Achi news desk-
Canada held a large-scale diplomatic deployment this week in preparation for a more consequential US presidential election than usual.
More than a dozen Canadian diplomats posted in various US cities came to Washington to meet with scores of American lawmakers on Capitol Hill.
On the horizon during their visit was the possible return of Donald Trump to the White House. In particular, there is one Trump policy they are watching warily this year.
The former president has promised a global tariff on imported goods if he wins. This would be tougher than any trade policy from his first term.
Trump has offered very few details about the policy in his campaign literature and is media interviews but he has said he envisages a global tax of 10 per cent.
Would that apply to Canada?
Neither Canadian officials, nor Trump’s allies, have a clear answer on that. Trump has been vague about which countries and products could be included or excluded.
But Canada’s starting point, as one might expect, is that, no, there should not be sanctions on a country — our country — that recently signed a free trade agreement with Trump, which he has repeatedly praised as the best ever .
“We will have a serious conversation with them if they want to apply that policy to us,” Canadian ambassador Kirsten Hillman told CBC News.
“But I think the starting point is that it shouldn’t — and we just concluded a 99 percent tariff-free deal,” he said, referring to the new NAFTA.
Tariffs on Canada? It depends on who you ask
Trump’s platform is worth watching closely, as current polls give him a decent chance of being returned to office in the November election.
Even in Washington there is no clear consensus on what his policy might ultimately look like. Ask different people about tariffs on Canada, and you’ll get different answers.
“I have a hard time believing that would be the case,” Michigan Republican congressman Bill Huizenga told CBC News. “Especially in terms of the trade agreement he negotiated, and led.”
North Dakota Sen. Kevin Cramer says that’s exactly what he says to Trump: “We talk about these things a lot,” he said. “I think we should have a North American strategy. Not just a strategy for the United States.”
An expert who supports Trump’s tariff policies says he is not sure this will affect nations that have free trade deals; he doubts it will, but adds that Trump is trying to do something unprecedented under modern law.
“There is literally no precedent,” said Charles Benoit, a Canadian-born, US-based trade lawyer with the Coalition For A Prosperous America, a pro-domestic manufacturing firm. group.
He expects that Trump would call the Trade Act 1974. Its section 122 allows a president to set a maximum tariff of 15 percent, for up to 150 days, if there is a balance of payments deficit with other nations, which the United States regularly has.
He says Trump could then try to extend it, again and again, every 150 days. This would certainly trigger lawsuits, as the law says extending it requires an act of Congress.
Benoit’s advice: Let it expire for a day, then keep resetting the tariffs every 151 days.
“I think that’s something the president could do. Just doing it – [and] do it a second time after letting it expire,” he said in an interview.
Despite looming threats to Canada-US trade relations from presidential candidate Donald Trump, ‘Team Canada’ is confident American industry leaders know Canada is ‘vital’ to economic growth in North America, says Innovation Minister , Science and Industry François-Philippe Champagne .
One of Washington’s best-known trade policy experts over several decades says that such behavior would make a mockery of the language in the bill.
It would be challenged in court, said Gary Hufbauer. Meanwhile, countries would launch retaliatory tariffs.
As for Canada, this is his prediction: The northern neighbor will be banned, as would Mexico. But it doesn’t come for nothing.
He expects Trump to use the threat as a negotiating ploy – a stick to threaten Canada and Mexico into making concessions.
“He will bargain — to get something for that ban,” Hufbauer said, noting that when it comes to Trump, “[It’s] all transactional.”
As for what Trump might ask for, he’s already complained, like has the Biden administration, about the way Canada has implemented some aspects of the new NAFTA. Specifically, milk and cars.
“Milk comes up immediately,” Hufbauer predicted.
Parsing trade czar Trump’s words
One thing Trump has already succeeded in doing is reorienting the American political consensus on trade.
The current Biden administration has maintained most of his policies. The two presidents may differ in style, but they agree substantially on trade.
That philosophy has been expressed at length by Trump’s former commerce secretary. In his a book a several magazine piecesRobert Lighthizer has set some of the tariff policies that Trump is now running on.
Lighthizer remains in the picture: He is advising the Trump campaign, and recently said publicly that he plans to be part of the next administration if Trump wins; either serving in an official role, or as an external advisor.
His basic argument is that globalization has impoverished the US working class; making the country incapable of producing essential goods; lost manufacturing industries that drive innovation; and leaving it dependent on a potential military rival (China) for basic everyday products.
He has little patience for people who call the United States defenders, when he has among the minimum tariffs in the world.
And when it comes to Canada, Lighthizer’s book takes the country to task for seeing itself as a free trader, then adopting “parochial” and “protectionist” policies around everything from milk to television to telecommunications.
He said tariffs on Canadian and Mexican steel were helpful; Trump forced them, then lifted them, and threatened to reinstate them.
“President Trump’s willingness to impose tariffs on two of America’s closest trading partners — one of which, Canada, is also one of our closest allies — sent an unmistakable signal that business as usual is over,” Lighthizer wrote in his book, No trade is free.
Mexico and Canada have won a trade dispute with the United States over rules of origin for auto parts, which could help protect Canadian businesses and jobs.
What next?
The tangible effects of Trump’s trade policies remain disputed.
Several studies say his tariffs have had very little positive impact on the US jobsand least harmful effect on the economy a inflation.
One economist and trade historian says Trump’s policies have shifted some production from China, mostly to Vietnam and Mexico; meanwhile, China bought more food from Brazil.
“In the political debate, the benefits and the costs [of tariffs] tend to exaggerate,” says Douglas Irwin of Dartmouth College.
But what Trump is proposing now is more than its first season tariffswhich the Congressional Budget Office said shaved 0.3 percent off the US economy.
Trump also wants Congress to pass a law that would allow bilateral tariffs – huge duties on countries with high tariffs, such as India and China.
Irwin says the real risk is that, in the long term, Trump’s policies could trigger a domino effect, toppling the rules-based trading system, making trade more politicized and less predictable and leading to tit-for-tat retaliation -father He says countries most dependent on the US for trade are the most vulnerable.
“You’re right to be worried in Canada.”
Benoit takes the opposite view. If Trump succeeds in implementing his entire agenda, with the biggest tariffs on Asia, he says Canada would enjoy a a renaissance in manufacturing.
Instead of reflexively opposing some of these policies, he says Canada should offer to join Trump in imposing similar tariffs against China.
“Canada should say: ‘We are with you. We walk shoulder to shoulder with you,’” Benoit said.
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