Tariff Wars with United States

The plan, if there can be said to be a plan, is to push through as much as Trump administration policy they can get through in the first 100 days. The administration is moving ahead faster than they have people in place who can even direct the departments. Employees are getting layoff notices even while there is little recognition if their jobs are critical to matinal security.

Trump wants tariffs just to see what will happen. It clearly isn't about border security when Canada is already acting on it. Certainly it isn't about Trudeau who is leaving shortly. Some say it is a negotiating tool but others think that is a basic misunderstanding of who pays the tax on this policy. Somehow many people think it is countries other than the U.S. that pay the tariff.

There are some real tariff supporters in his administration but they can't articulate what is they want from Canada except to say Trump says to become the 51st state. The measly amount of fentanyl coming into the U.S. pales to other countries. It is a cover to say it is national security. The goals keep moving. When Canada gets to 2% GDP for defense, the U.S. will say it has to be 5% even though they are not at that level themselves.

If the goal is to have all manufacturers and producers move to the U.S., it will have to force Canada to find new markets for resources. Already aluminum companies are looking to begin shipping their product to Europe which has no tariffs. I'm sure Chinese would like Canadian oil and minerals. These are products that Trump supposedly says the U.S. doesn't need. 

Canada's problem will be to re-new east-west connections to get things to coastal posts. Thankfully, we still have road, rail seaway connections but they could could all stand upgrades. The TMX pipeline to the coast came at the very right time. Improvements are being made to Churchill so more goods can go to Europe through there. 

U.S. unions are terrified that 30,000 steelworkers might be out of a job if Canadian oil is not getting to refineries that employ them according to the Wall Street Journal. Those same unions are asking for tariffs on steel and aluminum in Mexico and Canada. This might be what many unions face. Some of their members do well from tariffs, others lose their jobs.

Polling in the U.S. suggests that even among Republicans, support for tariffs is only about 30%. It is doubtful anyone wants higher prices. Or lose their jobs. However, even if Canada had zero issues at the border, the U.S. would hit the country with a tariff. Trump has been talking about them for years. This is a substitution of taxes. Some Trump supporters believe all income tax disappears hen tariffs take over. The problem is that tariffs will only account for 2% of income tax. That is pretty thin soup.

Most of the trade deficit is oil exports. Some in the administration think they don't need that oil but it is hard to imagine that U.S. finding cheaper, reliable oil from a trusted partner such as Canada. The problem is that no one seems to be listening in America. And those that do are afraid to speak out until it begins to hurt them. And it will hurt. If gas goes up, regular consumers will feel it.

The deadline now seems to be April 2 and Trump has said he will hit many countries with a 25% tariff. Our Foreign Minister Melanie Joly said the Europeans have been stunned about how to respond. She said Canada has to coordinate with its allies. However, that may only occur after the tariffs hit. There are probably many countries hoping it just doesn't happen.

It has been four weeks of chaos so far south of the border. The only thing Canada can do is to make sure it supports Canadian business, looks to create freer trade within Canada and know what our response will be if the U.S. does enact tariffs.