Whoa, Canada
by Martyn Wendell Jones
Donald Trump’s massive tariffs on goods from Canada dropped into place last night at midnight, and the initial monthlong delay that he apparently thought would soften up the neighbors to the north has instead radicalized them. His repeated remarks about Canada being absorbed into the United States have heightened their rage.
One minute after midnight, Trump’s 25 percent tariffs on goods from Canada and 10 percent on energy products triggered retaliatory tariffs on the Canadian side: an initial 25 percent levy on $30 billion (CAD) of American imports, to be followed in three weeks by a further 25 percent on another $125 billion (CAD). (The delay between stages is intended to give Canadian businesses a chance to unlink their supply chains from American producers.)
But the dollar-for-dollar tariffs everyone is focusing on, much as they will hurt, are only a starting point for Canada’s response to Trump’s trade war. As Prime Minister Justin Trudeau said last night, “should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures.”
It’s those non-tariff responses that Americans would do well to think about. Trump’s moronic gibes about annexation have incensed the most-educated country in the world, and much brainpower has been channeled into creative methods for causing Americans economic pain.
For starters, there is the possibility, endorsed by a progressive Canadian think tank, of placing punishing export taxes on Canadian goods for which American demand is both high and inelastic—including crude oil, unalloyed aluminum, and potash, a key fertilizer ingredient.
The consequences of tariffs on minerals imported into the United States from Canada will be “particularly profound for the [U.S.] defense industry, nuclear energy, and heavy manufacturing,” according to an analysis from the Center for Strategic and International Studies. Canada supplies a quarter of the United States’ uranium imports and half its nickel; the two countries’ aluminum industries are deeply integrated. Both Canada and the United States could see their energy and security positions against China weakened.
Not to be outdone, the Canadian Labour Congress published its call to action last month under a forthright headline: “Cut Off U.S. Energy and Resources Now: No Electricity, No Critical Minerals, No Oil and Gas.”
“You need our uranium. You need our potash. You need our high-grade nickel,” Ontario Premier Doug Ford told NBC News on Monday. “Your aluminum. The steel. The lumber. It will be an absolute disaster.”
But Ford wasn’t talking about placing export taxes on these goods. He was describing plans for retaliatory export bans. And those aren’t the only stoppages Ford has said he’ll enact: “I’m going after absolutely everything.”
Imagining Ford’s forceful response to be unreflective of the constituents’ feelings—don’t they say “Sorry” at everything up there?—would be a mistake. Many Canadians want their leaders to go after absolutely everything. Even energy.
“We keep the lights on for 1.5 million homes and manufacturing in New York, in Michigan, and in Minnesota,” Ford told NBC News. “If [Trump] wants to destroy our economy and our families, I will shut down the electricity going down to the U.S. And I’m telling you, we will do it.”
“With a smile on my face,” he added in a speech on Monday: “They need to feel pain.”
One other possible mode of retaliation, unimaginable just a few weeks ago: intellectual property. A think tank based in Waterloo has advocated suspending U.S. patent rights. An Albertan pundit argued on Monday that by instigating a tariff war, Trump broke “the free trade agreement he signed during his first term, and we should move forward as if the agreement does not exist.” Among other things, she writes, this “frees up a lot of space in intellectual and technological property rights.” Further, “We can also disregard registered trademarks.”
In the minds of many Canadians, extreme measures like this are legitimate because, as one commentator puts it, “this isn’t really a trade war—it’s a shakedown.”
Coincidentally, the same day Trump said tariffs on Canadian and Mexican goods would go ahead, a story broke that his administration is seeking to ease sanctions on Russia. After appeasing the bear, he has decided to drive his car into the moose. All of us are about to find out what happens next.
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