Dealing with Trump

All Canadians are on high alert to see how this pending threat of massive trade tariffs works out!

All Canadians are on high alert to see how this pending threat of massive trade tariffs works out!

It’s clear that the final outcome must be a workable trade deal with associated policy agreements and commitments. It would also be better if this became the basis for a new USMCA trade bloc style free trade agreement so that it will be a lasting deal.

To get there we will need a new federal government that has a clear and lasting mandate.

This means we need an election, and pronto!

It must be a new leadership, as the old liberal one is far too tainted in failure of performance with the Canadian voters and has completely lost the ability to have any productive relationship with the new US President. In some ways the problem with Trump is amplified due to his clear dislike for our current leadership team members.

The new Canadian federal government must ensure that all local governments are committed to the strategy for a final trade deal.

The first phase would be a leader-to-leader meeting to seek common ground, and this must be directly with Trump and our new PM.

Hopefully, it will allow a more tactical second phase negotiation to proceed with experts on both sides working to reach an agreement that both leaders will accept and sign-off on.

Any rhetoric and arm-waving and sabre rattling in reaction to the pre-deal Trump banter is very counter productive, and just shows our hand, and weakens our eventual deal closure.

Trump is technically correct that the USA needs Canada far less than Canada needs the USA. Our dependency on cross border trade is far higher as a percentage of our Canadian economy than the USA, but its also clear that both our economies are very intertwined, and any tariffs will be a detriment to both economies, and certainly a disaster for Canada.

In certain trade areas we can show long term value in the relationship, but for other trade areas we only have a short-term advantage, as the USA could eventually develop local stateside alternatives.

Its very true that after a full capital cycle the USA market does not need our auto assembly and feeder plants. Also, the over complex cross-border supply chain activity just adds waste and cost. By many calculations our auto market in many cases is not big enough to justify duplicate Canadian factories. Most of our future auto demand could eventually be serviced by capacity south of our border.

It’s now very clear based on the general collapse of the NetZero regime that the latest Canadian government investment in automotive EV batteries was a huge mistake, and we must find a way to reverse that decision and avoid further taxpayer expense.

The mining sector is a strategic trade advantage for Canada as the mining and processing of many minerals can be expanded to support the reshoring of the North American electronics and hi-tech industries. This can be a future strategic trade advantage for Canada to use in the negotiations.

Out nuclear industrial capability needs to also be offered as a strategic future trade advantage.

Such bright shiny things that our government always seems to be attracted too…. such as most Hi-tech industries…. will probably not be a strategic trade advantage, as they will need USA support and large amounts of capital, and for many reasons the US would rather have these activities on their side of the border. Any talent that we have available would easily relocate south to follow the jobs and opportunities.

Our resources, energy and agricultural sectors does certainly offer the USA an advantage to buy from Canada onshore rather than go offshore, but we will need to justify a competitive price and improve the infrastructure to support it to make a deal work.

Any existing supply management agreements that abhor free trade such as dairy will be a target for elimination in any new deal.

Even within any new USA / Canada trade zone we need to ensure we work at keeping supply chains as short and local as practical, and work hard to reduce our dependency on foreign imports.

We also need to look at industries we can retain that will utilize our own raw resources and can be consumed by our own population and will reduce our own exposure to foreign imports. The furniture industry is a good example, and industries that offer this profile need to be defined and supported.

Our ability to reduce our imports of food products and localize those industries is another opportunity.

We also need to maintain the right to expand our capability with new infrastructure to have the ability to export our resources and energy products to the global market.

All this will be predicated on managing our share of the continental border on foreign trade, immigration, security, and defence. This is an area Trump is correct in criticizing, and we had better pay attention to his demands in this regard. Maybe we should request that any Tariffs get directed at paying to setup the effort to far better secure the border and improve our contribution to the continental Defence plans. We will need to agree how all this gets done so that we earn the right to continue to trade inside the USA free trade bloc.

In a certain way he is correct that we need to look like a supportive 51^st state even if we make a deal to retain in some manner our Canadian sovereignty. This outlook will be a hard pill for some Canadians to swallow, but for many of us we always felt that we were North Americans first and Canadians a close second. So, lets work hard to keep it that way!!