Trump is currently playing his usual silly bugger games with NAFTA. Basically, it seems that he thinks that he’s “negotiating”, by threatening to pull out, and generally being a dick.
Plus, even US trade experts have said that Trump is basically handcuffing negotiations with demands that are simply poison pills, and ridiculous to boot. Eg. new rules on origin of automotive parts - the auto sector in North America is now fully integrated, and new rules like this would be unworkable and non-beneficial.
So… What if the Canadian government took a very hard line. What if they announced that Canada was invoking Article 2205 of NAFTA, and will pull out in 6 months. Further, Canada could announce that they were willing to come back to the table once adults were in charge, and specifically, once Trump is gone. Period. Full stop.
Canadians would have to be prepared for some hard times, as the US (and Trump specifically) rages against this. But by the same token, are the 22 states that have Canada as their biggest trading partner going to sit back? Are the automotive companies willing to see a shutdown in production as their parts are no longer arriving on time? Are consumers in the US ready for a huge spike in energy costs, as prices for imported electricity, oil and natural gas from Canada soar due to duties?
Sure it’s a lose-lose scenario in the short term. But as long as Canada sticks to their guns, and promises to get everything back on track the moment Trump is gone…
Who do you think would blink first once both countries plunge into recession?
The problem with that strategy is it makes the Canadian government look like the asshole. Those businesses that would be hit hard by NAFTA would go ballistic on the Canadian government. The opposition parties could paint the Liberal government as idiots and win back votes. The adults in the U.S. administration would be rightly miffed that Canada was making their lives even harder than they currently are.
There is really nothing Canada can do except slog through negotiations and hope Trump gets distracted from NAFTA. It’s the economically and politically sound choice.
Like it or not, we are small and weak compared to the United States. Our economy would suffer far more.
The thing is, Canada is the US’s 2nd largest trading partner, but the US is Canada’s largest trade partner. Canada, like Mexico, would be hurt a lot more than the US would be in any sort of trade pissing contest. Only when you start looking at an aggregate of trade partners with the US would it be possible to hurt the US more than it hurts any given nation wrt trade.
That said, I think Trump is an idiot, and on trade, he is even a bigger idiot. It’s clear he doesn’t actually understand much about international trade (or debt, or taxes, or the stock market or even business outside of perhaps real estate and brinksmanship games). He also doesn’t understand the nature of US power. He thinks it’s overt, put a gun to their heads kind of power. And to a certain extent, it has elements of that. But the US REAL power is its soft power…and Trump has been hurting the US every step of the way wrt our soft power, undermining it and exposing our weaknesses and limitations of our soft power. He is and has been a disaster as a president for these reasons…along with a host of others. I’d say he’s done more damage to the US in a short time than any previous president, and we aren’t even a year into his administration yet.
I suppose onw way to overcome the political problems would be if there was unanimous consent from all parties to proceed this way. (Ha! And pigs may fly)
As for the second… yes, Canada would hurt more. But I think the typical US consumer has far, far less tolerance for discomfort.
I do like the current strategy of talking with Governors of states that trade a lot with Canada, and other administration types with the Federal gov’t. That, and simply ignoring what Trump has to say, and recognizing it for what it is; Bullshit and Bluster.
I really don’t see why one would believe that Canadians would accept a great deal of economic hardship more than Americans would accept a small amount.
I agree. The federal government deserves a lot of credit for approaching the problem of Trump with an intelligent, adept, and well-thought-out strategy. Trump is a terrible problem for the world, and whatever else one thinks of the Trudeau government, they’ve handled this crisis as well as it could be.
I’m pretty sure Canada would never go this route. Most of us can do math, after all. Short of Trump just scraping NAFTA all together, and possibly going nuts with tariffs, Canada will pretty much always be better off with some version of a deal than with no deal at all*.
So you’ll just have to hope the American people get off their asses to fix this, because Canada won’t, and likely can’t, be their knight in shining armor.
*And with no deal at all, we have zero incentive not to go full speed ahead with other trading treaties. The US is conveniently close for trading purposes, but there’s no reason to think we can’t sell every barrel of oil and every scrap of lumber we can produce to China, eventually.
Far better strategy to play nice, salvage whatever we can with NAFTA, and push hard to get the remaining parties to TPP to agree to a deal. Whatever visceral satisfaction slapping Trump in the face might bring, it’s just not the course that’s in the best interest of Canada.
