Trump and tariffs: taking aim at trade partners

Hey there, time traveller!
This article was published 27/11/2024 (358 days ago), so information in it may no longer be current.

The day after Donald Trump was elected, this newspaper pointed out that Trump’s platform presented clear dangers for Canadian industry and our economy, particularly with regards to Trump’s fondness for punitive tariffs.

What else did the editorial say?

Pierre Elliott Trudeau famously said that being neighbours with the United States was risky: “Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”

Well, it turns out that we are now likely to be affected by every Tweet and grunt.

Monday, on his Truth Social account, Donald Trump announced that, on his first day in office, he plans to institute 25 per cent tariffs on all products entering the United States from Canada and Mexico, saying that the tariffs would stay until all border issues, from illegal immigration to drug trafficking, are solved to his satisfaction.

The responses ranged from the near-servile to the downright panicked. Alberta Premier Danielle Smith jumped in right away with a tweet of her own, “The incoming US @realDonaldTrump administration has valid concerns related to illegal activities at our shared border. We are calling on the federal government to work with the incoming administration to resolve these issues immediately, thereby avoiding any unnecessary tariffs.”

Other premiers reacted with a variety of levels of shock and fear, no doubt aware that $582.7 billion of Canadian products went to the United States in 2023, and that the U.S. accounts for 77 per cent of Canada’s exports. The Canadian dollar plunged by a full cent against the U.S. dollar after the threat — it’s a sign of how edgy markets are about Trump’s mercurial governing style. The Canadian dollar has been slipping against its American counterpart since Trump’s election, a measure of concerns about Trump’s plans.

Prime Minister Justin Trudeau immediately contacted Trump to discuss the issue: he also agreed to call a virtual first ministers’ meeting on the tariff threat for this afternoon, saying that the issue requires a united “Team Canada approach.”

Get used to this.

Will there be more social media eruptions from Trump? Absolutely.

In fact, looking at the crew he’s surrounding himself with, we can expect less restraint than the last Trump presidency, and more policy-by-social-media announcements.

Missing, of course, from Trump’s threat is the question of what 25 per cent tariffs on imported Canadian and Mexican goods would do to Americans and the American economy: while Trump holds fast to the fiction that foreign importers will eat the costs of new tariffs, the fact is that no one can continue to do business at a loss.

America needs building materials and oil from Canada, just as it needs to import food and other goods from Mexico — Mexican exports into the U.S. totalled US$480 billion in 2023. Adding 25 per cent to the cost of production and delivery of exports from Canada and the U.S. means that customers will have to pay the lion’s share of the additional cost.

It’s hard to tell if Trump’s musings are actually going to take place or not — what is certainly the case is that a vast amount of effort — and expense — will now be spent on trying to halt a tariff process that might not even take place. It’s exhausting to realize that Trump hasn’t even been sworn in yet, and we’re already awash in his trademark policies of discord.

The editorial we printed after Trump won the presidential election ended with the words “Buckle up.”

Buckle up indeed. There’s plenty more where this came from.

It’s going to be a long, long, long four years.