Gordon Ritchie is a former Canadian ambassador for trade negotiations and deputy chief negotiator of the Canada-U.S. free-trade agreement (FTA)
Can a “dishonest and weak” Prime Minister Justin Trudeau keep his cool in the face of extreme provocation from the “insulter-in-chief” Donald Trump? The stakes are now enormous.
Given the contempt in which Mr. Trump is held by most Canadians, it will be very tempting to respond in kind to the latest barrage of Twitter insults and misrepresentations, but that would be a mistake. To draw a red line around the defence of Canada’s sacred dairy program, secure in the knowledge that there will be no criticism from an opposition whose leader owes his position to the milk lobby, would also be wrong.
While Mr. Trump’s outbursts have all the earmarks of a deeply disordered mind, there is some method in his madness. Believing as he does that his predecessors were “stupid” when they worked for more than 70 years to build an America-led world economic order, he would like nothing better than to smash that system and replace it with the big-dog-eat-smaller-dog mentality of the New York real estate scene. He should not be aided and abetted in this enterprise.
It is Mr. Trump’s “normal” pattern of behaviour to try to knock his adversary off-balance with a combination of personal insults and outrageous threats. Having given his best shot at bullying his adversary into submission, it is, however, also his pattern eventually to settle back, accept a deal and describe it as a personal triumph. (The Singapore summit may provide yet another example.)
On the weekend, in a pause between insults, the President called for the elimination of tariffs at the border and, in particular, elimination of the special regime of tariffs “up to 270 per cent” around certain dairy products. The elimination of tariffs is called a “free trade agreement” and that is precisely what was negotiated in 1988, extended to Mexico in 1994, and what Canada and Mexico are now trying to preserve in the North American free-trade agreement renegotiations.
There are indeed certain exceptions and exemptions: The United States has astronomical tariffs on tobacco and its sugar program effectively embargoes imports of sugar-containing products for domestic political reasons, just as Canada, which does not come to the table with clean hands, has absurdly high tariffs on dairy products. These are all bad economics, but good local politics and should be manageable as they have been in the past. After all, Mr. Trump would be surprised to learn that the United States actually runs a sizable surplus on dairy trade with Canada and Mr. Trudeau has already indicated that Canada is prepared to show some further flexibility on the issue, as it was ready to do in the Trans-Pacific Partnership negotiations from which Mr. Trump withdrew.
As the White House itself indicated last week, before Mr. Trump’s latest outbursts, there is a workable NAFTA deal on the table right now. Canada should keep focused on that objective.
Meanwhile, there is mounting realization in the United States that the President’s offensive tactics are self-destructive. The U.S. economy will pay a growing price for the tariffs on aluminium and steel, and from the inevitable retaliation in kind by America’s best trading partner. The threatened tariffs on cars would be devastating for the American automobile and parts producers. To date, the opposition, notably from traditionally free-trading Republican legislators, has been muted but is starting to build.
To date, Mr. Trudeau and his team have shown remarkable poise and skill. It is asking a lot of the Prime Minister, but it would be the path of wisdom to ignore the insults as the tantrum of a child and keep attention focused on the much bigger game – preserving substantially free trade between Canada and the United States. It is clearly in the interest of Canadians and Americans alike.