National Post (Latest Edition)

From a whisper to a scream

PM’s Trump skills fail to work on steel tariffs

- JOHN IVISON in Ottawa

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 comrades-in-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 Canadianpr­oduced 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 VicePresid­ent Pence on Tuesday, who impressed upon me a preconditi­on 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-per-cent 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 dispute-resolution 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 U.S. trade representa­tive in American history who appears to want to roll back trade liberaliza­tion and rebalance 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 at persuading U.S. manufactur­ers to relocate their production in the United States.

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. mid-term 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.”

 ?? MANDEL NGAN / AFP / GETTY IMAGES FILES ?? Prime Minister Justin Trudeau’s influence with U.S. President Donald Trump may not be what it was.
MANDEL NGAN / AFP / GETTY IMAGES FILES Prime Minister Justin Trudeau’s influence with U.S. President Donald Trump may not be what it was.

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