Prime Minister Justin Trudeau sounded an upbeat note Tuesday on the prospect of working with U.S. president-elect Donald Trump, saying Canada has dealt with his trade threats before and can do so again.
Trudeau said Trump’s trade rhetoric is mainly focused on China — and Canada already has shown a willingness to move in lockstep with the U.S. against the Chinese when necessary.
Trudeau suggested a coordinated approach to Chinese trade, and measures to tackle its abusive trade practices, could put Canada in Trump’s good graces.
Trump has for years accused China of deliberately devaluing its currency and flooding the world with cheap goods made by workers who earn very little, displacing products made in the U.S. and forcing jobs overseas.
“The Trump administration is significantly concerned about international pressures, particularly overcapacity by China and unfair trade practices by China. Canada is aligned with the U.S. already and we’re going to be able to do good things together,” Trudeau said.
Canada and the U.S. worked together as “friends and partners” in Trump’s first term “and we’re going to do that again,” Trudeau said.
Responding to a reporter’s question about how his government would react to U.S. president-elect Donald Trump imposing 10 per cent tariffs, Prime Minister Justin Trudeau pointed to the renegotiation of NAFTA during the first Trump presidency and the ‘interdependence’ of the two economies.
As of Oct 1., Canada is levying a 100 per cent surtax on Chinese-made EVs, which effectively doubles the price of those imported vehicles, making them far less attractive to consumers in this country.
A readout from Trudeau’s first call with Trump after the election said the two discussed “addressing unfair trading practices in the global economy.”
While Canada and the U.S. are aligned on EVs, there could be friction ahead with the third partner in the continental free trade pact: Mexico.
Trump has said he could slap big tariffs on Mexico — he’s floated tariffs as high as 200 per cent on vehicles imported from that country — to make it less attractive for automakers to build plants there.
There’s been a huge uptick in car manufacturing in Mexico in recent years; most that product is destined for the U.S. Chinese EV maker BYD has been scouting out locations for a Mexican factory that could supply the U.S. market.
“All I’m doing is saying … I’ll put a number where they can’t sell one car,” Trump said of Mexico in October, referring to threatened tariffs. “I don’t want them hurting our car companies.”
He’s also threatened to impose steep tariffs on Mexico if it doesn’t do more to stop the flow of migrants into the U.S.
Trump’s former ambassador to Canada, Kelly Craft, has said the president-elect is also worried about transshipments.
That’s the practice of countries like China shipping goods to Mexico so they can then be sold into Canada and the U.S. tariff-free under the Canada-U.S.-Mexico Agreement on trade, which Trump renegotiated in his term.
“There are manufacturers producing products for the U.S. and Canada in Mexico, and he wants to reduce that, he wants us to have indigenous manufacturing capability,” Craft said of Trump in an interview with Radio-Canada before last week’s presidential election.
“Why would you want China bringing auto parts through Mexico into the U.S.? Or steel or aluminum? No. We need to protect North America because I can tell you we are going to protect the United States, making certain that nothing from China passes through Mexico.”
Ontario Premier Doug Ford raised similar concerns Tuesday when he suggested Canada and the U.S. should go it alone on a future free trade deal and leave Mexico out.
Ontario Premier Doug Ford says Mexico is undercutting Canadian workers by serving as a back door for Chinese imports. On Tuesday, Ford issued a statement floating a possible bilateral trade agreement between the U.S. and Canada.
“Since signing on to the new NAFTA, Mexico has allowed itself to become a backdoor for Chinese cars, auto parts and other products into Canadian and American markets,” Ford said.
“If Mexico won’t fight transshipment by, at the very least, matching Canadian and American tariffs on Chinese imports, they shouldn’t have a seat at the table or enjoy access to the largest economy in the world.”
As for Trump’s threat to level a minimum 10 per cent tariff on all imports — a policy that could be applied to Canada — Trudeau said Tuesday he’s working to convince the incoming president that policy would be a bad idea for businesses and the workers they employ on both sides of the border.
Canada faced U.S. tariffs on steel and aluminum in Trump’s first term, a policy that was economically damaging. Canada responded with dollar-for-dollar retaliatory tariffs and got the U.S. to back down.
Trudeau suggested it’s a manoeuvre Canada could pursue again if it comes to that.
“We responded to tariffs he brought in with a demonstration that the interdependence of our economies means there are great jobs on both sides of the border that rely on the smooth flow of goods,” he said. “That’s going to continue to be the case.”
But trade experts say the mere threat of tariffs could be damaging for Canada because it could force firms to think twice about investing here.
Laura Dawson is a Canada-U.S. relations expert and the executive director of the Future Borders Coalition.
“Investors start leaving Canada. Production starts shifting elsewhere. Even if we get back to the status quo, it’s not all’s well that ends well. Canada’s really going to take a hit,” Dawson told CBC News.
The federal government is bracing for trade disruption under a second Donald Trump presidency, with former secretary of commerce Wilbur Ross saying Trump will not only focus on tariffs, but target Canada’s supply management sectors during his second term.
Canada could confront another trade issue in Trump’s second term — the ongoing U.S. opposition to supply management, the policy that shields Canadian dairy, eggs and poultry sectors from outside competition.
The U.S. has long said it wants its farmers to have more access to the Canadian market, but Trudeau pushed off Trump’s demands to do away with supply management when renegotiating NAFTA.
Wilbur Ross, Trump’s former commerce secretary, said in an interview Sunday that supply management could again be a sore spot for Canada-U.S. relations.
“I think the real message is he’s going to be cracking down even more than last time on the abuses of trade by various countries. That’s going to be a real fact,” Ross told CBC’s Rosemary Barton Live.
“Supply management is a very hot topic.”
