From a whisper to a scream
Trudeau can’t stave off Trump’s steel tariffs
Surreal as it may seem, Canada is now engaged in a trade war with the United States because Donald Trump deems this country a threat to America’s security.
U.S. Commerce Secretary Wilbur Ross announced sweeping tariffs on steel and aluminum imports from Canada, Mexico and the European Union on Thursday morning. He cited lack of progress on North American Free Trade Agreement talks as the reason for the tariffs, but they were applied under an obscure provision in the U.S. trade law that allows the administration to levy duties on imports it deems a threat to national security.
Prime Minister Justin Trudeau and Minister of Foreign Affairs Chrystia Freeland held an impromptu press conference Thursday afternoon to announce retaliatory measures worth $16.6 billion. Trudeau said using a national security provision as an excuse was an “affront” to a long-standing security partnership between the two countries and all those Canadians who fought and died alongside their American comradesin-arms in two World Wars, Korea and Afghanistan.
“The government of Canada is confident that shared values, geography and common interest will overcome protectionism,” he said.
According to Freeland, the measures being taken by Canada are intended to be precisely reciprocal — they balance the value of Canadian exports being hit by U.S. tariffs. The list of affected goods comprises steel and aluminum products but also consumer goods ranging from yogurt and pizza to coffee and maple syrup, from chocolate and strawberry jam to whiskey and playing cards.
The products were carefully chosen, Freeland said, so that Canadian producers and consumers were less badly affected. For most there is a Canadian-produced substitute, or options available from countries with which Canada has existing trade deals.
One consequence of the tariffs is that Trudeau’s reputation as the “Trump whisperer” has been shattered. The prime minister was unable to repeat his 11th hour intervention, which granted Canada a temporary exemption from blanket tariffs of 25 per cent on steel and 10 per cent on aluminum in March. The reprieve was tied to a renewed NAFTA, but a deal has not been forthcoming and is not expected anytime soon.
In the press conference, Trudeau denied suggestions the president rebuffed him this week. He said he made an offer to visit Washington to finalize the details of a modernized NAFTA. “There were the broad lines of a decent win/win/win that I felt required the final deal-making moment. But I got a call from Vice-President Pence on Tuesday, who impressed upon me a pre-condition to us getting together — that Canada accept a sunset clause. I had to highlight there was no possibility of any Canadian prime minister signing a NAFTA deal that included a five year sunset clause,” he said.
There are concerns in Ottawa now that the meeting of heads of G7 governments in Charlevoix, Que. next week — the pinnacle of Canada’s G7 presidency — may now be teetering on disaster.
The fear is that the imposition of steel tariffs on Canada and the European G7 countries will create such a hostile environment for Trump in Charlevoix that he may not even show up, though on Thursday Trudeau said “all indications are he will be there.”
The prime minister said he had spoken to the leaders of the opposition parties and been assured by Conservative leader Andrew Scheer that his party would continue to take a non-partisan approach on NAFTA. Later Thursday afternoon, however, Scheer released a statement blaming Trudeau for the tariffs. “It is clear that the prime minister failed,” said Scheer’s statement.
That is harsh. As one senior diplomat pointed out: “This government has been remarkably constructive — no public positions criticizing the Americans or making fun of Trump. They have done everything humanly possible to deal rationally with this Trump administration.”
Though the prime minister made clear his displeasure, he retained that respectful tone on Thursday — perhaps conscious of another investigation under the national security provision of the U.S. Expansion of Trade Act’s Section 232, one that could lead to a potential 25-percent tariff on imports of cars and trucks into the U.S.
“That is exponentially more significant,” said one source.
“The idea that cars and car parts from Canada are a threat to national security is even more absurd than making the claim about aluminum used in American fighter jets. We continue to hope logic and common sense will prevail with an administration that doesn’t always align itself around those principles,” Trudeau said.
But the prime minister’s influence with Trump may not be what it was.
The idea of a “skinny” NAFTA, essentially a deal on autos and agricultural access that would not require Congressional approval, appears dead. Trump remains rigid on his insistence on a sunset clause, which would require a renegotiation of the deal every five years, and on ditching the Chapter 19 disputeresolution clause that created the binational expert panel to adjudicate trade disagreements.
The failure to persuade Trump to extend the exemption suggests the growing influence of the arch-protectionists around Trump, like U.S. Trade Representative Robert Lighthizer.
Lighthizer is the first USTR in American history who appears to want to roll back trade liberalization and re-balance U.S. trade policy by forcing American multinationals investing overseas to repatriate their capital. In that scenario, the combination of lower corporate tax cuts and punitive tariffs is aimed persuading U.S. manufacturers to relocate their production in the U.S.
Speculation in Ottawa suggests Lighthizer doesn’t want an agreement, and believes a Democrat-dominated House of Representatives that may emerge after the U.S. midterm elections in November could give him leverage to extract an even better deal.
But there are signs that Canada still has allies in the White House. One senior source said Trudeau did not call Trump of his own volition last week — he was encouraged to do so by members of the president’s own team.
How is it possible to deal with such absurdity? On Walt Whitman’s birthday, his soothing words suggest the road forward:
“Keep your face towards the sunshine,
And shadows will fall behind you.”