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A banner announces the construction of a photovoltaic solar farm in Cabaiguan, Cuba, on May 21, 2025.
HARD NUMBERS: China becomes top Cuba benefactor, Canada backs down, & More
55: China is financing 55 new solar power projects in Cuba this year, the latest sign of how it is overtaking Russia as the crisis-wracked island’s main benefactor. Some of Moscow’s recent projects in the communist country have stalled: a Russian firm pledged two years ago to revitalize a sugar mill that once employed 2,000 people, but it still sits idle.
3%: In a win for US President Donald Trump, Canada walked back on its 3% Digital Services Tax that prompted the United States to suspend trade talks on Friday. The tax, which disproportionately affected American technology firms, was set to take effect on Monday.
71: Israel’s strike last Tuesday allegedly killed 71 people at a notorious detention facility in Tehran, per Iranian State Media. The prison houses thousands of political prisoners, including opposition politicians, journalists, and activists.
4,000: More than a third of Tuvalu’s population – around 4,000 residents – have applied for a landmark ‘climate visa,’ which grants Australian residency to migrants from Pacific Island nations battling rising sea levels. NASA scientists expect that the country’s main island, home to 60% of the population, will be fully submerged by 2050.
$80,000: US Homeland Security Secretary Kristi Noem reportedly re-routed $80,000 in political donations to a newly established personal company during her time as South Dakota’s governor in 2023. Noem’s lawyer said she “fully complied with the letter and the spirit of the law.”
Can Trump and Carney reset US-Canada relations?
But it has reduced cause for panic, in part because Trump stated a commitment of the United States to the basic alliance, to the security umbrella, to defending Canada as necessary, which was something he wasn't saying over the past few months with Justin Trudeau. He clearly likes Carney more than Trudeau, which is not surprising because that bar is pretty much on the floor. And also stopped with the governor speak, which is clearly disrespectful, but did push on the 51st state issue, and how much better it would be for Canada if they were actually a part of the United States, not that he intends to take it over militarily, but rather something he's going to keep talking about.
And Carney didn't interrupt Trump when he was going on and on, talking about that, but then responded with his best line of the conversation, which is, "I've spent the last couple months going around talking to the owners of Canada, meaning the voters, the citizens of Canada, and it's never, never, never going to happen." Trump says, "Never say never," and they kind of agree to disagree on something they shouldn't be talking about to begin with. But at the end of the day, not much there. The bigger problem, of course, is that there is an incredibly important trade relationship between the US and Canada. And no, it is not true that the US doesn't do much business with Canada. In fact, Canada actually buys more from the United States than any other individual country in the world does. And if you go talk to the governors, the senators, the representatives of all of the northern states that border Canada, they can tell you just how integrated those supply chains are, how essential the Canadian economy is for them.
And some of those are blue states, some of those are red states, and it don't really matter, they all care a lot about their relationship with Canada. So, it is important. But because Trump is individually taking the right to tariff from Congress, where it legally sits, and using legally contestable national emergency clauses to enforce tariffs, impose tariffs on other countries, including those that are governed by pre-existing trade relationships, like Canada, which has a robust USMCA, US-Mexico-Canada agreement, that Trump himself helped drive, negotiate, and trumpeted as a huge win at the time, but now he is singularly undermining it. And what that means is that we are very unlikely to get to a new agreed USMCA in the coming year, despite the utility of renegotiating it with the sunset clause, and instead... look, I don't think anyone's going to run away from it, I don't think it's going to break, instead, it means that every year we're going to kick it down the road and renegotiate so that you can keep it going.
And that means that the Canadians don't feel like they have a functional multilateral trade arrangement with the US and Mexico, that also means, because the US president can change it at any moment he wishes, and also that an enormous amount of time is going to be spent in those negotiations, not just now, but every year, creating more uncertainty for those that need to want to rely on the long-term stability of that trade relationship. And here is the rub, which is that the US-Canada relationship will stay important, it'll stay robust, but it will become more transactional, where it had been built on trust and shared values, and that means the Canadians will work really hard to hedge and de-risk their relations from their most important trading partner.
About 75% of Canadian trade is with the United States right now, they rely much more on the US than the Americans rely on Canada, Trump is absolutely right about that, but they now see that as a vulnerability. And for the last 40 years, the Canadians, really since '88, '89, the Canadians have focused singularly on increasing their interdependence with the United States. They built out all of this infrastructure from the provinces, not east-west, but rather north-south. If you look at the way that rail transit, and energy infrastructure, and supply chains work in Canada, it's as if these provinces were independent republics set up to do business just with the United States, not focused on what would make sense for an independent sovereign Canada over the long term, if that relationship suddenly were ruptured.
Well, that needs to change, and that's something that you're going to see the Canadians work very strongly on over the coming years. Easier for Carney to do, because his relationships internationally are much stronger than previous Canadian prime ministers, certainly generationally, if you think about the fact that he was Central Bank governor in the UK, and that one of his best international relationships is actually with the French president, Emmanuel Macron, and others and others, I think you're going to see a very strong effort to work with the UK, to work with the Commonwealth, to work with the EU, and to help shift those trade flows over time to hedge further away from the US.
And the costs of that will be significant, the impact of the trade rupture in the near term will be a major recession in Canada imminently, and a mild recession in the United States imminently as well, but over the long term, my view is no one benefits from that.
So, that's the main takeaway, a little less theatric maybe than the internet, apologies for that, but it is the way I see it, and I'll talk to you all real soon.
A ''Buy Canadian Instead'' sign is displayed on top of bottles, hanging above another sign that reads "American Whiskey," at a B.C. Liquor Store in Vancouver, British Columbia, Canada.
Canadians take aim at US businesses
Even before Trump’s tariff announcement on Wednesday, Canadian consumers were engaged in a grassroots trade war aimed at hurting American companies.
The “Buy Canadian” movement — which emerged out of Canadian anger at Donald Trump’s trade provocations and annexation threats — is hitting a growing number of American consumer firms. Canadian governments have pulled American liquor, beer, and wine from the shelves, and Canadian consumers have been scorning US products, with retailers delivering the bad news to suppliers. Half of the businesses making efforts to highlight Canadian-made goods reported last month that they had already seen a 50% increase in demand for Canadian products.
The trade tensions have also hit American tourism operators as Canadian snowbirds shift to other sunny destinations, reducing cross-border bookings by 70% this spring and summer. Canadians represent the largest group of international visitors to the United States, so a continued decline could hit US businesses hard.
Canadians made about 20.2 million visits to the U.S. in 2024. A 10% reduction could cost $2 billion and 14,000 jobs, according to a US trade group. There is no reason to think this will end anytime soon. Canadians are increasingly concerned about how they will be treated, and the Trump administration doesn’t seem to mind.
“Canadians will no longer have to worry about the inconveniences of international travel when they become American citizens as residents of our cherished 51st state,” White House spokeswoman Anna Kelly told the Wall Street Journal.
Canadians will be hoping that pressure on US businesses will eventually make the White House change its tune.
Flags of Canada and China.
HARD NUMBERS: China executes Canadians, Tariffs slow economic growth, Canada buys Australian tech, Fed keeps rates steady, Egg seizures escalate while drug busts drop
4: The Canadian government has strongly condemned China’s use of the death penalty, following revelations the country executed four Canadian citizens for drug-related offenses, despite appeals for clemency. China carries out more executions than any other country and has a conviction rate of over 99%.
2.2: US President Donald Trump's tariff tiff with Canada is dampening economic growth on both sides of the border. Canada’s GDP was set to rise by 2% in 2025, and America’s by 2.4%. An OECD analysis has revised those figures to 0.7% and 2.2%, respectively, as a result of the trade war.
6 billion: Canadian Prime Minister Mark Carney announced a CA$6 billion purchase of an Over-the-Horizon Radar system from Australia to enhance Arctic early warning capabilities. Carney’s move both asserted Canada’s northern sovereignty and allowed Australia to find a buyer for its technology after DOGE cuts impacted possible US spending on the project.
4.5: The US Federal Reserve held overnight interest rates steady on Wednesday, in the target range of 4.25 to 4.5 %. But the Fed also signaled a willingness to cut borrowing costs by half a percentage point later this year, anticipating economic growth to slow to 1.7% and inflation to rise to 2.7%.
116: US Customs and Border Protection says it made 3,254 egg-related seizures in January and February 2025, a 116% increase compared to the same period one year ago. US egg prices have ballooned 59% since February 2024 because of the culling of flocks due to bird flu. In comparison, fentanyl seizures at the border dropped by 32% during the same period compared to the previous year.President Donald Trump holds an executive order about tariffs increase, flanked by Commerce Secretary Howard Lutnick, in the Oval Office of the White House on Feb. 13, 2025.
The tariff waltz continues as everyone is set to lose
Economist Justin Wolfersjoked on social media on Tuesday that we had a “world first: An intra-day tariff chart.” Donald Trump launched a 25% tariff on Canadian aluminum and steel, raised it to 50%, and then lowered it again the same day after Ontario Premier Doug Ford backed off on a 25% energy export surcharge for electricity sent to parts of three northern US states.
In response to Trump’s steel and aluminum tariffs, Canada nonetheless moved ahead with counter-tariffs worth more than $20 billion on US goods including steel, aluminum, and other products. If you’re keeping score at home, these duties are on top of previous $30 billion counter-tariffs levied by Canada from Trump’s first round of tariffs.
The tariffs and counter-tariffs threaten to disrupt supply chains, drive profits down for manufacturers, lead to job losses, and raise prices for consumers on both sides of the border. The Dow Jones dropped almost 500 points on Tuesday and slid again Wednesday as markets reacted to the news, which included European counter-tariffs against the US worth $28 billion.
The Bank of Canada on Wednesday announced a 25-basis point interest rate cut amid slowing market confidence and investment, warning the trade war would hike inflation and make for tough times ahead – including the risk of a recession. Tough times and recession are prospects the US also faces as the tariff wars drag on.Ontario Premier Doug Ford prepares to speak to an American news outlet in his office at the Queens Park Legislature in Toronto on Monday, March 10, 2025.
Canada and US to discuss renewed USMCA following tariff de-escalation
In a major development on Tuesday, Ontario, Canada, suspended its 25% surcharge on exports of electricity to Michigan, New York, and Minnesota. Premier Doug Ford also said that he, US Secretary of CommerceHoward Lutnick, and the United States Trade Representative will meet on March 13 to discuss a renewed USMCA ahead of the April 2 reciprocal tariff deadline. Ford announced the move on X and indicated that he and Lutnick had a “productive conversation about the economic relationship between the United States and Canada.”
The announcement followed US President Donald Trump’s threat Tuesday morning that tariffs on Canadian steel and aluminum imports would increase from 25% to 50% starting March 12. Trump said he would declare a “national emergency” in the three states and posted to Truth Social, “Why would our Country allow another Country to supply us with electricity, even for a small area? Who made these decisions, and why? And can you imagine Canada stooping so low as to use ELECTRICITY, that so affects the life of innocent people, as a bargaining chip and threat?”
In response to Ford’s suspending the electricity surcharges from Ontario, Trump reversed course late Tuesday, revoking his imposition of the additional 25% tariffs on Canadian steel and aluminum. But the planned 25% tariff on the industry will still go into effect on Wednesday.President Donald Trump faces Prime Minister Justin Trudeau, with President Ronald Reagan and Prime Minister Brian Mulroney at the bottom.
Donald Trump is making Canadian nationalism great again
Canadian nationalism is surging as Donald Trump threatens the country with tariffs and annexation through “economic force.” Struggles over free trade and talk about Canada becoming the 51st state aren’t new; in fact, the history of US-Canada trade conflicts and worries about Canadian sovereignty go back more than a century. But this time, things may be different.
To understand the roots of Canadian nationalism and both the parallels and differences between past and present US-Canada battles, GZERO’s David Moscrop spoke with historian Asa McKercher, Steven K. Hudson Research Chair in Canada-US relations at St. Francis Xavier University in Nova Scotia. This interview has been edited for length and clarity.
David Moscrop: Since Donald Trump started talking about making Canada the 51st state and threatening tariffs, there’s been a surge in Canadian nationalism – as if the country became a nation of flag-wavers overnight. Are there other times in Canadian history when an external force or event has produced a nationalist wave?
Asa McKercher: The previous instances where free trade has been an issue have spurred a lot of this kind of nationalism. The 1911 election, very famously, was about free trade. The Wilfrid Laurier government had signed a free trade agreement with President William Howard Taft, and this led to a huge nationalist panic among Canadians – an anti-American nationalist panic driven by worry that the Laurier government was going to sell us out, that they were annexationists. That wasn’t helped by the fact that the incoming speaker of the House of Representatives, a guy named Champ Clark, made a statement after the treaty passed through Congress but got held up in the Canadian Parliament. He basically said he couldn’t wait for the stars and stripes to fly over British North America. That stirred a lot of nationalist, anti-American sentiment. The Laurier liberals were portrayed as sellouts.
Also, the free trade election of 1988 stirred up a lot of passions. Brian Mulroney and the Conservatives were portrayed as American sellouts. There’s a Liberal attack ad that you’ve probably seen of a Canadian and an American diplomat meeting in a shadowy area, and the American diplomat is scratching out the border between Canada and the United States. Prime Minister John Turner talked about Mulroney becoming governor of the 51st state.
So we’ve seen that kind of nationalism during elections before. What’s interesting about this moment is it’s the pro-free-trade side that is full of nationalism in its wings as opposed to the anti-free-trade side of those other two elections.
Why have we seen that inversion? During the 1980s battle over free trade, the concern among many nationalists was that free trade with the US would be the death of Canadian sovereignty, the death of Canadian culture, the death of Canadian economic prosperity — that Canada’s future depended on resisting free trade. Now, most of the nationalist sentiment seems to be spent on preserving free trade.
We took a bet on free trade. We defended free trade against the thickening of the border after 9/11. We defended free trade in the USMCA negotiations. We made ourselves way more dependent on America. In 1988, the US counted for roughly three-quarters, or more depending on the year, of our trade. But the trade volume in 1988 was $100 billion a year across the border. Now it’s almost a trillion. So the extent of dependence makes that inversion happen. So we had a less continentally reliant economy in 1988, and now our economy is totally reliant on continental trade.
Do you think Trump’s aggressive approach will generate another round of deep Canadian introspection and assessments of what makes the country different from the United States?
I think so. We’re already seeing an uptick in nationalism. But people have also long said we are too focused on America. Take health care, for example. We have big problems in our health care system. Maybe we shouldn’t mimic the American health care system, but maybe we should look at other countries with a social welfare system that might have better health care. But we’re so focused on America as our twin that sometimes we look at them as a focal point for comparison to our peril.
Is the wave of Canadian nationalism we’re seeing deep and stable? Will there be a persistent solidarity there that can carry the country through the tough times that may be ahead? Or do you think it’s superficial — or, worse, a potential source of division?
I mean, we couldn’t wear masks for three years without ripping each other apart — not even three years. So I don’t know what will happen if the tariffs go through … and we see real job losses, we see real industries impacted, particularly on a regional basis, and maybe we see some carve-outs. If autoworkers face a 100% tariff, as Trump is talking about, we could see some real anger in Southern Ontario. But if there are exceptions, where Alberta oil only gets a 10% tariff – which I think would bring it mostly up to market prices, since it gets a subsidized price – people in Ontario might say, “Well, maybe we should put an export tax on that. Maybe we should cut off oil exports.” And that may be the makings of some big challenges to national unity.
I would like to think that this rally-around-the-flag effect is real. I think we’re seeing a reflection of that in the reviving Liberal fortunes in the polls federally. But I don’t know, once the rubber hits the road, once the tariffs actually go through, and once we potentially have hundreds of thousands of people thrown out of work or shifts cut or hours cut back, then yikes, I don’t know what will happen.
But I think the smart leader would be the one who can focus that anger, if it happens, on the external person who’s doing this — it’s a single person who’s doing this — in the White House.
Thinking about that single person and the conflict between Donald Trump and Justin Trudeau, who are not fans of one another, we’ve seen clashes between presidents and prime ministers before: Lyndon Johnson and Lester Pearson, Richard Nixon and Pierre Elliot Trudeau, George W. Bush and Jean Chrétien. Does personal or policy conflict between a prime minister and president generate domestic support for a PM?
Certainly in a few of those cases, yes. If we can remember back to 2003, there were a lot of people rallying behind the Liberals and the Chrétien government. There were also people like Wayne Gretzky, Don Cherry, Ontario Premier Ernie Eves, Stephen Harper, and Stockwell Day who blasted Chrétien for not taking part in the Iraq War, but there were also people rallying to his side. But I would think if we were to look, the corporate media was pretty critical of Chrétien for not reigning in those people calling Bush a moron and such. So, there is a desire to support a prime minister, but not always.
For instance, in the 1960s, Progressive Conservative Prime Minister John Diefenbaker fell out with President John F. Kennedy over nuclear weapons and the Cuban Missile Crisis, but the Liberals won the next election. Why did people vote for the Liberals? Well, there were a number of issues. The Diefenbaker government was pretty out of wind by that point, and the Liberals were talking about dealing with Quebec and social programs, but the Americans pushed Diefenbaker around, and Canadian voters had a favorable view of Kennedy.
What makes this time so different is just how mendacious Donald Trump is. It’s not just the tariff issue. It’s not just the border or the 51st state comment. It’s the belittling, the calling Justin Trudeau “governor” incessantly. It would be one thing if Trump and Trudeau simply disagreed, if Trump said, “Let’s have more defense spending or action to combat fentanyl trafficking.” But the fact that he’s trying to bring about the ruination of our country and talking about annexation — it raises national hackles and makes people excuse the prime minister’s pretty bad handling of a lot of files.
Sometimes we look to history for a precedent or perhaps even a playbook, something we can follow to navigate the moment. Does that exist this time around, or is the Trump threat unprecedented?
We haven’t really faced a hostile American president in over a hundred years. Nixon wanted to impose tariffs, but he withdrew them eventually and actually said, “Isn’t this what you guys wanted?” So, we haven’t really faced a hostile president in a long time, and I think that’s what makes this different. And Trump is also hostile to democratic countries around the world, so we’re not on our own in that sense.
In terms of a playbook, we’ll see if the Team Canada approach works. We’ll see if it works when tariffs go through and we place our own tariffs. And we can lobby members of Congress or the state governors and say, “We’re bringing mutual economic ruination upon us. Can you bring pressure on the White House?” Maybe that will work.
But I’m almost tempted to think we should abandon the Team Canada approach and maybe find, I don’t know, whatever diplomats we have dealing with Saudi Arabia or Turkey, diplomats dealing with authoritarian governments. They might be better situated to deal with a Trump administration if we deal with them on the same level that we deal with authoritarian countries. That may be the playbook we need to dust off instead.
Can Canada quit the United States?
On Monday, President Donald Trump promised to hit Canada and other countries with 25% tariffs on steel and aluminum. The tax is set to come into effect on March 12, the same day Trump’s 30-day pause on across-the-board tariffs against Canada lifts.
As the US’ biggest source of aluminum and one of its top sources of steel, Canada stands to be hurt more than any other country by the president’s new metals tariffs. Prime Minister Justin Trudeau and his government are rushing to find ways to wriggle out from under the tariffs, but a national discussion is also underway to find ways to diversify the country’s trade relationships and to protect the economy from what’s seen as an increasingly unreliable partner: the United States.
To get a sense of what Canada could do to fight back against US tariffs, while developing a long-term plan to build economic resilience, GZERO’s David Moscrop spoke to economist Kevin Milligan, director of the Vancouver School of Economics at the University of British Columbia. This interview has been edited for length and clarity.
David Moscrop: How productive would Canadian counter-tariffs be against the US?
Kevin Milligan: The US economy is 10 times the size of ours. I've heard politicians and some others talking about dollar-for-dollar retaliation. The problem with that is our dollars don’t go very far when we put tariffs on their goods. To give an example, imagine we were to do one of the products that Canada loves to think about, like Harley-Davidson motorcycles from Wisconsin. Imagine we put a big tariff on them, and the sales to Canada dropped by half. What share of Harley-Davidson’s business overall comes from sales to Canada? Like 5% or something like that? Maybe, maybe 10%. So they’re losing a couple of percent off of their overall sales. They’re not going to be happy, but it’s not going to devastate them. In contrast, there are many businesses in Canada that sell almost everything they make to the US. When they’re faced with a big tariff, they will lose substantial sales, and it’s not going to be a couple of points off the top. It’s going to be existential to them. So that’s where the magnitude is different.
When we tariff US goods coming into Canada, that means that the cost of those goods coming into Canada goes up for Canadian consumers. And so we will be putting taxes on ourselves to make a small change to Harley-Davidson or whatever we tariff. So that’s where the counter-tariff is not something that I think will be super effective. It’s not to say we don’t do it. We have to strike back. This is an attack on our sovereignty, on our economy, and so we have to strike back and strike back hard. I’m just not sure that broad counter-tariffs are the way to go.
What about something like export controls on critical minerals or energy?
This is most easily understood in the context of oil. I’m not suggesting we do it for oil — there are a lot of political tensions within Canada when it comes to oil — but it is very tangible to think about this. Imagine the oil industry got together with the government and agreed that we’d purposely throttle both production and exports to the US. So, instead of 100 barrels a day, we’re now going to export only 50 barrels a day. If we did that, what happens? There are fewer barrels, and there are lots of people bidding for them, so the price goes up. The government doesn’t get the revenue. The industry keeps the revenue. They’re going to get less than they would’ve if they sold the full 100 barrels, but the revenue goes directly to the producers, which is better than washing it through a government program.
So you don’t have to worry about export taxes or anything else. You just do a curtailment in conjunction with the industry — though the government may have to organize that — but that just keeps the revenue in Canada by shrinking the amount of oil we export.
Trump’s threats have Canada talking about removing barriers that keep goods from flowing east to west within Canada. But breaking down internal trade barriers, primarily regulatory barriers, is tougher than people think. What are those barriers, and why are they so persistent?
There has been a lot of talk now and before, but especially now, on interprovincial barriers to trade. These aren’t like tariffs where if you buy something from Saskatchewan and you’re in Alberta, you have to pay some big tax. These are mostly regulations. And the thing about regulations is it’s kind of hard to tell sometimes which are really important regulations that keep us safe and which ones are designed for feather-bedding for some interest group.
When you dig in, what does it mean to have uniform standards across the country? The thing is that provinces are different. There’s a reason we have different regulations and different provinces. In British Columbia, we have these mountain highways where it really matters if you have snow tires. It really matters if your truck is too long and can’t snake through a mountain pass. In contrast, if you are from Saskatchewan or PEI carting a big load of potatoes, it’s a different set of regulations you need to worry about. Can you clean the truck so the potato worm doesn’t get in or out of a province? That’s a big deal In PEI, but it’s maybe less of a deal in other provinces.
One way to go forward on that is to have a mutual recognition system that if you’re licensed in one province, then other provinces will recognize that. So there’s kind of like a minimum standard that everyone has to meet. And then if a province wants to have special rules for mountain highways or potato bugs, you can do that. The challenge there is defining that minimum standard, which means 10 provincial governments, maybe three territorial governments, and the federal government all sitting around and figuring out what the minimum national standards need to be for tire size and snow chains.
What about external trade diversification? It’s easy to talk about more trade with Europe, South America, or China. It’s harder to do it. Why doesn’t Canada trade more with countries other than the US?
There are a couple of reasons for this. One is that economists have something we call the gravity model of trade, where the geographic distance between countries is a really good predictor of who trades with whom. One aspect of it is transportation costs. Another aspect of it is culture, language, legal similarities, and things like that. Personal ties. It makes it easier to trade when you have kinds of business contacts that are easier to make — when there are cultural, linguistic, and personal ties.
Thinking tangibly, I mean, we are not building a pipeline to Italy for oil, right? We’re building it to Cushing, Oklahoma, where they trade all the oil. That’s a geography constraint. We can ship oil to the coast and put it on the ships, but that gets prohibitively expensive for providing oil to Italians versus wherever they might get it already, so that’s it. The trade costs are going to be a big reason for why our trade is the way it is.
If we want to diversify, I think it’s a good goal. We have an unreliable economic and political partner to the south of us. This is a big deal. This is a hugely important deal. We want to make sure that we decrease our reliance on them. I’m fully on board with that strategy, but we have to be a bit modest in what we think we can get out of that because, at the end of the day, our oil is almost surely going to be going to the US.
Are we so dependent on north-south trade that we just have to find a way to manage this relationship no matter what it might be?
I think that’s the core truth of this. We’re not putting up a big wall at the border and not trading with the US. That would be immiserating for us. What the president says I guess is true: They don’t literally need our oil, our cars, our software, or whatever we might want to trade with them; they can get along without it. But boy, they’d be paying a lot more for it from other sources. We can offer them cheaper stuff they can get elsewhere. At the end of the day, this is about managing what all of this looks like going forward. We have to be extraordinarily wary of signed agreements and giving up stuff for a signature. I’m very wary of that because that signature has shown to be worth zero. This is an amazing choice that the American government is making and giving up all of its international credibility. But even nations at war will trade with each other because there’s just a fundamental economic logic that when something is way cheaper brought in from abroad, that just is better for everyone to allow those trades to happen.
Would a Canada-first industrial strategy be a non-trade measure we could consider?
It definitely could be. You can think about industrial strategy as, say, subsidizing a pipeline. That’s industrial strategy. We’ve had a battery strategy over the past few years for EVs. I’m not quite sure where that sits now, but these are big bets that we could take. I’d be most keen on ones that involve public infrastructure for export. That could be actual tangible infrastructure. It doesn’t necessarily mean pipelines. It might mean improving our ports and things like that. But also intangible infrastructure like our trade missions abroad, like export encouragement for services and electronic services and software and apps and all of those good things that are way easier to trade across borders that don’t really matter as much for geography.
How much, if any, of the Canadian strategy should be waiting Trump out, hoping that Americans feel the pain – like with steel and aluminum tariffs, which are going to be expensive for US consumers — and say, “OK, enough, we need to change this, drop the tariffs”? Or how much of this is about just waiting for someone better the next time around?
You can think of 2016 as an accident. I don’t know that we can think of electing Mr. Trump twice as an accident. I think this is a permanent state of affairs. I think we have to think about it that way. But an important element of your question is: “What strategy should we have?” I think that we should be upfront and ask whether we should do dollar-for-dollar tariffs. For those who support that, we need to ask, what is your strategy of action? What do you expect that to bring us? I don’t think it will bring people what they think. We need to think of strategies that will put pressure on the White House right now. I don’t think that is decreasing Harley-Davidson sales by 1%.
I think there are other measures we should look at. It can be trade measures. There are things that we have that are very rare in the US, that will mess up their production. Aluminum is one of them, and they just self-owned on that. Those are things we should focus on.
We should also be very open to nontariff barriers. What I mean by that is rather than throwing a tariff on US goods, which again could be part of the mix, we could talk about intellectual property reforms. I’ve heard people talk about not allowing US coal to be exported through BC. There are a ton of nontariff measures, regulatory measures, and other things we could do. There could be diplomatic measures. We could expel diplomats. I’ve seen people talk about not allowing the US ambassador to be sworn in. We could shut off electricity to New England for 24 hours.
Maybe some of these would work, and maybe some would not. But being creative and finding things that cause pain to the US is the point, while minimizing pain to us.
An important element of strategy here is to understand we are not in a regular old tit-for-tat trade war. Too many people are thinking of it on that small playing field. This is a much broader thing. Certainly, Mr. Trump thinks about it as a much broader thing, and I’m mystified that so many Canadian pundits — the Canadians themselves, I think, get it — are still thinking, “Oh, what tariffs should we put on them to counter their tariffs?” Tariffs are just a tactic in a broader strategy from Mr. Trump. It should be the same for us.