Canada stunned over Trump trade threats
TORONTO—It started with President Donald Trump’s attacks on Canadian dairy farmers. Then Washington slapped tariffs on Canadian steel, citing national security. There was that disastrous G-7 summit in Quebec. Now it’s a new North American free trade agreement that excludes America’s northern neighbor.
Canadians are stunned by the repeated broadsides from what has long been their closest ally and some have even begun boycotts.
“Everybody is afraid,” said Margot Lajeunesse, who helps run a familybistro in Quebec. “We depend a lot on the U.S.”
About 75 percent of Canada’s exports go to the U.S. so the tariff threat looms large after Trump snubbed Canada and reached a preliminary deal with Mexico.
LaLa Bistro, owned by the Lajeunesse family, is among Canadian businesses that are boycotting California wines, American ketchup and other U.S. products in protest. Some Canadians have cancelled U.S. vacations, particularly after Trump assailed Canadian Prime Minister Justin Trudeau at the G-7 meeting in June, calling him a “weak” and “dishonest” back-stabber.
“It’s not the way you treat a friend,” Lajeunesse said.
“It’s revolting, agreed Raymonde Kennedy, who has ceased buying American products like mustard and clothing. “We won’t be insulted like that, by a man with no brain.”
Luc Routhier, co-owner of Bar Le P’tit Canot in Quebec, also banned American wine from his eatery after Trump announced tariffs on Canadian aluminum and threatened Quebec’s dairy industry.
“I’m not even going to the U.S. this year,” he said. “I’m a golfer, and normally I do two trips a year to the U.S. with my buddies.”
“I’ll only go back to the United States when Trump is gone.”
To intensify the pressure on Canada, Trump threatened this week to impose new taxes on Canadian auto imports if Canada didn’t negotiate “fairly.” Canada must now decide whether to sign onto an agreement it didn’t negotiate, or risk that the U.S. and Mexico will make good on threats to do a two-way deal that excludes it.
Canada could lose 60,000 jobs in a trade war and take a 1 percent hit to its GDP—a significant drop because Canada’s economy is projected to grow just 2 percent next year, according to estimates from the C.D. Howe Institute, a Toronto-based think tank.
Canada had been left out of the trade talks for the past five weeks, but Trudeau said there was still a “possibility of getting to a good deal for Canada” by Trump’s deadline of Friday.
“But,” he added, “as I’ve said all along it has to be the right deal for Canada. We will not sign a bad agreement.”
Trump expressed optimism Wednesday that a deal could be reached.
“We gave until Friday and I think we’re probably on track,” Trump said. “We’ll see what happens. I love Canada. And you know what, I love Mexico too. … I like them both the same.”
There is some optimism in Canada’s automotive sector despite the Trump tariff threats.
Among other things, the U.S.-Mexico deal mandates that 40 to 45 percent of a car be made in a country with a minimum hourly wage for auto workers of at least $16 to qualify for duty-free status—a requirement that could stem the flow of auto-sector jobs to Mexico, where auto workers earn on average just $5 an hour.
“This should stop the bleeding in Canada,” said Jerry Dias, president of Unifor, Canada’s largest private-sector union.
Bank of Montreal chief economist Douglas Porter said the U.S. deal with Mexico leaves Canada in a near take-itor-leave-it situation. Still, he noted investors have welcomed the news and that helped push the Canadian dollar up 0.5 percent. Stocks of Canadian auto parts companies were up too.
“Perhaps the clearest indicator that the market is viewing the U.S.-Mexico deal as a positive for Canada is the strengthening of the Canadian dollar,” Porter said.
Still, the ties between the U.S. and Canada are without parallel anywhere in the world. Trade between the two neighbors totaled an estimated $673.9 billion in 2017, with the U.S. enjoying a nearly $3 billion surplus with Canada. Each day, about 400,000 people cross the world’s longest international border. There is close cooperation on defense, border security and law enforcement, and a vast overlap in culture, traditions and pastimes.
Trudeau’s father, the late Prime Minister Pierre Trudeau, offered this take on sharing a continent with the United States. “Living next to you is in some ways like sleeping with an elephant,” he said. “No matter how friendly and even-tempered the beast, one is affected by every twitch and grunt.”