Canada could be hit by fight between Washington and Beijing

Canada is about to get hit again by China, even if it is only the spillover effect from the trade war boiling over between Washington and Beijing.

Over the weekend, China retaliated against American tariffs on Chinese goods by banning agricultural imports from the United States by state-owned companies. They also started to devalue their currency a move that saw the White House label Beijing a ‘currency manipulator’ and file a complaint with the International Monetary Fund. This latest battle could last for some time, according U.S. President Donald Trump who tweeted, “I’ll do it again next year if necessary!”

So what does this mean for Canada? We’re already suffering collateral damage from helping the United States deal with Huawei CFO Meng Wanzhou. Two Canadians — Michael Spavor and Michael Kovrig — have been held for more than seven months now.

China has also taken retaliatory measures against Canada’s canola, soybean, pork and beef producers. The most immediate impact of these latest changes in the trade war could be Canadian exports becoming more expensive in China. As China devalues its currency, our exporters have a tougher time selling to them, even as goods they send us become cheaper and easier to buy.

Charles Burton, an expert on China and senior fellow with the Macdonald-Laurier Institute’s Centre for Advancing Canada’s Interests Abroad says that in another era, China and the United States embroiled in a trade war could have helped our producers get more market share.

But not now. “Due to our ongoing dispute with China and China’s sanctions against us, I don’t think this will positively impact on Canadian agricultural exports to China,” Burton said. “They’ll be sourcing their soybeans from Brazil.”

As Canada continues to take an economic beating from China, Burton says there seems to be little the government is willing to do to help free Spavor and Kovrig or improve trade conditions.

“We lack the political will to take this matter more seriously,” Burton said. “If we had been more assertive in retaliating against China by, say, slowing shipments of Chinese goods on the basis of searching for fentanyl, that would have sent a signal to China,” Burton said.

He adds we could also have added pressure by cracking down on Chinese money laundering, mostly taking place in British Columbia through casinos and property purchases. All of this he puts down to pressure from many in Canada’s business and political elite with extensive business ties to China, and don’t want to rock the boat.

While Burton calls for an aggressive approach, Carlo Dade is opting for a less confrontational method of dealing with China. Dade, director of the Centre on Trade and Investment Policy with The Canada West Foundation says Japan, Australia and New Zealand – all countries with extensive experience dealing with China’s bully tactics – take wait-and-see approaches that seems to be working.

He also suggests Canada take greater advantage of other tools at our disposal, such as selling more of the goods that China doesn’t want to partners in the recently-ratified Trans Pacific Partnership. “If you look at beef, or even pork, we’ve seen significant surges in our exports to Japan – and Japan has been the bigger market for us,” he said.

Selling more to Japan, Vietnam and other countries could mitigate the losses in China. “It couldn’t have come at a better time,” he said.

“The markets that count are in, and we are seeing increased exports.”