United States Tariffs the Saga Continues

United States Tariffs the Saga Continues by Maj (ret'd) CORNELIU. CHISU, CD, PMSC, FEC, CET, P. Eng. Former Member of Parliament Pickering-Scarborough East Canada has received a 30 days reprieve until 4 March from the 25% tariffs the Trump administration threatens to impose. However, the situation is far from good, while politicians in Canada are involved in elections at various levels. Ontarians have been called to the polls on February 27 to elect a new government, while the Governing Liberal party is involved in a leadership contest in order to elect a new Prime Minister of Canada, who in turn, will be facing an imminent election. These electoral diversions cannot help but seriously affect sound national judgement. Therefore, the tariffs are still a menace for Canada and strong leadership will be essential in negotiating with the Trump administration. Ontarians are looking for their leaders to stand up for them, and secure the best possible options. Dealing with tariffs, border-state diplomacy, ad campaigns aimed at American voters, and business-to-business pressure are all necessary tactics. The fear of ordinary Ontarians over this eventual tariff war must be addressed. That is where Ontarians are looking to their own province’s leaders to protect them. Ordinary people are not worried about theoretical macroeconomic shocks. They are concerned about the price shock of suddenly paying a lot more for gas, groceries and other imported products. That is what keeps them up at night. With the provincial election campaign in full swing, I am just wondering how Premier Ford’s caretaking government will be able to deal with this very serious issue. If it is mishandled, it will affect the wellbeing of the people of Ontario and Canada as well. However, nothing will matter as much as Doug Ford’s ability to convince Ontarians that he is the best candidate to protect their pocketbooks from Donald Trump ‘s actions. Elections are not won on hypotheticals; they are won on trust. Moreover, right now, Ontarians do not need a leader who promises to “figure it out” when the storm hits. The storm has already hit. They want someone who has been through the storm before and knows how to steer the ship. Calling an election when the Province of Ontario already had a majority government, shows very poor leadership, especially when the government should be fully focused on this potentially major economic problem. Looking good in the polls now, can easily backfire. At the same time, the governing Liberals are involved in a leadership contest that will be decided on March the 9th, and is very likely to be succeeded by a federal election. All these electoral issues obviously jeopardise the full attention that should be dedicated to the very likely trade war with the United States. It seems clear that the Trudeau government mistakenly believed it could persuade Trump to change his mind. Therefore, they made no preparations for this looming eventuality between late November when Donald Trump first raised the prospect of tariffs on Canada, and when he officially announced them. Now that we have gotten this 30-day reprieve, we cannot afford to waste this time too. Although the temporary agreement is ostensibly focused on fentanyl and border control issues, Trump’s social media post emphasized that the delay was meant to see “whether or not a final economic deal with Canada can be structured.” This post strongly suggests that all of this turmoil will culminate in the imminent renegotiation of the United States-Mexico-Canada Agreement (USMCA) under the threat of imposing tariffs, withdrawal from the agreement, or some combination of the two. Canadian policymakers need to be ready. They should be devising a renegotiation strategy over the next 30 days, which accepts that any negotiation is going to be suboptimal. It will be conducted under a state of duress and the lesson of the past weeks is that there is no guarantee that Trump will ultimately honour an agreement. Yet it is still in the country’s best interests to try to maintain a free trade agreement with the United States. Canada must therefore have a clear understanding of its own priorities in advance of the USMCA’s renegotiations. The US administration’s lack of clarity on what it precisely wants can actually be an advantage. Canada has a chance to shape the negotiations and fill-in-the-blanks of America’s policy goals. By exercising first-mover advantage, Canada could set out a new vision for a North American economic and security partnership. Such a proposal must be cognizant of the administration’s understanding of the end of unipolarity and the requisite adjustments to America’s economic and foreign policy. Trump’s top advisors firmly believe that the U.S. can no longer accept the asymmetric economic and security arrangements with its allies that have marked the past several decades. Those in its orbit (or bloc) will face greater expectations than ever before. Canada will need to bring more to the relationship. This requires Canadian policymakers to reach beyond the typical playbook. Radical ideas like economic union or a common border adjustment policy should be considered, for example. The same goes for a bilateral arrangement on drug development costs and consumer prices. Alternatively, even shared border patrols and Arctic defence bases. Are Canada’s politicians ready to think outside the box?