The slightly comic array of American products targeted by Canada for retaliatory tariffs on Thursday (gherkins, playing cards, inflatable boats) belies the seriousness of the moment we find ourselves in.
The Trump administration has slapped a 25-per-cent tariff on Canadian steel products and a 10-per-cent tariff on aluminum, removing Canada, Mexico and the European Union from a list of trade partners exempted from those levies.
That grace period was extended to Mexico and Canada because of ongoing NAFTA negotiations; the slow pace of those talks prompted the U.S. to slam it shut.
Canada has responded in kind, throwing in a range of foodstuffs (toffee, mustard) and consumer products (fungicide, bobbins) to reach an equivalent dollar figure. We have entered the most serious skirmish yet in the low-level Canada-U.S. trade war that has been simmering ever since Donald Trump was elected president.
Of course, the tariffs on Canada are senseless and self-harming, but President Trump’s motivations are clear: This is a power move aimed at extracting NAFTA concessions.
The U.S. administration’s nominal argument, that unfettered steel imports imperil national security, is obviously bogus – Canada and the U.S. are the closest of allies. Nor can this move be laid at the door of the President’s frequently invoked soft spot for industrial workers, because the tariffs will harm American factories that use Canadian steel.
No, this is all about leverage, an obsession of a bullying President who styles himself a deal-maker. That has led him into a foolish way of doing business, especially with close partners, something we hope his administration will see.
Tit-for-tat tariffs probably won’t help as much as the fact that U.S. steel production can’t meet domestic demand for some products, so manufacturers will simply pay the levy and pass it on to American consumers. Or shut down.
Of course, all this ascribes a certain amount of reason to Mr. Trump, a man who tweets manically about conspiracy theories. Canada has reacted appropriately so far. But it’s hard to predict how things will play out in a confrontation with a reckless and erratic bully.
The Globe and Mail · by @globedebate Opens in a new window · May 31, 2018