Trump’s whims could deal blow to our economy

No easy answers but Canada can try to minimize the risk

The past three decades of Canadian political economy have been a test case as to the effects of corporate-driven free trade — with the results indicating that the promise of trickledown economic benefits is entirely illusory. But it’s just in the past week that we’ve seen the futility of relying on corporate trade deals when they’re supposed to matter most.

From the moment Canada pushed ahead with free trade with the U.S. and Mexico, the move from economic management in the public interest to blind faith in capital market forces was bound to displace some workers. And an insufficient adjustment plan, combined with a sudden demand to cut off social spending, exacerbated the harms from structural change.

In theory, we were supposed to see a long-term economic reward for that short-term pain. But contrary to the promises of free-trade zealots, most Canadians haven’t made up any ground.

Workers’ wages have been stagnant even as corporate profits have soared; inequality has at best plateaued after rising initially; and the few obvious sources of increased income and wealth in three decades of the free trade era have involved global commodity booms and land price surges, rather than any factors remotely traceable to increased reliance on trade with the U.S. and Mexico.

Beyond false economic promises, there was always one backup argument as to the supposed value of a free-trade agreement. Even if it tied the hands of our own government, at least NAFTA was supposed to limit any economic upheaval in the event of unpredictable political developments in the other participating countries.

Enter Donald Trump to demonstrate the folly of that assumption.

While a systematic increase in the risks and costs of public action thoroughly warps the incentives facing rational government actors, it poses no meaningful deterrent to an irrational one. And now, a president who is unabashedly willing to leave everybody worse off in order to demonstrate his own power has had no problem launching a trade war — regardless of what NAFTA says about its legality.

It’s possible the U.S. will eventually have to pay some compensation for throwing up tariffs willy-nilly — and indeed that Canada might have to do the same to the extent it retaliates. But Trump doesn’t seem to have any problem with that outcome, which would ultimately see businesses on all sides paid off by the same public that is caught in the crossfire.

Meanwhile, NAFTA’S omission of public interest by design means that the investor class alone has any standing to recoup any losses from a trade war, while the general public will be left to foot the bill.

Unfortunately, there aren’t any easy answers as to what we can do as an immediate response to the likes of Trump.

No matter how smartly Canada’s retaliation may be targeted in any trade war, it’s not clear that it will have a meaningful impact on Trump’s bombast. And nothing in Trump’s behaviour suggests there’s any prospect of even undoing the damage already inflicted on the relationship between the U.S. and Canada — let alone agreeing to terms on a new deal.

That means our longer-term priority should be to re-examine the two key choices underlying NAFTA: The additional tethering of Canada’s economy to the U.S., and the linkage of our economies on terms which privilege corporate interests over public ones.

There’s little we can do to avoid the immediate fallout from Trump. But with more forethought, we can at least minimize the damage that we (and the rest of the world) may face from his ilk. Greg Fingas is a Regina lawyer, blogger and freelance political commentator who has written about provincial and national issues from a

It’s not clear that (Canada’s trade retaliation) will have a meaningful impact.