We’re out? Who knows
COMMENT NAFTA salvo is Trump’s latest trade drama
The extraordinary thing about Donald Trump’s presidency is this: as low as expectations of him were going in — as ignorant, unstable, and corrupt as he seemed likely to be, in advance — he has still managed to come in under them. It is impossible, indeed, to imagine how his first 100 days could have been worse, short of — well, I was going to say short of starting a war, but stay tuned.
In the same way, however much of a dilemma as Trump may have been supposed to present the government of Canada, we are beginning to see just how much worse it can be. Whatever attempts might have been made to anticipate the kinds of havoc he could cause Canadian interests — and there is every indication Trudeau’s people were seized of this from the night he was elected — have proved inadequate, for the simple reason that he is inherently unpredictable. Trump’s next move is a mystery to everyone, including him. As president, he is a random walk.
It is not j ust that his policy pronouncements cannot be assumed to conform with those of any past president, Republican or Democrat — it is that they cannot be assumed to conform with anything: not established f act, not expert consensus, not custom or precedent, not domestic or international law, not his own past statements, not even, in many cases, the previous sentence.
He is a rogue missile, guided variously by i mpulse, e go, pique, who talked to him last, what he saw on Fox News, or which of the various factions within the White House is temporarily ascendant.
And so we have the serial drama of the past several days, in which the president, having scant weeks before assured the world that relations with Canada were “outstanding,” that trade arrangements between the two countries needed no more than “tweaking,” suddenly discovered that Canada was the United States’ mortal enemy, a devious, inscrutable power that pretended f riendship while plotting infamies against American farmers and workers. Shocked, he responded by attacking first the dairy sector (“very, very unfair”), second the softwood lumber industry, in the form of a 20 per cent countervailing duty, and finally, NAFTA itself (“a disaster”), via an executive order, supposedly drafted and ready to go, signalling his intent to withdraw from the deal in six months.
Trade is f ar f rom t he only area in which Trump has made life difficult for the Trudeau government. Wednesday’s sweeping tax reform proposal, should whatever package is finally passed by Congress r esemble it i n any degree, would present a monumental challenge to Canadian policy- makers: the slashing of the corporate tax rate, in particular, from 35 per cent to 15 per cent, would undo several years of effort to establish a competitive advantage for Canada in the taxation of capital.
The arrival of hundreds, perhaps soon to be thousands of asylum- seekers on our southern border may not be entirely attributable to Trump’s abrupt, if abortive, rewriting of American l aw on refugees, but the unforgiving stance it connoted was surely a factor. The demand that Canada, and other NATO partners, pony up the promised defence spending of two per cent of GDP, more t han twice the current defence budget, puts added pressure on Canada’s already tenuous finances. American withdrawal from the Paris climate accord, should it come to that, would arguably make Canada’s commitments moot.
How should the government Canada respond to all this? The short answer is: slowly. There is a case for waiting things out, in foreign affairs as in politics, for where there is time there is hope. The hasty response, the intemperate over- reaction, may only make things worse. Time, by contrast, offers the chance to build alliances, entrench defences, stall, bargain, deflect. In time, Trump may change his mind again, or be distracted by other priorities, or lose public support, or be impeached.
Some of Trump’s latest imprecations may prove less fearsome, come the dawn, than they now appear. The threat to withdraw from NAFTA is more than likely an attempt to gain bargaining leverage in the coming renegotiations; in any case, it is not entirely clear Trump can do so unilaterally ( I have read lawyers’ opinions on both sides of the question). The tax plan, likewise, is probably best regarded as an opening bid: so far as it implies permanently increasing the U. S. budget deficit, it is unlikely to pass the Congress.
What we should not imagine we can do is change Trump, much. The Trudeau government’s efforts to engage and flatter him may have failed to divert his wrath, but I’m not sure any other approach would have succeeded better. In particular, there would seem little point in retaliating — slapping tariffs, for example, on American exports in response to Trump’s tariffs on ours.
Nothing we can do to them would have remotely comparable impact, given the difference in our sizes and relative trade dependence.
We would i ndeed be hurting ourselves much more than them; impoverishing our own consumers is an odd way to “retaliate.”
Free trade, rather, is the best revenge: keeping our borders open, even if they do not, while pursuing further trade l i beralization opportunities with other partners — China, Japan, the Trans Pacific Partnership. Indeed, much of what we might do in response to Trump is stuff we ought to be doing anyway. We should have gotten rid of supply management long ago. If that can now be used as a bargaining chip, so much the better. The need f or comprehensive tax reform, likewise, has been evident for years; the Trump chall enge only makes urgent what was already desirable. Neither can Canada’s history of welshing on our NATO commitments be anything but a source of national shame.
If we cannot i mprove Trump’s behaviour, in sum, we can at least improve our own.
IN TIME, TRUMP MAY CHANGE HIS MIND AGAIN, OR BE DISTRACTED.