How to win a trade war with the United States
Canada is now officially locked in a trade war with its closest trading partner.
According to the C.D. Howe Institute, U.S. tariffs on steel and aluminum will shrink the Canadian economy by $8 billion this year, meaning President Donald Trump’s tariffs are personally costing every Canadian $228 per year. And that will get much worse if Trump follows through on promises to enact even worse tariffs on the auto sector.
Below, a guide to how we can prevail in our just and righteous battle with the Americans.
Start lobbying: Trade powers, just like actual war powers, have been a Congressional responsibility since the 1700s. However, Trump is able to get away with this only because of a 1962 law that allows him to unilaterally throw up trade barriers in the interest of “national security.” Amend that law and all of this goes away. Fortunately for Canada, this happens to be an issue in which it’s pretty easy to find representatives from both parties who are horrified at their president’s actions on trade. Republican Sen. Orrin Hatch, for instance, recently said Trump aide Peter Navarro “should have kept his big mouth shut” when alleging Prime Minister Justin Trudeau belongs in hell (for which he later apologized). Of course, just because a U.S. lawmaker likes Canada doesn’t mean they’re prepared to go to the wall for us. “There are a lot of people who will say nice things about Canada, but they don’t have a lot of influence in the Trump administration,” said Edward Alden, a fellow at the U.S.based Council on Foreign Relations.
Be careful about how we retaliate: As the obvious underdog in this war, Canada would be best advised to continue with its current strategy of tit-for-tat retaliation. The White House slaps us with a tariff and we retaliate with a dollar-fordollar tariff package that follows all the proper WTO and NAFTA rules. The trick is to find things to tariff that will do the most harm to Americans, while costing Canadians the least. University of Calgary economist Trevor Tombe suggested finding U.S. products “that sell a lot to Canada relative to elsewhere.” The more a U.S. company is dependent on Canadians to stay in business, the more they’ll be willing to absorb the cost of a tariff instead of passing it on to the consumer. Tombe also warned against the urge to lay tariffs that would disproportionately punish Trump voters. Tariffs designed to punish Canada-dependent industries in Trump-loving Montana therefore would probably just make Montanans love Trump more.
Be nice: The House of Commons passing a unanimous motion to oppose the U.S. tariffs. A conservative exprime minister calmly explaining to Fox News that the White House actions didn’t make any sense. And a really old conservative exprime minister (who was best buds with Ronald Reagan) hurtfully wondering why the White House was suddenly lashing out at its “greatest friend and ally.” It’s important Canada not get angry: Trump looking like an unprovoked bully is going to be good for us in the long run.
Get allies: Fortunately, just as Trump is alienating Canada, he’s also alienating most other big economies. The European Union is considering following Canada’s lead on enacting retaliatory tariffs on the U.S. for its trade barriers on steel and aluminum. Meanwhile, Japan has been hit hard by new U.S. tariffs since March and they’re not too happy about this recent North Korea summit. If this new anti-U.S. coalition can stick together, it might collectively be able to cause some noticeable damage to the U.S. economy.
Pray for economic “harm:” Logic and reason are not going to win this fight, at least not with the U.S. president. Trump is doing this largely because of an economically illiterate notion that trade deficits are inherently bad. He also seems to be uninterested in the fact the U.S. actually runs a substantial trade surplus with Canada. “I do not believe this trade conflict will end until we see some real economic harm in the United States, which almost certainly means this dispute is going to escalate further,” said Alden.