{"id":14147,"date":"2025-01-25T09:20:46","date_gmt":"2025-01-25T09:20:46","guid":{"rendered":"http:\/\/torontotribune.ca\/index.php\/2025\/01\/25\/trump-says-canada-is-a-bad-trade-partner-are-his-tariff-threats-justified\/"},"modified":"2025-01-25T09:20:46","modified_gmt":"2025-01-25T09:20:46","slug":"trump-says-canada-is-a-bad-trade-partner-are-his-tariff-threats-justified","status":"publish","type":"post","link":"https:\/\/torontotribune.ca\/index.php\/2025\/01\/25\/trump-says-canada-is-a-bad-trade-partner-are-his-tariff-threats-justified\/","title":{"rendered":"Trump says Canada is a bad trade partner. Are his tariff threats justified?"},"content":{"rendered":"


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As Ottawa floats possible solutions to U.S. President Donald Trump\u2019s tariff threats, it faces a dilemma: does it appease the United States and open up the domestic market, inflicting volatility and job losses but potentially driving down consumer prices, or does it stand firm with retaliatory threats to protect Canadian industries?<\/p>\n

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Canada is bracing for the impact of Trump\u2019s threats to levy blanket tariffs of 25 per cent on all goods entering the U.S. from Canada and Mexico<\/a>, with much being said about price hikes for certain consumer goods<\/a> if the tariffs come into force, but little attention paid to what possible solutions, like opening up the market, could mean.<\/p>\n

\u201cI\u2019m not going to sugarcoat it, there will be job losses if we open up those protected industries,\u201d says Ian Lee, associate professor at Carleton University\u2019s Sprott School of Business.<\/p>\n

\u201cBut prices will go down, not up, and businesses can go on to much greater success [in an open market].\u201d<\/p>\n

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At the heart of this trade battle is a list of long-held U.S. grievances. The behemoth south of the border wants access to Canadian markets for all kinds of goods and services, namely telecoms and banking. <\/strong>This could have positive results for Canadians in terms of purchasing power \u2014 but if Ottawa doesn\u2019t meet Trump at the negotiating table, the ramifications of a trade tit-for-tat could be far more devastating.<\/p>\n

\u201cWe cannot get into a trade war. If we do, we will be slaughtered,\u201d Lee says.<\/p>\n

Trump is known for his long-held beef with Canada\u2019s protectionist industries<\/a> \u2014 particularly supply management, which protects the country\u2019s dairy, egg and poultry industries. But he\u2019s not the first U.S. president to clash with Canada on trade. Instead, he may just be the most vocal about it.<\/p>\n

\u201cI don\u2019t really see Trump raising any particular trade issues relative to Canada that aren\u2019t widely held in the United States,\u201d Mark Warner, a principal at MAAW Law in Toronto says.<\/p>\n

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\u201cThe irritants were always there. Trump is acting on them when past presidents did not.\u201d<\/p>\n

Key members of the incoming Trump administration have described tariffs as a bargaining tool used to pull other countries into line and to protect American interests. But the United States\u2019 2018 trade war<\/a> with China proves that Trump isn\u2019t afraid to make good on those threats.<\/p>\n

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This week, the Liberal government threaten<\/a>ed a \u201cdollar for dollar\u201d response to Trump\u2019s <\/a>tariffs, which could come into effect as early as Feb. 1, but now look more likely to be put in place in April<\/a>. Canadian Prime Minister Justin Trudeau insists tariffs would not only harm Canadian industries but also increase costs for American consumers, particularly in sectors like automotive, lumber, and oil \u2014 so retaliation must be \u201cstrong.\u201d<\/p>\n

But, experts say, the size disparities of the two countries make this an uneven, if not disastrous fight.<\/p>\n

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\u201cThat\u2019s absolutely absurd\u2026 no country can stand up to this might against this juggernaut,\u201d Lee says.\u201cOur strategic objective is the elimination of all tariffs\u2026 It\u2019s not to get to show a bunch of angry voters that we went and socked Donald Trump in the face or kicked him in the shins to make us feel better.\u201d<\/p>\n

Which is why the \u201cTeam Canada\u201d approach is splintering. While Canadian voters overwhelmingly<\/a> believe fighting fire with fire is the best option, several provincial leaders<\/a>, including the premiers of Quebec, Saskatchewan and Alberta, have refused to adopt the retaliation narrative.<\/p>\n

Alberta Premier Danielle Smith has gone so far as to attempt to curry favour with Trump with a peacemaking mission to Mar-a-Lago.<\/a><\/p>\n

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Trump continued his taunting during a virtual address to the World Economic Forum in Davos, Switzerland, on Thursday, where he lashed out at several allies but saved much of his ire for Canada \u2014 saying he didn\u2019t need Canadian cars, lumber or oil.<\/p>\n

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He maintained that it\u2019s \u201cnot fair\u201d that the U.S. has a trade deficit with Canada to the tune of $200 billion or $250 billion.<\/p>\n

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That claim may be erroneous \u2014 the U.S. goods and services trade deficit with Canada was about $40.6 billion in 2023, according to the U.S. government\u2019s Bureau of Economic Analysis, and much of it is caused by the U.S. importing Canadian oil, which keeps costs at the pump down for Americans \u2014 but his laundry list of perceived trade infringements are not.<\/p>\n

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\n\t\t\t\tSupply management is \u2018deader than dead\u2019\t\t\t<\/h2>\n<\/p><\/div>\n

Canada is currently on the USTR (United States Trade Representative) watch list because of concerns over its enforcement of intellectual property rights, particularly around high levels of online piracy, inadequate border controls against counterfeit goods, and a perceived lack of strong penalties for copyright infringement.<\/p>\n

But Trump, and previous U.S. administrations, harbour a long list of grievances that extend well beyond those issues.<\/p>\n

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Softwood lumber<\/a> is one source of contention \u2014 a decades-long bilateral back-and-forth \u2014 as are banking and telecom monopolies, Canada\u2019s controversial digital taxes<\/a> levy and its liquor and energy industries.<\/p>\n

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The country\u2019s supply management system<\/a>, which protects the country\u2019s dairy, egg and poultry industries from market volatility, has long rankled the U.S., and Trump in particular. Opening up that market was a central point in renegotiating the North American Free Trade Agreement (NAFTA), leading to some concessions in CUSMA. Trudeau announced<\/a> billions in compensation for Canadian farmers as a result of that deal.<\/p>\n

But the number of dairy farms has long been declining in Canada \u2014 largely due to advancements in technology and output. When supply management was introduced in 1972, there were about 145,000 dairy farms in Canada.<\/a> There are now about 9,000.<\/p>\n

\u201cThe number of Canadians in dairy is so trivial that it\u2019s not even worth considering,\u201d Lee says.<\/p>\n

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Dismantling supply management could also drive down domestic prices, as more options enter the market, he says.<\/p>\n

\u201c[Supply management] is deader than dead.\u201d<\/p>\n

Lee advocates fighting tariffs by opening up protected industries to invite competition into the market, and to drive prices down. While there will be job losses, American companies would enter the market and create subsidiaries, he says, which would create more jobs \u2014 so there would be more \u201cjob churn.\u201d<\/p>\n