Turning on charm to reinvigorate stressed economic relationship

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This article was published 04/02/2025 (270 days ago), so information in it may no longer be current.

Despite a last-minute pause Monday on what will be economically damaging tariffs on Canadian exports to the U.S. — and the retaliatory ones Canada has promised — it remains, as the Wall Street Journal dubbed it, “the dumbest trade war in history.”

There’s yet to be a cogent economic rationale for the U.S. to impose 25 per cent tariffs on virtually all Canadian goods it imports and it is the respective tax-paying electorate of both countries who will effectively foot the bill.

Trump should remember: Americans buy Canadian products because, for any number of reasons, they’re the best/most appropriate/most inexpensive/highest quality/most accessible product relative to the competition.

Other than an American or Canadian company that might now find more domestic customers because the formerly more competitive import has been priced out of the market, there’s nothing hopeful about such tariffs.

However, Gary Mar, CEO of Calgary-based Canada West Foundation, believes the depth and breadth of the economic relationship between the two countries will eventually create a reason for optimism.

“The relationship goes beyond the president and the prime minister,” he said. “It’s more than Ottawa and Washington, it’s about Manitoba and North Dakota, Ontario and Michigan, Alberta and Texas.”

Obviously, the American market is so much larger than the Canadian one and, in general, Canadians are likely to feel the effects of a trade war more than Americans would.

Irrespective of previously negotiated trade agreements — and the absence of good will in the unilateral decision to disregard those agreements — maybe it could be argued Canadians have grown to take access to the U.S. market for granted.

Mar’s advice is for Canadians to do much more outreach to all the American jurisdictions, not just the federal government in Washington.

“It’s the governors of the U.S. states who really run the economy,” he said. “Those are the people who can have more influence on what the president does than we can as Canadians.”

Mar points to former Manitoba premier Gary Doer as a model. Doer was famous for schmoozing with state officials up and down the mid-continent corridor.

“He knew that today’s state assemblymen could be tomorrows congressmen, today’s congressmen might be tomorrow governor, today’s governor might be tomorrow’s senator or cabinet secretary,” said Mar.

Both countries’ trade policies are set by their federal governments, but Mar also makes a good point in noting there are “not enough federal politicians to cover the map the way the provinces can.”

However, provincial export development, in Manitoba at least, became a thing of the past not so long ago.

Trade missions led by premiers have become far less common than they once were. Under the Pallister government (2016-21), the province’s export development efforts were effectively outsourced to World Trade Centre Winnipeg.

Manitoba’s recent decision to set up a trade office in Washington, D.C., will likely not have much impact on the tariffs now threatened to come into effect in a month, but it’s a sign maybe it behooves the province to treat that market with the importance it deserves.

Most commercial agreements between parties take time to come together and the payoff is not instantaneous. It may be hard to justify the capital costs of export development efforts when it’s the private-sector players that are making the deals at the end of the day.

Provincial governmental resources are stretched thin and export development departments were once a cut that could be made without much push-back.

Perhaps the pendulum is about to swing the other way.

The narrative about diversifying trade that has died down considerably over the years, even while Canada has signed trade agreements with Europe and the Pacific Rim countries. To some extent, such a strategy would often fizzle after an enterprise took stock of costs and risks of various overseas markets in comparison to the proximity and scale of the U.S. market.

Prime Minister Justin Trudeau’s 11th-hour success Monday in forestalling tariffs for another month allows Canadians to rev up the charm campaign.

Regardless of the success of such an offensive in the short term, it may serve to reinvigorate more high-profile trade development efforts with a country that, despite the chaotic nature of its current administration, is a market just about every Canadian company wants to do business with.

martin.cash@freepress.mb.ca