By declaring a ‘tariff war’ on nearly the entire world, the United States has created an opportunity for Canada. We must act fast to seize it.
‘Beggar-Thy-Neighbour’.
That’s the new trade policy and foreign policy of the United States of America. The U.S. will make you lose, so they can win. You will be punished for the ‘sin’ of successfully producing products and services Americans freely consume. If you’ve signed trade deals with the U.S., answered the call when they asked for military assistance, or spent years integrating your economy with theirs, you will still be slammed with tariffs.
America has declared a tariff war on most of the world. And while fragments of the America that championed global trade and mutually beneficial cooperation may still exist, those fragments are currently powerless. Instead, exploitative isolationism rules the roost.
This exploitative isolationism is being ‘built’ on a foundation of ignorance. An open contempt for expertise has led to a shocking level of incompetence, with the White House using an absurd calculation (dividing the U.S. trade deficit with a country by that country’s total exports to the U.S., and then dividing that number by 50%).
The White House claimed the number derived from applying that formula to each country is that country’s tariff on the United States. That is laughable. It appears that the White House used ChatGPT or another Large Language Model (LLM) to derive the formula.
As if that weren’t concerning enough, many MAGA influencers are now shifting to an anti-consumerist stance that derides those worried about higher prices or declining stock values. A new ‘trust the leader’ and ‘suffer for Trump’s brilliance’ ideology is taking form, with elements of the pro-Trump American right now embracing a way of thinking reminiscent of the Soviet Union.
As the markets absorbed this information, it’s clear that powerful Wall Street investors and Main Street stockholders alike are realizing that ‘the Emperor has no clothes.’
The Dow fell 1,679 points.
The S&P 500 fell 5,396 points.
The Nasdaq fell 1050 points.
The drop in the S&P 500 was the largest since 2020, as was the drop in the Nasdaq.
Rather than a targeted tariff approach – easing tariffs on democratic allies while ramping up tariffs on authoritarian states like China – the Trump Administration used an absurd formula to slam nearly the entire world with tariffs at the same time, with zero distinction made between nations that are hostile to the U.S. and those that consider the U.S. to be an ally.
The shockwaves from Trump’s tariff insanity are rippling out across the world, meaning Canadians are no longer alone in feeling a sense of betrayal from the United States.
And this presents Canada with an opportunity. There is a growing global backlash against America’s ‘new direction,’ and this backlash could create a counterreaction in favour of increased mutually beneficial cooperation between nations.
Canada is uniquely positioned to benefit from this for three reasons:
- We have a strong pro-free trade consensus (both the Liberals & Conservatives are pro-free trade and have been for decades).
- We possess immense natural resources.
- We have a diverse population that provides us with deep potential connections to nearly every nation on Earth.
However, it is not yet certain whether the backlash against Trump’s absurd tariff war will lead to a renewed era of openness. It could easily lead to most nations becoming more isolationist themselves, which would be a disastrous outcome. To avoid this outcome-or at least to play an influential role in seeking to avoid it – Canada should be an exemplar of the world we want to see. With so many countries feeling a sense of instability and anger, Canada should reach out and do what we can to not only maintain support for free trade but expand support for it.
A prime example of mutually beneficial cooperation
Donald Trump’s worldview – as now expressed by the U.S. government – is built on taking advantage of others and winning at others’ expense. This has been an avenue to success for many people and nations throughout history, but the long-term damage caused by ‘winning’ in such a way renders it a less than optimal way to build either a reputation or a country.
By contrast, while it is often initially more difficult to succeed in a way that is ethical and mutually beneficial to others, it is far more sustainable and generates far more prosperity than taking advantage of others. Ironically, this is how the United States built much of its power in the 20th Century. American companies gained a dominant role across much of the world, and America became the centre of the global financial system, largely because allying with America and deepening trade with America was a win-win proposition and far preferable to being trapped in the Russian or Chinese sphere of influence.
With the U.S. abandoning that role – and thus eviscerating its soft power and long-term influence – Canada has a chance to step up alongside other pro-trade allies and become a prime example of mutually beneficial cooperation.
Here are three things we can do immediately to seize this opportunity:
Sign LNG deals with Japan & Germany
Former Prime Minister Justin Trudeau made a significant error when he downplayed the potential for Canada to sell more LNG to Japan & Germany. The damage from that error cannot be fully undone, but the newly hostile U.S. trade posture ensures that countries like Japan & Germany will be seeking out more reliable economic partners. Canada can be that partner, and we should demonstrate that immediately. Even if we sign LNG deals that are more long-term focused or more of a declaration of intent, rather, it would be a signal that Canada is ready to be a bigger player in the energy space at a time when our allies are looking for exactly that.
Hold a summit on ‘cooperation & trade’
Summits are often ways for countries to look like they are taking action without taking action. However, summits can also be a sign of what a country values and the kind of alliances it wants to build. And in the immediate term, sending a clear message to the world that we value free trade and mutually beneficial cooperation is essential. The damage caused by U.S. tariffs will take time to ripple out through the global economy. There is no way to fully adjust in the next few weeks or even months. But we can take actions now that position our nation effectively for the new world trade regime that will soon be in place. Our nation should hold a summit on cooperation & trade focused on reducing trade barriers, and we should invite any nation that wants to participate (aside from Russia & North Korea).
Turn Canada into the world’s freest zone for trade
If Canada wants to take a leadership role and help bring about a pro-free trade shift in response to Trump’s ‘beggar-thy-neighbour’ trade policy, we must lead by example and build credibility. That credibility takes a hit every time people focus on Canada’s lack of internal free trade. If we are to inspire and encourage others to support free trade, we need to have free trade within Canada. There is already a strong movement in this direction, and that movement must continue. We should reward politicians who support the breaking down of internal trade barriers and the effective development of our natural resources, including both conventional energy and green energy.
As difficult as it will be to navigate a world where the U.S. is hostile to trade, Canada has an opportunity here. The underlying truth that trade is mutually beneficial, the importance of treating trading partners with respect and the long-term benefit of being honest in our dealings with others are unchanged, no matter what Donald Trump says or does. Now is a time for Canada to step up, and we must step up if we want to emerge as a stronger & more prosperous nation.
Spencer Fernando
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