Does anyone really know where Canada’s tariff negotiations with the U.S. are headed? Despite a steady cavalcade of ministerial visits to Washington and efforts by individual premiers to engage, it is difficult to know what is being discussed, or whether anything has been agreed or rejected. We have been treated instead to airy platitudes: Talks are “progressing” or meetings “have been constructive,” etc. Messaging to the U.S. media has been obsequious, not crisp lest anything strong trigger an outburst by the unpredictable president.
The U.S. Appeals Court verdict deeming most of Donald Trump’s tariffs unconstitutional is helpful but is being appealed to the Supreme Court and regardless, the administration has other options it can select to sustain the tariffs.
We and the rest of the world face a blatantly crude shakedown as the Trump administration uses its law-of-the-jungle approach to trample all conventional principles governing trade and rebalance global accounts in America’s favour. Allies and foes alike are agreeing to pay a price on tariffs and reshoring investments to the U.S. just to maintain the privilege of doing business there. It worked first with the EU, then Japan and, most recently, South Korea. It may be ugly but probably will work with Canada as well.
We have backed down on almost all retaliatory measures. First, we imposed dollar-for-dollar retaliatory tariffs then sheepishly withdrew them. Then we jettisoned the Digital Services Tax and received nothing in return. Most recently, we abandoned most of the remaining reciprocal tariffs, again receiving nothing in exchange, prompting Opposition Leader Pierre Poilievre to
the action as “extraordinary weakness,” a “capitulation and climbdown.” Trump’s blatant shakedown will continue because that is his forte. Yet Canada-U.S. Trade Minister Dominic LeBlanc
on CBC News that Canada “has a lot of cards” in the negotiations. Such as?
Economic growth in Canada is expected to drop from 1.5 per cent in 2024 to about 1.0 per cent in 2025 and about 1.1 per cent in 2026. These are not robust numbers. The auto sector is particularly vulnerable. The Trump administration has made it crystal clear that it does not want to continue to import autos made in Canada to its market. Even if this is not a topic for the current discussions, it will certainly arise in the context of any renegotiation of the USMCA/CUSMA. American executives of the Big Three have been utterly silent about the threat. We owe them nothing.
Canada is the only G7 country that does not have its own independent auto production. We should remedy that. Tata’s Land Rover product would be a quintessentially Canadian brand to adopt.
Has anyone asked the Americans to explain why Canada faces a 35 per cent tariff on non-CUSMA-compliant products while the rate for Mexico is 25 per cent? The Hispanic vote in the U.S. may have been a factor. But Mexico contributes an estimated
of the fentanyl entering the U.S., while according to Canada’s Fentanyl Czar, based on U.S. Customs and Border Patrol
since 2022, about one tenth of one per cent of fentanyl seizures are attributed to the northern U.S. border or crossing into the U.S. from Canada. And we have formal security agreements with the U.S. Mexico does not. Both were reasons for implementation of the initial tariffs so why the discrepancy?
When it comes to dealing with Trump there is no magic bullet. Excessive flattery helps but he can still inflict heavy damage simply on a whim of the moment.
It is time for the prime minister to explain to Canadians what he expects to achieve and how. Because domestic trends — investment, productivity and competitiveness — are spiralling downward and talk of reshoring domestic production and diversifying trade is, so far, just talk. Of course, we need to diversify as we are over-weighted to the U.S. The sclerotic EU does not offer much comfort. Our best bet is to focus on the Trans-Pacific Partnership (TPP) where growth is strong.
Instead of a cacophony of discordant players on trade the prime minister should designate a single, credible individual to lead the challenge — as Brian Mulroney did by appointing Simon Reisman to head the Trade Negotiations Office (TNO) for the launch of Free Trade Agreement negotiations with the U.S. in 1987. He knew that Reisman would stand firmly against the Americans. If there is no one in Ottawa up to the task, I suggest that the prime minister give our current ambassador to the U.S. the responsibility. Kirsten Hillman is one of Canada’s strongest trade policy practitioners, has extensive knowledge of how Washington works and has been a sensible advocate of Canadian interests to the U.S. media.
Apart from the serious trade friction with the U.S., we were promised by the prime minister that major projects involving energy and rare minerals would be fast-tracked to boost our economy, yet little happened as too many in cabinet show the wear and tear of their lost decade in government. However, last week’s welcome appointment of
to head the major projects office in Calgary should kick-start action and cement a needed partnership between Alberta and Ottawa.
We need to shed the rust from more than a decade of climate hypocrisy that stunted development of our most prominent natural resources. Accept the reality that our ability to export oil and gas and rare minerals constitute major pillars of our economic strength. We need pipelines to tidewater quickly before global demand sours once again on our potential. Tough decisions on major policy initiatives need political mettle and political capital. Striving in vain for consensus will not produce results.
Mark Carney was elected primarily because he was perceived as the best able to manage relations with the tempestuous Donald Trump. He has yet to deliver on that expectation. The prime minister might have boldly proposed an alliance with the Conservatives to move on major projects, cope with the U.S. on trade and serve the national interest. However, now that Conservative Leader Pierre Poilievre has been re-elected to Parliament, he may smell blood, namely that Canadians will not favour vacillation, and any idea of a national unity coalition will have lost its appeal.
Ultimately, Carney’s political fate will be determined by results, not personality.
National Post
Derek H. Burney is a former 30-year career diplomat who served as Ambassador to the United States of America from 1989-1993.
