Don’t let Trump win on trade

Donald Trump’s decision to slap tariffs on aluminum from Canada didn’t make any economic sense when he did it the first time in 2018. It makes even less sense the second time around.

Start with the timing. Trump’s slap at Canada comes barely a month after the new, updated version of NAFTA officially came into effect. At a minimum, the tariffs violate the spirit of cross-border co-operation that was supposed to come with what’s now known (in Canada, at least) as CUSMA.

To make things even worse, it all comes as both countries are trying to rev up their economies after the COVID-19 shutdown. Turning on your neighbour and leading trade partner at such a delicate moment makes no sense.

But it was never about economics. Back in 2018, Trump used tariffs on aluminum and steel to put pressure on Canada and Mexico during the NAFTA negotiations.

This time, the new tariff is a transparently political move to buff up Trump’s claim to be the protector of American manufacturing. No coincidence that it was announced in rust-belt Ohio, the most critical swing state in November’s presidential election. Trump’s ludicrous claim that the tariff is justified by a threat to U.S. “national security” just adds insult to injury.

The 10 per cent levy on aluminum, as many pointed out two years ago and again this week, will only penalize American consumers and workers. They’ll pay more for everything made from aluminum, from beer cans to cars.

Even most of the U.S. aluminum industry is against the move. They know they can’t meet American demand and they don’t buy Trump’s claim that Canada is flooding their market.

Two years ago, the Trudeau government made the best of a bad situation. It imposed dollar-for-dollar tariffs of its own on American goods and focused on getting the North American trade deal renewed with as little damage as possible along the way.

This time around, the government again has no choice but to impose retaliatory tariffs if the Trump administration doesn’t change its tune. But the real game now is to wait out Trump. His erratic and destructive behaviour on the trade front is just one more reason to wish fervently for his defeat in November.

In the meantime, it’s tempting to respond with the kind of emotion that Premier Doug Ford showed on Friday when asked about Trump’s move. “We’re up against a real battle right now,” said the premier. “It’s us against them.”

Ford said Canadians should “hit them where it hurts.” He called on Ontario companies to label their products “Made in Canada” or “Made in Ontario” so consumers can use their spending power to buy local rather than supporting American producers.

In the heat of the moment, that sounds good. But is this really the road we want to go down? If the United States is intent on shooting itself in the foot by raising prices for its own consumers (which is what tariffs do), does it make sense for us to get even by lopping off some of our own toes?

“Buy Ontario” has a nice ring to it, but if it’s followed by “Buy Quebec,” “Buy Manitoba” and “Buy Michigan,” will that leave anyone better off in the long run?

Securing guaranteed local access to key strategic goods like personal protective equipment is one thing. Buying Ontariomade potato chips on principle, rather than perfectly decent snacks from Manitoba or Ohio, is another. Presumably we want people in Manitoba, Ohio and everywhere else to buy our excellent chips and not snub them out of a misplaced sense of local pride.

But this is the road Trump wants to send us down — a self-destructive downward spiral of protectionism that will leave everyone worse off.

In the short run, simple self-respect demands that Ottawa stand up to Trump’s unjustified tariff. But let’s not lose sight of the real goal: defending a rules-based system of free and truly fair trade that benefits everyone.

Trump’s ludicrous claim that the tariff is justified by a threat to U.S. “national security” just adds insult to injury