No shots fired - yet

In a recent editorial by The Globe and Mail, it hit the nail squarely on the head with its assessment of the current state of Canada-U.S. relations. “As a country, we have always assumed that our relationship with the United States was based on more than a collection of overlapping interests, and that an American president would not abandon common sense in his dealings with us, or deliberately hurt us,” it surmised. The pointed editorial then went on to observe: “Disagreements, yes. But no shots fired.” This is what the literature on bilateral relations commonly refers to as a long-standing Canadian American “diplomatic culture.” That is, an agreed upon set of diplomatic “rules of the game” and tacit understandings about how diplomacy between the two countries is to be conducted. In general, the rules of the Canada-U.S. diplomatic game revolved round managing issues bureaucratically and seeking conflict resolution through diplomatic interchange. There were no threats of retaliation or playing of power games; no effort to politicize bilateral disagreements; and no attempt to link the resolution of one dispute to the untangling of another. Indeed, issues and irritants would be resolved on their merits and always via a diplomatic compromise. Both countries realized that a cordial and constructive bilateral partnership was in the overall best interests of the two countries. Washington understood, moreover, that cultivating special relations with Canada sent a powerful message to the rest of the world. That is, the U.S. can be trusted, plays by the rules and respects its negotiating partners and friends. All of that has changed with the unorthodox Trump lording over the West wing - as the fallout from the G7 has aptly demonstrated. He has no interest whatsoever in playing by the rules or understanding how valuable a friendly ally like Canada could be to the United States. Apparently, he has figured out his own way of doing things, which goes against what 13 other U.S. presidents plainly understood. Back in the early 1970s, the socalled “Nixon shocks” resulted in Washington initially imposing a 10 per cent surcharge on foreign imports (including those from Canada, its largest trading partner). Up until that point, Ottawa had been able to finagle an exemption from a host of harmful U.S. economic and budget-related measures. And in the case of the Nixon surcharge, it was effectively removed after roughly three months (in part because of Canadian pleading) and the normal bilateral modus operandi was restored. But that was almost 50 years ago. Fast-forward to spring 2018 and witness the “Trump shocks” precipitated by the invocation of an old national security justification to hit Canadian steel (along with Mexico and the European Union) with a 25 per cent tariff and a 10 per cent tariff on aluminum. With a more economic nationalist and protectionist team now ensconced in the Trump White House (especially the likes of Peter Navarro and Wilbur Ross), a U.S. president always keen to please his political base and an administration determined to change the international economic order to its own liking, Canada and other Western countries are surely in for a rough ride ahead. Needless to say, a key part of the tariff tussle was driven by Trump’s belief that punishing both the Canadians and the Mexicans will bring them to cry uncle at the NAFTA table. Predictably, Canada responded with its own set of tariffs on U.S. imports (steel and consumer goods) - from whiskey to playing cards (and totalling an equivalent cost of $16.6 billion on U.S. products). It is the toughest response in terms of retaliatory trade action that Canada has ever enacted in the post-1945 period. Of course, the last thing that Canada wants to do is to trigger a wider trade war with our biggest customer. The real fear, which would be far more consequential in terms of economic impact than steel or aluminum, is that Trump follows through with his threat to slap a 25 per cent tariff on imported foreign cars. That would inflict enormous economic damage on southern Ontario and cost the Canadian economy approximately $80 billion annually. I’m not really sure today where we go in terms of Canada-U.S. relations. We’ve never seen this type of bad diplomatic behaviour before. Perhaps all we can do is wait out the current occupant in the White House and pray that Americans come to their senses in 2020.