Justin Trudeau came out to do a little trade lobbying in public, trying to stop threatened U.S. tariffs on steel and aluminum from being applied to Canada. It "makes no sense," the Prime Minister said. Canada is the biggest customer for U.S. steel, he said. Our industries work together. We're allies.
Mr. Trudeau said he'd already told U.S. President Donald Trump the same thing, many times. Yet, by the time the Prime Minister went out to make a public appeal in front of reporters, Canadian officials were still saying they had no idea whether the mooted U.S. tariffs will apply to Canada.
Makes no sense? Allies? Mr. Trump seemed to have an answer in a tweet: "Trade wars are good, and easy to win."
None of this has much to do with whether the U.S. President likes Canada. He doesn't seem to think in terms of prioritizing allies. It has been widely reported that Mr. Trump demanded to hold the public event on Thursday where he declared the United States will adopt steel and aluminum tariffs even though his staff wasn't ready to go ahead with the policy. This was presidential impulse.
On Friday, U.S. Commerce Secretary Wilbur Ross said he didn't know the details, but that it looked as though tariffs would apply to all imports of steel and aluminum. "That's what the President seemed to announce yesterday," he said. Hey, how is the Commerce Secretary supposed to know?
Mr. Trump supposedly aimed this blow at China, but seems to have hit Canada, and in the process, he's shaking the world.
Foreign Affairs Minister Chrystia Freeland has been on the phone a lot with U.S. politicians and officials, according to one Canadian government source, but just as much with counterparts around the world, who are all calling each other to try to figure out what to do about a move that could start a global trade war.
Some leading figures in Mr. Trump's administration see steel tariffs as a way of hitting back at China, which ramped up steel production in its heavy-industrialization years, and now produces half of the world's steel. Mr. Trump's National Trade Council director, Peter Navarro, wrote a 2012 book called Death by China, and he has talked about steel tariffs as a defensive measure against what he calls Chinese trade cheating.
But China doesn't sell much steel to the United States, so these tariffs won't really hit the Chinese hard. Canada is its largest supplier.
On Friday, Mr. Trump tweeted that if the United States has a trade deficit of US$100-billion with a country, it can win just by stopping trade.
But in a CNBC interview, Mr. Ross inadvertently explained why that doesn't work, as he argued other countries won't retaliate against U.S. tariffs: Foreign countries buy U.S. goods to get the best price, and if they stop, their costs will go up, he said. That's also why Mr. Trump is facing a backlash inside the United States: Steel and aluminum tariffs will increase the cost of things Americans buy, and make.
And countries do retaliate, as a deterrent, to protect their own, and as a response to their own angry publics. Canada and the European Union have already promised they will.
Mr. Trudeau makes a lot of good points. Canadian officials have been making them for 10 months. The United States sells a little more steel to Canada than the other way round, according to the U.S. Bureau of Economic Analysis. The industries in the two countries are integrated, and trade with each other. The U.S. tariffs would be applied under national-security sections of U.S. trade laws – and of the North American free-trade agreement – and Canada is an ally, with a defence industry that is integrated with that of the United States.
But a President who tweets that trade wars are good might not be listening to all that.
The Canadian government is employing a strategy a bit like that used for NAFTA, making the Canadian case relentlessly, talking to many U.S. actors, trying to work with allies who would divert Mr. Trump to another path – in this case, an exemption for Canada. Last April, Mr. Trump pulled back at the last minute from a plan to announce a withdrawal from NAFTA, and went into negotiations.
This time, with steel and aluminum tariffs, he is facing a backlash from inside the United States, and still seems to be forging ahead. Mr. Trudeau has personally made his case to Mr. Trump several times, and his public sortie Friday made it clear that this time, he's not confident that Mr. Trump's impulses can be stopped.