Updated: Oct 17, 2018
Say what you will about Canadians, but when we are attacked (especially by Trump) we rally behind our leadership and stand united, Conservatives, Liberals, NDP and the lot. Ya gotta love Canada!
Unfortunately, rallying together doesn’t quite give us an edge in the free trade fiasco. In Ontario 49 per cent of economic output is linked to U.S. trade. In New Brunswick, the number is 50 per cent. For us to suggest an economic fight with the US, would be like bringing a knife to a gunfight.
National Bank Financial Markets geopolitical analyst Angelo Katsoras, stated, “There's something that could hurt Canada more than Trump's trade tariffs, and that's the uncertainty that seemingly endless NAFTA negotiations are creating. Companies don't want to invest into uncertain climates, and when business investment stalls, so does job creation.
"The bad news is, the longer negotiations drag on, the riskier investing in Canada and Mexico could become for companies looking to have guaranteed access to the U.S. market."
When we had NAFTA in place, Canada was a viable option for globally oriented firms to consider how they do business in North America; without it, Canada is a tiny market that probably can be served from the U.S. or elsewhere, instead of dealing direct with us.
Given the prospect of never-ending negotiations, which certainly appears to be happening, we can expect more and more people to challenge Trudeau's declaration that a bad deal would be worse than no deal.
Katsoras wrote. "In their view, a flawed deal should be preferred to the risk of seeing certain companies choosing not to invest in Canada."
Sure, the US would not be unscathed in a trade war, as the majority of US states have Canada as their largest export market. Also, Trump is likely to pay a higher political price than Trudeau if a trade war leads to domestic economic turmoil. Canadians may be willing to give Trudeau a lot of leeway fighting Trump's protectionism. The political upset in the US from states (including those that voted for him), businesses and Congress, could overwhelm Trump's administration.
Katsoras wrote. "Going beyond threats would also seriously risk one of Trump's main talking points: the strong performance of the economy and the financial markets under his watch."
Based on a trail of recent history, can we really count on Trump to do the rational thing? With steel and aluminum tariffs in place, and Trump already talking about expanding tariffs to include auto imports, it hardly seems like the U.S. president is about to turn friendly toward Canada.
The experts have been telling us for years that Canada needs to diversify its trading partners; we can't simply rely on the U.S. forever. Those words ring more true than ever today, but it seems we may have waited too long, and there's precious little we can do but fight a trade war in defense of our economic interests.
We have to ask ourselves, just how much wealth are we willing to risk to fight Trump? And how much choice do we actually have? Food for thought.