Stung by U.S. Tariff Plan, Canada takes a deep breath
by Catherine Porter & Ian Austen (feat. Hugh Segal)
The New York Times
March 2, 2018
TORONTO — It was yet another slap in the face from the bellicose best friend and neighbor to the south.
Of all the countries that could feel the sting of President Trump’s planned tariffs on steel and aluminum imports, Canada, the long-suffering and restrained American trading partner, is at the top of the list because it is the No. 1 exporter of both to the United States.
But as the news settled on Friday, Canadians took another breath and hoped that Prime Minister Justin Trudeau and the army of cheerleaders he has deployed to charm American officials since President Trump was elected would cajole the United States back from the edge of a trade war.
Rather than erupting in rage, Mr. Trudeau — ever conscious of how much his country’s economy relies on the United States — remained calm and firm, counting off the reasons that Mr. Trump’s move defied economic sense.
The integration of the steel and aluminum markets “has created millions of jobs on both sides of the border and has benefited companies, workers, individuals right across North America,” Mr. Trudeau told reporters on Friday, pointing out the countries’ military forces also worked together to keep North America safe.
“It makes no sense to highlight that Canadian steel or aluminum might be a security threat to the United States,” he continued, referring to the argument that the imports threaten the United States’ national security.
He echoed the sentiment of his foreign minister, Chrystia Freeland, that any tariffs on steel or aluminum were “absolutely unacceptable” — but he did not echo her foreboding statement that they might set off “responsive measures.”
Experts had some optimism that Mr. Trump might not go through with his plan of imposing tariffs of 25 percent on steel and 10 percent on aluminum.
“There’s still some hope that cooler heads will prevail and America’s closest allies and most reliable trade partners will be excluded from these types of protectionist measures,” said Roland Paris, a professor of international affairs at the University of Ottawa and a former foreign policy adviser to Mr. Trudeau.
Hugh Segal, a former chief of staff to the prime minister in the 1990s, said the move would hurt American consumers among others. “If this is about unfair trade practices of other countries, we are not the violators on that front,” he said. “Any rational analysis will indicate that.”
Although the United States and Canada have long had a mutually beneficial trade relationship, tensions have grown since Mr. Trump came into office. Last year, the Trump administration announced the imposition of new tariffs on Canadian lumber imports, the latest round in a longstanding battle over those products. It also threatened to impose crippling tariffs on a new airliner from the Canadian company Bombardier, although it ultimately backed off.
Now, the Trump administration appears ready to apply tariffs on Canadian newsprint. In response, Canada has gone to the World Trade Organization with a sweeping challenge over how the United States handles trade complaints from its industries.
While other American administrations had quarreled with Canada over trade issues in the past, Mr. Trump has distinguished himself with harsh comments about what he calls Canada’s unfair trade practices.
Then there is the matter of the North American Free Trade Agreement, which Mr. Trump has threatened to tear up if the United States cannot obtain substantial changes through negotiations.
Gordon Ritchie, a former Canadian trade negotiator, said he worried the American move on tariffs would further fray good will between the countries during the seventh round of negotiations over Nafta. But if the Americans want to “shoot themselves in various parts of their anatomy, then there’s not a lot we can do about it,” he said.
Canada has declared many of the main American demands on Nafta to be unacceptable, and Mr. Trudeau has recently said it will walk away from the deal rather than accept a bad one — despite the fact that a full 70 percent of the country’s exports go to the much larger American market.
Since Mr. Trump was elected, Mr. Trudeau has sent a series of envoys — cabinet ministers, premiers and a former prime minister, Brian Mulroney — on regular trips to the United States to meet with American officials, lawmakers, chambers of commerce and businesses, to convince them of the mutual benefit of free trade with their northern neighbor.
The hope is that they, in turn, might deflect and contain Mr. Trump’s impulses. Most Canadian observers consider the approach — called the “doughnut strategy” — successful to date.
But this seems the biggest test of that strategy, especially as Mr. Trump has taken the unusual step of invoking United States security as the reason to impose the tariffs. And on Friday, Mr. Trump also said that a trade war was “good” and “easy to win.”
Laura Dawson, the director of the Canada Institute at the Wilson Center, a research organization in Washington, called the American move “risky,” and said it could prompt other countries to cite national security grounds to slap tariffs on things like American corn and grain.
She also asked: “Is Canada no longer a trusted partner in defense?”
Others offered a similar blend of criticism, based on economics and friendship.
Frank McKenna, a former ambassador to the United States, said the country would be “traumatized” by the tariffs should they be implemented next week. Although much smaller in size, Canada does have some ammunition to hurt the United States as the “biggest provider of energy to the U.S. — in terms of oil, gas, uranium and hydro.”
But he also called the American plan “a repudiation of our friendship.”
Jean Simard, the president of the Aluminum Association of Canada, whose industry’s nine smelters export about $5.6 billion across the border every year, said it was “very difficult to accept being treated this way.”
He added: “It’s not how to deal with a country that has been the most strategic ally of the U.S.A. since the Second World War.”