Competing interests
CANADA ISN’T READY FOR CHAOS HEADING OUR WAY FROM SOUTH OF BORDER
One of the lesser-noted moments in Michael Wolff ’s behind- thescenes book on the Trump presidency comes when Reince Priebus, the much- maligned chief of staff, throws in the towel and approaches Donald Trump on Air Force One to offer his resignation.
Trump tells him to take his time. “You tell me what works for you,” he says. “Let’s make it good.”
Minutes later the plane lands, Priebus steps out and discovers Trump has already tweeted his departure and the name of his replacement, who also hasn’t been notified of the change.
In the wacky world of Trumpdom it’s barely worth noticing, but it underlines the challenge Canada, and much of the rest of the trading world, faces in seeking certainty from an administration embroiled in perpetual confusion. The U. S. has been at the heart of liberalized trade for decades, but is now seen by many as its biggest threat, attacking accepted conventions while simultaneously denying it is doing any such thing.
The problem is that, a year into Trump’s administration, it has become clear that nothing he says can be trusted. He may say one thing one moment, then tweet the opposite seconds later. If you accept the portrait penned by Wolff — and reportedly reflected in less sensational terms in a forthcoming book by media critic Howard Kurtz — the people around the president are in a constant state of mystification as to what he may say next, whether to take his latest words serious- ly, whether to act on his demands and whether he himself knows what he wants, other than constant praise and approval. Words spill out, but they don’t necessarily carry any meaning.
This is a problem for those who, like Secretary of State Rex Tillerson, seek to represent presidential policy while ever in danger of being publicly contradicted and castigated. It’s no less the case for Robert Lighthizer, who has headed efforts to rework NAFTA while dealing with Trump’s see- sawing comments and moods. As the sun rises, Trump observes that talks seem to be going well. By noon he’s inclined to scrap the whole thing. By nightfall anything is possible.
“Look, the U. S. is not pulli ng away from nothing,” insists Gary Cohn, Trump’s head of the National Economic Council. Yet Washington has already quit the Trans- Pacific Partnership and is filibustering appoint- ments to the World Trade Organization, while slapping tariffs on trading partners in Canada and China. Cohn claims Washington is pursuing numerous bilateral deals, but doesn’t identify any.
It all suggests Lighthizer has no more clue than anyone else where it will lead. He could conclude a deal with Ottawa tonight, only to have Trump tweet it to death before dawn. No matter how firm his assurances to Canada’s negotiators, he can promise nothing, because he just doesn’t know whether his pledges will be kept. His boss is irascible, unpredictable, impulsive and prone to sudden changes of mind.
The challenge for Canada is to prepare for whatever outcome prevails, even as the goalposts keep moving. The Trudeau government is clearly making attempts: after bungling a TPP session in Vietnam at which agreement was expected, Ottawa confirmed Wednesday a trade deal had been reached among 11 Pacific Rim countries, excluding the U. S. If Prime Minister Justin Trudeau believes Washington’s assurances that it supports freer trade, it wasn’t evident in his remarks.
“If we’re going to push back against the anti- trade tendency in globalization that will leave us all worse off, we have to put the concerns and the well-being of our or- dinary citizens at the centre of what we are negotiating and that’s what all 11 of us have been able to do,” he said in Davos.
Unfortunately, one trade deal can have only limited impact in a marketplace surrounded with uncertainty, and Canada appears unsettlingly unprepared. As Andrew Coyne indicated in worrying detail on Monday, Canada is coasting on a wave of confidence based largely on deteriorating realities. At a time one in three Canadians say they can’t cover monthly bills, and with consumer debt at record levels, the U.S. has appointed a new Federal Reserve chairman who plans to continue raising interest rates. Unless Canada wants a plummeting dollar, the Bank of Canada must follow suit, pushing up mortgages, credit card rates and other borrowing costs even as the country’s largest cities already border on unaffordability.
Most of the provinces continue to act as if good fortune will go on indefinitely. Ontario, by far the biggest economy, is mired in debt and dangerously vulnerable to disruption of the trade links that tie it so closely to U.S. markets. Yet its unpopular government continues to move resolutely to the left in search of votes, piling on new taxes, restrictions, wage hikes and friendly labour laws bound to diminish its attraction to investors, even as the recent U. S. tax overhaul sharply increases its competitive advantages. J.P. Morgan Chase and Co. said Wednesday it will spend $20 billion on U. S. investment over five years, solely from the gains it garnered in the tax overhaul. It is only one of many that see renewed appeal in its home market, a fact Canada seems slow in grasping.
There is little evidence Finance Minister Bill Morneau is preparing for the growing threat to Canadian competitiveness. While larger issues gathered, he spent six months targeting small businesses in his ill- starred effort to find new revenue for Liberal spending plans. Rosy projections from the finance ministry depend on future spending restraints that are unlikely at best. In Davos, his response to questions about the U. S. tax challenge was the usual breezy brush-off.
“We intend on staying competitive,” he said. “It will have different impacts on different sectors, so we are looking carefully on it.”
We’ll have to take him at his word, since there’s no evidence to back it up. If Trump manages to stay in office until the end of his term, Ottawa needs to be prepared for an ongoing roller-coaster of uncertainty, which could quickly torpedo all its warm assurances about its devotion to championing the middle class. Now would be a good time to start.
LOOK, THE U.S. IS NOT PULLING AWAY FROM NOTHING.