Following the failure of negotiations between the American and Canadian governments, the two countries have now entered a trade war. Canadian sanctions on a variety of US products came into effect on the 1st of July. This was in response to tariffs on steel and aluminium levied by the US administration against Canada earlier this year. An increasingly aggressive rhetoric was employed by both administrations in the run-up. The hostile climate between Canada and the US had earlier been exacerbated by Trump’s outburst at the G7 summit in Charlevoix, Quebec.
This was followed by Canadian foreign affairs minister Chrystia Freeland’s speech in Washington DC. Freeland defended Canada’s behaviour during the negotiations and unleashed a thinly veiled barrage of criticism at President Trump. In response to these events, Justin Trudeau stated during a recent press conference that Canada will not be pushed around. The US president, for his part, is adamant that his administration will not back down.
This is a classic game of chicken. The first one to back out will lose leverage in future negotiations. The issue is that it was unwise for Canada to start playing such a game in the first place. Nevertheless, there is no point in discussing what could have been done differently. But it would be foolish for Canadians to wait and hope for the world to stand up for us. While Canada has indeed garnered much esteem in the international community due to its passive (re: inoffensive) nature and its rigid adherence to PC sensibilities under the current Trudeau government, esteem does not really translate into anything more than words of high praise by our European allies. Words will not save us from the wrath of the giant down south. Neither will our own wits — not with our comparatively small and resource extraction based economy. We are simply not that important to the international community when the chips are down.
For his part, Trump will be using a strategy of divide and conquer if he is to come out ahead in this global game of commercial brinksmanship. It would be absurd to assume that the United States would be able or willing to fight a trade war every country in the world at the same time. As such, it will not do so. The US will instead go after its opponents piecemeal. Canada has sadly entered a fight it cannot win. This is partially due to a bad case of national hubris, as the current government saw an opportunity to exploit a severe streak of antipathy towards Trump in the Canadian electorate. Consequently, our country must look to an exit strategy while minimizing damage, all the while seeking to diversify our international trade. How can this be achieved?
The world does not seem to know how to deal with Trump, and our current government is no exception. To find out what Canada can do, it is worthwhile to analyse Trump’s foreign policy in order to understand both his cabinet and his resentment towards Washington’s intellectual elite. Such an analysis will reduce uncertainty about Trump’s foreign policy by identifying risk areas and providing best courses of action for Canada.
Dated to April 27th, the president’s foreign policy speech at the Center for National Interest reveals the Trump foreign policy doctrine. Plainly, he does not believe in the post-Cold War ideology of spreading western values and ideals throughout the globe.
It all began with a dangerous idea that we could make western democracies out of countries that had no experience or interests in becoming a western democracy.
Donald Trump unofficially declared a trade war against the world even before he declared his candidacy for the presidential election. It should not come as a surprise as Trump’s intentions are captured in various interviews dating back to the early ’90’s.
Trump’s “America First” policy is in some ways sign of the weakness and decline of the United States power. Since the beginning of the 21st century, the U.S has been fighting wars in the Middle East and has yet to decisively end them. This has so far only achieved a deadlock in the region, while leading to the deaths of thousands of Americans and hundreds of thousands of local people.
Meanwhile the American quality of life has not improved, in fact taking a hit after the 2008 financial crisis. Economic opinion tends to be that had President Obama adopted a protectionist trade policy after the 2008 crisis, it would have caused a deeper recession due to the size of the country’s GDP. By adopting a pro-free trade policy in 2008, America was able to recover and its economy is now thriving.
While there is never a “good” time to get into a trade war, the best move from the American perspective is indeed to do so now, while the US economy it at its strongest in more than a decade. Trump has been extremely vocal throughout his campaign and presidency about his belief that America has been “ripped off” in trade by its various allies and that, to “Make America Great Again”, extreme measures will be required.
Trump’s foreign policy is based on the following principles:
- All foreign policies must directly improve the quality of life of the American people.
- Refer to bullet 1.
Trump’s foreign policy is being criticized by many for being unjust, unfair, and impulsive. However, US foreign policy has often been so. Iraq, Afghanistan, Libya and Syria stand as examples of this. One can also point at the dozens of military interventions in the Americas during the Cold War. The big difference today is that Canada, to its immense shock, is now on the receiving end of the pattern. We should have known better; it keeps happening to the US’s near abroad and it was bound to happen to us.
In November 2013, President Barack Obama tried to reduce sanctions against Iran — a preliminary measure that was supposed to enable the construction of a framework for Iranian de-nuclearization. This caused great consternation amongst traditional US allies in the Middle East. Israel quickly threatened a bombing campaign against Iranian nuclear facilities and Saudi Arabia indicated it would open its air space to the IDF. Furthermore, the KSA began floating the idea that if Iran was to nuclearize, it too would seek nuclear weapons in order to maintain regional balance. Despite Israeli and Saudi concerns, the Iranian deal was signed in 2015 in collaboration with various European countries. The deal in question was criticized for favouring Iran more than the United States or its allies in the region.
Trump is asking a rhetorical question to the American electorate. It is one which many have certainly asked themselves in an era of ballooning deficits and increasing economic marginalization of the working and middle classes. Why should the US allocate resources to intervene in foreign security matters while being antagonized by the beneficiaries of such actions? Why do so when it seems to have no positive impact on the quality of life for the average American family? The real extent of positive impact is beside the point. Trump’s foreign policies reflect American society’s accumulated fatigue and disappointment regarding the perceived benefits of the US government’s extensive involvement in international affairs.
Trump’s foreign policy is a factor that needs to be managed in order for Canada to come out ahead in the coming years. Risk identification and mitigation are required based on Trump’s negotiation tactics, the Trump cabinet, and Trump’s exclusion of a certain portion of the intellectual elite.
Canada is in a trade war with the United States and no one is coming to rescue us. China and the EU likewise followed through with their retaliatory tariffs, but theirs are actually to their own benefit. China’s premier Li Keqiang has been trying to form a united front with the EU against the US but the EU has not responded in kind. In other words, there appears to be no international coordination to counter the US tariff regime.
The question, then, should be how to negotiate a deal that is favourable to Canada? Let us go back to Trump’s foreign policy checklist. Trump is unable to convince his support base that NAFTA is favourable to the United States. Canada needs to give symbolic concessions such as the elimination of tariffs on US dairy products. Traditional lobbying, one of Canada’s more successful tools in the past, is no longer effective in DC when the US President does not care for the traditional wheeling and dealing that characterizes big party politics. Furthermore, such actions may be seen as duplicitous by the Trump administration, creating the perception that Canada is going behind the back of the US government and ending with further antagonization. President Trump benefits from an aggressive cabinet which includes a former Marine Corps 4-star general as White House Chief of Staff and a West Point alumnus and former CIA director as Secretary of State. As we’ve seen, those that refuse to play ball are quickly disposed of. There is a long list political careers now in tatters after a stint in the Trump administration
Trump’s logic on trade deficit with Canada is certainly weak. However, it may well good enough to convince the US electorate that Canada may seem polite but is in fact conniving. Our case is certainly not helped by calling for free trade while imposing a 270% tariff on US dairy imports or by our much lower stumpage fees, which the US considers to be a hidden subsidy to our lumber industry. Flip the situation and put Canada in American shoes. How should we react if Canada was providing security for the United States and they repaid us by imposing 270% tariff on Canadian dairy product, or lumber, or perhaps even oil? For Trump, the United States of America is being ripped off while providing many services to Canada, including defense and the securing of oceanic trade lanes vital to international trade essentially free of charge.
Canada needs to negotiate exclusively with Trump and take a close look at his base and how it thinks. A Trump supporter will easily be convinced that a 270% tariff on dairy product is unjust. But the same Trump supporters should be able to accept the idea of no tariff on US dairy products within a quota, and a 25% tariff on anything above the quota. In other word, a fair compromise.
This is an example of giving symbolic concessions. The Canadian media is portraying President Trump as unreasonable and unjust, and uses ad hominem language on a regular basis. On the contrary, Trump has been rather reasonable in a variety of previous scenarios. If North Korea and the US could go from “my nuclear launch button is on my desk” to “let’s make the world a better place”, then a country such as Canada which claims to have common sense and to bring fact-based argumentation to the table should have no issues negotiating via symbolic concessions in NAFTA.
But our actions must not be restricted to concessions. Long-term actions are required. Canada needs to build pipelines to the east and west in order to find new trade partners for the energy sector. We must systematically and strategically open our markets to foreign competition in order to rid ourselves of our corporate world’s sense of entitlement. This is especially prevalent in telecom, construction and shipbuilding, amongst other industries. We possess the potential to dominate worldwide. Canadian mining companies, for example, are amongst the most powerful in the world. We must spark a desire to become economically powerful so that Canada cannot to be pushed around. Merely saying that Canada will not be pushed around does not make up for the reality that Canada is, in fact, very much being pushed around by our neighbour. Canadians must shake themselves out of this national case of delusions of grandeur. Though we have indeed achieved great things, we are by no means the equals of the US. Failure to understand this fact means we will be unable to overcome our weaknesses and increase our political and economic strength. If Canada persists on a collision course with the US, we may very well end up reshaped over time into a middling vassal by a discontented American giant.
As the saying goes: si vis pacem, para bellum. A strong society prevents war, while a polite one does not. Polite countries such as Canada can only exist thanks to the military protection provided by the friendly hegemons such as the United States. It does not take a rocket scientist to forecast what the Russians would do to the Canadian Arctic if America’s global hegemony ceased to exist tomorrow. If Canada wants leverage in future trade negotiations, we must stop depending on US military for its security and slacking off on the defense sector. Furthermore, we must seek to increase trade with the rest of the world. Nevertheless, we must also understand that US trade will always be vital to us and that without such a massive client so close to us, we would surely not be nearly as prosperous as we are today. As long as the United States provides the majority of Canada’s security, we will not be treated as an equal partner at negotiating tables with the United States. Let us seek to resolve this problem.