Quiet campaign ends with audible sigh
Year-long push to avoid steel, aluminum tariffs culminated in a nail-biting final week
WASHINGTON — In this most unpredictable era in Canada-U.S. affairs, a crisis-management unit created inside the office of Prime Minister Justin Trudeau, devoted to Donald Trump-related emergencies, was designed like a campaign war room. Thursday was election day.
As a quiet, year-long push to avoid steel and aluminum tariffs culminated in a nail-biting final week, staff were nervously awaiting the results, which rested almost solely in the hands of one single voter: Donald Trump.
Canadians only began following this campaign closely during its final days, after the U.S. president pushed the tariff story onto front pages around the world. But unbeknown to most, it had actually been floating near the top of the Canada-U.S. agenda long before then, dating back to an announcement last spring that the U.S. was contemplating drastic measures.
“It got our attention from the beginning,” said one Canadian official.
It was among the topics Trudeau raised with Trump at the G7 in Sicily, and twice by phone last spring, then again this week. Foreign Affairs Minister Chrystia Freeland also made under-the-radar trips to Washington, where it was a key topic of conversations with U.S. Commerce Secretary Wilbur Ross.
While Freeland was most involved in the effort, so were the ministers of defence, transport and natural resources, as well as diplomats at the United Nations and in Washington, with the central unit in Trudeau’s office co-ordinating with the myriad messengers.
“This has been a true Team Canada effort,” Freeland noted this week.
The issue intensified last spring, then waned a bit last fall, as the administration blew past deadlines amid its numerous planned trade actions; Canada’s focus turned to other hot files, like NAFTA.
Shortly after Christmas, the staffer heading the Canada-U.S. unit in the Prime Minister’s Office, Brian Clow, was flipping through a list of American trade files and made note of the fast-approaching legal deadlines for the U.S. to release its tariff recommendations.
“We resumed our aggressive lobbying essentially the first week of January,” said the Canadian official, who spoke on condition of anonymity in order to discuss frankly the details of Canada’s efforts.
Those efforts reached a peak last week. The planning unit within the centre advised everyone to set steel and aluminum atop the agenda when talking to Americans.
Canada’s lobby effort, as it turned out, found numerous receptive ears. Powerful figures in American politics urged the administration to take a more targeted approach, most notably Defence Secretary James Mattis.
More than 100 congressional Republicans published a letter expressing their dismay. A common theme among Washington critics was to ridicule the idea of national-security tariffs imposed on Canada.
The original U.S. news reporting on the tariffs kept referring to them as a measure aimed at China, but within a day the conversation shifted and American media noticed the northern neighbour would be the No. 1 loser.
In an editorial under the headline “Trump’s tariff folly,” The Wall Street Journal pointed out: “The tariffs will whack that menace to world peace known as Canada.”
The administration line softened. After espousing a no-exceptions attitude, Ross and White House trade hawk Peter Navarro suggested in last Sunday’s weekly talk shows that the door to potential revisions remained open.
Trudeau had a cordial phone call with Trump on Monday. Developments over the week led the Canadians to believe they might be spared the immediate impact of tariffs, but they were still watching for bad news Thursday.
Of particular concern was the possibility the presidential proclamation might include some trigger snapping the tariffs into place, say in 30 days. The fear in Ottawa was that it could become a threat at the NAFTA negotiating table.
It still could: Ross has made clear he wants to see the steel issue addressed somehow — inside or outside NAFTA.
The American concern, and the reason some chafed at an exemption for Canada, was the possibility that U.S. barriers will depress worldwide prices, then the rest of the world might use the neighbours as a back door to keep dumping cheap steel into the U.S.
Ross suggested he still wants some action from Canada and Mexico to address the international glut.
“The form of what happens isn’t so important,” Ross told CNBC. “What is important is the substance. And the substance has to be to hold down over-production.”
Yet Thursday’s news was far from the feared scenario.
There was a pattern in the way the Americans spoke — and it did not go unnoticed in Ottawa: nobody specifically threatened tariffs later. The presidential proclamation used vague language, and referred to a special situation with Canada and Mexico. Trump hinted that maybe something could happen with Canada later, or maybe not, and in any case he expressed optimism a successful NAFTA would be reached. There were similar messages at a White House briefing, and from Ross.
Ross even wrote a Wall Street Journal editorial Friday that eschewed a belligerent tone: “We expect continuing negotiations to create more national-security benefits than the tariffs,” he wrote in his only reference to Canada and Mexico.
One campaign was over, the NAFTA one remains ahead, and both Canada and Mexico insist they are two separate battles.
“Today is a step forward,” Freeland said. “There is more hard work to do.”