|
Here’s a healthy, if frightening, dose of reality for Canadians clutching pearls over U.S. trade friction: Americans simply don’t care.
American exports to Canada comprise, at the top end, 1.5 per cent of U.S. gross domestic product. For an economy with a GDP of approximately $28.5 trillion, the $300 billion it exports to Canada is, essentially, a rounding error away from being nothing at all.
We might be America’s single biggest customer, but if we went away… oh well.
Advertisement
Late Tuesday night, as I was monitoring media outlets for news of the 11th-hour negotiations between Canada and the U.S. — and holding the No. 1 position on the front page for the story, good or bad — Canadian media were following the talks with breathless anticipation.
American outlets? Not so much as a whisper. It wasn’t until U.S. President Donald Trump announced ‘a deal’ that CNN’s website paid any attention, and even then, far down its front page. Fox News? Even 12 hours after Trump’s announcement… crickets. On something it could have easily spun into a victory for Trump.
Of course, all this raises another question: if U.S. trade with Canada is so insignificant, why all the histrionics?
Prime Minister Mark Carney, at least on the outside, did not appear to panic as U.S. President Donald Trump’s trade rhetoric ratcheted up. (Evelyn Hockstein / The Associated Press)
Here’s why: Canada’s exports to the U.S. comprise, at the top end, 25 per cent of our GDP every year. It’s our soft underbelly, and if Trump has shown anything, it’s that he’s not above taking cheap shots to score a win.
It also underscores some math that Trump simply doesn’t seem able to grasp: larger economies will always buy more than smaller economies. When you have a market of 41 million next door to a market of 400 million, it’s simple arithmetic that more goods will flow one way than the other.
It can’t go without mentioning, obviously, that all the companies that participate in that $300 billion of exports to Canada are clearly very worried, and sympathetic. For some of them, Canadian exports are lifeblood. Kentucky bourbon makers and California wineries are perhaps at the top of that list. On one hand, I certainly don’t intend to minimize their pain. On the other, I can’t help but think, “Hey, you voted for this.”
Here’s some other math: the U.S. trade deficit with Canada is one of its smallest deficits. On goods, the deficit runs about $46 billion. But balancing it out with energy, services and tourism, that deficit very nearly, if not entirely, disappears, according to an analysis by TD.
At least it did until many Canadians stopped travelling to the U.S. and eight provinces stopped ordering U.S. booze.
Prime Minister Mark Carney’s efforts to widen our export base are important, but Canada could never completely replace the U.S. as a customer. It doesn’t mean we don’t hold some cards, however.
The U.S. booze boycott certainly inflicted some pain.
Narrowing down Canada’s choice of submarine builder to a Korean and a German firm, before ultimately choosing the German company, also flexed some independence.
Pondering a reduction in F-35 fighter jet orders in favour of a Swedish competitor? That raised some eyebrows, as well.
The gaslighting through all this has been fascinating to watch. The most recent was when U.S. Trade Representative Jamieson Greer acknowledged Canada’s reactions — the booze ban, the quotas on U.S.-built vehicles, etc. — were retaliation. What he didn’t acknowledge, of course, was it all could have been avoided by simply honouring the 2018 trade deal Trump signed and praised as “the greatest trade deal ever.”
The other frightening aspect to this all: it’s not over. Given how quickly Trump threatened to trash his deal with the U.K., the smallest irritant could put this whole situation back to where we were just a few short days ago.
Any skepticism about the Trump administration’s trustworthiness was confirmed Friday when, according to Carney, it tried to backdoor some untenable additions to the deal, including restricting with which countries Canada can make trade deals. That’s an attack on sovereignty. Carney was right to walk away.
It won’t really be over until someone else is in the White House. And even then…
|
