Say what you will about Donald Trump, the president-elect of the United States. Just don’t call him predictable. What is more predictable is the outcome of his policies, if implemented as promised.
Let’s start with trade, the bilateral US-Canadian issue that’s most important to Atlantic Canada. Trump says he will impose a blanket 10 to 20 per cent tariff on all imports. This may sound as sumptuous as a southern barbecue to his base, but it won’t sit too well with some of Trump’s “crony capitalists.”
Take the trade in seafood as an example. A punishing tariff on lobster imports from Nova Scotia and New Brunswick won’t do a lot to help New England lobster fishers, who can sell everything they catch but catch less and less as stocks decline.
But it will certainly annoy the white linen dining sector, which we suspect leans to the Republican side of the ticket. (Heck, Trump himself likes to brag about the two-pound lobster served at his Mar-a-Logo resort’s Six Star Seafood Night.)
The stakes are bigger, and the consequences more dire for the Atlantic and US economies, when it comes to regional exports of petroleum, tires and forest products. Add 10 or 20 per cent to the price of Newfoundland and Labrador crude oil shipped to US refineries, and it doesn’t exactly lower the cost of gasoline in Poughkeepsie. Ditto for exports of refined petroleum products from the refinery in Saint John, New Brunswick.
A tariff on forest products would result in the same outcomes – hardship on our side of the border, inflation on the US side. Does Trump really want to increase the cost of lumber to build houses in America?
Michelin Tire has integrated operations in North America, with three plants in Nova Scotia and operations in seven US states. No one would benefit from a trade war that imposed sanctions on two-way shipments of specialized tires across the border.
Here’s the point: In the densely intertwined economies of the US and Canada, a blanket US tariff on Canadian exports will hurt industries and people on both sides of the border.
We’re pretty sure Trump would not be immediately amenable to this kind of reasoning, so what’s a small region like ours, inside a sparsely-populated country like Canada, to do about the looming trade and economic crisis. When it comes to Donald Trump, the reflex response on this side of the border is to spend a great time yelling at him or about him, which may be therapeutic but sure isn’t strategic.
Trump’s first term in office (2016-2020) provides some guidance to Canada on trade issues. In May 2018, in the midst of trilateral trade negotiations with the US and Mexico, the US announced a 25 per cent tariff on imports of Canadian steel. A year later, Trump rescinded the tariff.
The backstory is complicated, as it always is in trade, but the reversal can be explained in part by the fact that US companies which depended on Canadian steel made the case that the tariff on Canadian exports also punished their industries.
The CrowsNest leans toward a similar strategy today. Private but urgent conversations should be held, linking up Canadian trade officials and their US governments, Atlantic Canadian premiers and New England governors, and the Canadian exporters and importers who depend upon each other.
Self-interest will find a way to express itself on the US side, and President-elect Trump (or his people) will learn soon enough that trade sanctions are a vipers’ pit of unintended consequences. And please hold the tirades for the time being. Quiet diplomacy is the first order of business.