Better ways to deal with the U.S. and tariffs

Bravo to Ontario Premier Doug Ford, standing up for Canada.

The Ontario government’s advertisement which aired in the U.S., especially during the initial games of the World Series, was brilliant. It spoke directly to American citizens and was quintessentially Canadian: nothing but polite. It was effective, too. It did catch U.S. President Donald Trump’s ire, but given it was too close to home, using wise words by well-respected former president Ronald Reagan to raise serious concerns about tariffs. Ford’s aplomb contrasts starkly with Prime Minister Mark Carney, who can be generously described these days as “elbows down.”

Despite all the budget hubbub, Carney’s tactics with the U.S. appear protracted and ineffective, with “backing down” becoming his hallmark. The European Union has a deal. Mexico has at least a partial deal. We do not. Some have blamed Ford for the suspension of talks, but U.S. officials confirmed the ad alone was not the cause, further indicating progress was slow. This undermines Carney’s claim that a deal had been imminent. The situation also perfectly suits Trump as we face a constant drip of job-loss announcements going south.

Carney’s apology to Trump is also at odds with fiery rhetoric he employed during the election. In a broadly aired story last March, including on BBC, he stated, “My government will keep tariffs on until the Americans show us respect.” That did not transpire. He also disparaged, “the person who worships at the altar of Donald Trump will kneel before him, not stand up to him.”

Except, unfortunately, that best characterizes Carney himself, ready to do anything to avoid annoying Trump.

No one need nor should ever apologize when standing up on behalf of Canada. Remember it was bourbon bans, not compliance, that got Republican Kentucky to see our side, with their senators both recently voting against Trump.

If Carney can be successful, that would be great, but we are running out of time. Our businesses and economy need a deal, not promises. U.S. attention also appears strongly shifting elsewhere, notably China. We cannot wait forever and thus cannot depend on Carney. Everyone needs to start digging deep to find new solutions and new opportunities. Some are pretty straightforward, while others can be unexpected.

One pretty obvious example involves European markets and shippers. Canada is much smaller than the U.S. To maintain adequate volumes and keep costs reasonable, it had often been better both ways to include Canada goods as parts of larger shipments to and from North America via the U.S. Except, this formerly intelligent approach now just means tariffs. Some co-ordination with European countries would be worthwhile to help streamline shipping directly to and from Canada, away from via the U.S., avoiding excessive tariffs.

On the unexpected front, graduate students in my logistics class recently undertook what was supposed to be a theoretical modelling exercise, but discovered to have larger policy implications.

The Canadian Prairies represents a major food production area, but it turns out what we make is not exactly what we eat. One notable item is fresh produce. The numbers for the Prairies are significant. Produce in the past came largely from the U.S., predominantly California. Two years ago, students undertook modelling to determine what would be a suitable distribution centre location to receive these materials and redistribute them to five major Prairie cities, also calculating total logistics costs.

This year we switched out to look at something different. As described in media, a significant impact of trade disruptions has been on Canadian greenhouse operators, primarily in Southwest Ontario and lower-mainland B.C., now restricted on sales of fresh produce to U.S. cities. It also turns out their production capacities could reasonably match Prairie requirements.

This year students undertook the same modelling exercise, but instead of U.S. sources, switched to considering a distribution centre location based on Canadian greenhouses. Importantly, it turned out that total logistics costs were not very different. This realization meant the idea took on broader significance from a national perspective: we could meet a significant portion of Prairie fresh-produce needs from Canadian greenhouses with costs not much different than from the U.S., an idea that up until now few people likely considered. Two promising distribution centres were also identified: our own CentrePort Canada, just outside Winnipeg; or the Global Transportation Hub, just outside Regina.

This idea is by no means certain but warrants closer examination. We can no longer be content to rest on our laurels.

We all need to start expanding our horizons to look at diverse opportunities, big and small. Not everything may pan out but some will make sense. And these represent a positive future.

Robert Parsons teaches in the Asper School of Business at the University of Manitoba.