Disruption in trade with U.S. expected to continue for years

Glacier FarmMedia—One of Canada’s trade negotiators told farmers last week he expects ongoing disruption over the next few years as the Trump administration continues to stoke uncertainty.

Aaron Fowler, a deputy chief trade commissioner with Global Affairs Canada, said U.S. president Donald Trump’s actions are uncertain by design.

“The president and his administration and those around him, they are playing multiple games at the same time and there is a certain amount of what they’re doing that is disruption for disruption’s sake,” he said during a panel at the Canadian Federation of Agriculture annual meeting.

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“I do firmly believe that they have been and are comfortable being actors who inject a certain amount of uncertainty into a system that is otherwise stable and then they try to profit from the disorder that that creates.”

Trump’s economic vision

Although many view Trump’s actions as chaotic, Fowler said an economic vision underpins them. The idea is that he can use tariffs to generate revenue for important projects, create incentives for companies to return to the United States and make the economy, particularly strategic industries, more robust. However, Fowler said this is all built on the fundamental belief that it will work out in the long run.

As of Friday, Trump maintained he would implement 25 per cent tariffs on Canadian products on March 4, along with a 10 per cent tariff on energy. These measures are related to border security and drugs, but many say Trump uses incorrect statistics to make his case for stricter measures at the Canadian border.

On March 12, steel and aluminum tariffs are to take effect.

A review of Trump’s Feb. 13 memorandum on reciprocal trade and tariffs is to be delivered to him April 1. Additionally, his administration is reviewing the fiscal impacts of the memo on the government and the public and those findings are due Aug. 12.

And, there are other threatened tariffs that could potentially come in mid-April.

“I think we’re going to be going through this repeatedly over the course of the next several years as this administration test drives some of these economic policies,” Fowler said.

Canada can’t be too ‘hysterical’

The Canadian government has responded with advocacy, education and work on mitigation.

Fowler said there were indications that the world trading system was changing, and not all can be blamed on Trump.

“But I would suggest that what we’re dealing with right now is of an order of magnitude above and beyond the change that you would otherwise have predicted if you were just looking at trend lines over a long time,” he said.

“This is a very serious systems disruption.”

John Stackhouse, senior vice-president at RBC, cautioned that Canada’s response can’t be too hysterical. He said Canadians have been responding to the noise around Trump instead of the signal.

“The world is watching us kind of run around lighting our hair on fire,” he said.

Multiple delegations have gone to Washington saying they speak for Canada when they don’t, he said.

Canada should instead look at what is in its control and self-interest. Tariffs would be challenging and come with consequences, he said, but Canadians should stay calm and not respond to the noise.

Fen Hampson, a professor of international affairs at Carleton University, said Canadians have seen this movie before, through various tariffs over the last 100 years.

It will be painful, he said, but the real question is for how long. Trump could escalate action to include embargoes, financial restrictions and more, but he won’t, Hampson said.

“It would be suicidal,” he said.

“Donald Trump may be reckless. He may be uninformed. He may not be very good with numbers, but he’s not politically suicidal.”

Hampson said time is not on Trump’s side because of inflation. Tariffs on both Canada and Mexico would force food prices higher, and U.S. consumers are already complaining.

Congress would be in an uproar over these higher prices and job losses. If there are tariffs on the auto sector, the big three U.S. manufacturers would shut down and people would be out of work.

“And those are in key red states that delivered the election to Donald Trump,” Hampson said.

Opportunities in crisis

Paul Samson, president of the Centre for International Governance Innovation, said the situation is a wake-up call for Canada.

“We knew it could happen, but we were in denial that it would happen, but it has,” he said, and this necessitates a hard pivot.

Canada allowed itself to become too reliant on a single partnership and now needs to take advantage of the opportunities the crisis presents, he added.

Hampson said the talk of removing interprovincial barriers won’t be the Holy Grail. He said that’s because the real barriers aren’t restrictions on semi-trailer units or where beer can be purchased. They are things like licensing requirements for labourers and public procurement policies that require buying locally.

“At the end of the day, they’re going to have to get rid of things that helped them get elected and I don’t think they’re going to do that,” Hampson said of premiers.

Canadians ‘not patsies’

Hampson suggested Canada could play hardball with Trump on supply management.

“We all know the Americans have their own version of supply management, and they’re bloody hypocrites,” he said.

Canada’s lever for negotiation is the principle of reciprocity that Trump has invoked.

“We should say to him, ‘we’re happy to put supply management on the table but you’ve got to put your subsidies on the table and we can bring them down at the same time,’ ” Hampson said.

He added that Canada has to become more transactional, talk tougher and use the leverage it has in the relationship between the two countries.

“We’re not patsies, and our politicians have to start showing some spine,” he said.

Samson added Canada has to get its immigration policy right. The American agriculture sector is going to take a hit as a result of Trump’s deportations and tough-on-immigration stance.