trump thinks. And Mr. Trudeau indicated Saturday that the U.S. President is not returning his calls.
Who knows if and when Mr. Trump might choose to declare victory and lift the tariffs? If he does, he will threaten them again.
The shock to Canada’s economy will be serious. It comes with the shock of finding the U.S. is employing the same kind of manipulative bullying that Canada has seen from the People’s Republic of China. That’s a shock that will redefine North America and reshape Canada.