This week President Trump imposed a 25% tariff on imported steel and a 10% tariff on imported aluminum products from Canada, Mexico, and the European Union. The rationale was that this was done for reasons of National Security. In view of the very modest size of Canada’s military and the longstanding, peaceful relationship between the two countries, this explanation is ludicrous.
We are also being led to believe that the President apparently took these actions to protect jobs in the steel and aluminum industries, to correct what he deems as unfair trade practices by other countries and to bully Canada and Mexico into making concessions on the new NAFTA agreement that has been under negotiation for many months. Again, these are weak reasons to damage the strongest trade relationship between any two nations in the world.
In the case of NAFTA, the most recent sticking point has become the “sunset clause.” Vice President Mike Pence advised Prime Minister Trudeau last week that he'd have to accept this clause, which would make the trade agreement subject to renegotiation every five years. Trudeau said he couldn't accept the terms. The sunset clause is just one sticking point. The U.S. is also seeking changes to the "rules of origin" that govern how much of a car must be manufactured in North American to avoid import taxes in the three countries that make up NAFTA.
As a Canadian businessperson, I have two messages for Prime Minister Trudeau, push back hard against these bullying tactics and hit President Trump where it hurts. As the world has seen, persuasion, charm, diplomacy, and logical reasoning don’t work with this president. The fact is that both French President Macron and German Chancellor Merkel, two long-time allies, went to the White House in recent weeks to reason with him. Their visits appear to have had no impact.
The fact that Canada is America’s largest trading partner and a loyal ally, that our servicemembers have fought shoulder to shoulder with U.S. military personnel in two world wars and the Korean War, that Canada is the largest foreign market for over 30 U.S. states, that millions of Canadians visit America every year and inject millions of dollars in the U.S. economy have had no influence. President Trump does not appear to distinguish between his allies and enemies. In fact, he has been more supportive of Russia rather than most of his allies.
As reported by Scott Gilmour in Maclean’s magazine, “the President can be successfully engaged, and countries like Ukraine, China, and Qatar have demonstrated this. When they want something from the United States, they skip the State Department, and even the White House staff. Instead of approaching their problem state-to-state, they go state-to-man. These countries focus on what Trump wants on a personal level – to enrich his family. So Beijing granted Ivanka trademarks, Qatar invested in one of Jared’s office towers, and Ukraine, with Slavic candor, simply wired half a million dollars to the President’s personal lawyer Michael Cohen . . . Other countries that have figured this out have begun to openly bribe the President to get the foreign policy decision they need.”
Prime Minister Trudeau, this is not how Canada works and no thought should be given to following in the footsteps of these countries. I cannot imagine that any Canadian citizen would want to see his or her tax dollars directed to making Trump and his family any wealthier. Forget it! Rather, we should take the opposite approach. We should hit president Trump where it hurts, with his personal and financial situation and with his base to whom he desperately tries to cater. Mr. Gilmour makes the following argument.
“. . . instead of taxing the import of American serviettes, we tax Trump. In the spirit of the Magnitsky Act, Canada and the western allies come together to collectively pressure the only pain point that matters to this President: his family and their assets. This could take the form of special taxation on their current operations, freezing of assets, or even sanctions against senior staff. Canada could add a tax to Trump properties equal to any tariff unilaterally imposed by Washington. The European Union could revoke any travel visas for senior staff in the Trump organization. And the United Kingdom could temporarily close his golf course.
Arguably, the legislation to do so already exists. Canada’s Special Economic Measures Act and the Foreign Corrupt Officials Act permit us to sanction public officials who are “complicit in ordering, controlling or otherwise directing acts of corruption. In the case of Trump, we already have several open examples of this and the various ongoing criminal investigations (of his own government) are expected to produce many more . . ..” The question is whether the leaders of these countries have the courage to take these dramatic and unprecedented actions.
The other part of the exercise is to focus on those states that form a key part of his base. The Prime Minister Trudeau and Foreign Affairs Minister Freeland have clearly anticipated the action by Trump. Canada plans to impose tariffs on C$16.6 billion worth of US imports, including coffee, whiskey, orange juice, steel, aluminum, a variety of foodstuffs, hair products, insecticides, boats, tableware, matresses, sleeping bags, ballpoint pens and other products. To see the full list, click here (https://www.fin.gc.ca/activty/consult/cacsap-cmpcaa-eng.asp ). Canada’s leaders should take to the airwaves to communicate to Americans what the country is doing to respond to President Trump’s foolish actions.
Canada’s trade representatives should also push hard on the NAFTA front. After negotiating in good faith for many months, for Donald Trump to toss this grenade into the discussions, at this stage, is a disgrace. Maybe that is how he bought and sold real estate in the past, but this agreement will have major impacts on the future of the Canadian economy and on jobs in this country (and our two NAFTA partners). Our negotiators should bring even more resolve when the next round of negotiations take place.
Mr. Gilmour goes on to state the following. “The President of the United States is dismantling the entire liberal international order we have spent a century building, and he is completely focused on promoting his own interests, at the expense of American allies, and at the expense of Americans themselves.
Our attempts to use traditional diplomatic strategies to deal with this crisis are failing. If we do not ask ourselves now, 'How do we hurt Trump?', I predict we will reach that point in the not too distant future.”
It is difficult for me to write this blog. I love America. I have family, friends, and customers in the United States. This blog does not represent how I feel about America. It is about how I feel about what Donald Trump is doing to injure both Canada and the United States.
The imposition of the Trump tariffs is expected to cause a loss of jobs in America and Canada. Canadians should do their part to repudiate the Trump tariffs by buying Canadian or foreign goods rather than U.S. goods, wherever possible. Snowbirds should consider going to Mexico, the Caribbean or Central America until the sanctions are lifted.
The mid-term elections are fast approaching. The best ways for Canadians to hurt Donald Trump are in his pocketbook and with his base, and for Americans to express their disappointment at the ballot box. This Trump-induced trade dispute will likely end badly. At some point, after both countries display some financial pain, Trump will probably declare victory and start a new battle. In the meantime, Prime Minister Trudeau needs to punch back hard.
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