The politics of fearmongering will get us nowhere
Well before the infamous “Liberation Day,” the American tariff threat was accompanied by a veritable epidemic of swollen verbiage on both sides of the Canada-U.S. border. While the American president is working overtime to lower the prestige of his own office with his cutting remarks about the future of our country, Canadian commentators and politicians are helping to create a completely noxious climate of fear.
My point is not to imply that the latter are the cause of the American actions, but rather to stress an important fact: it is difficult to make good decisions when we are in such an agitated state. It was when I heard our prime minister declaring that our relationship with the United States would never be the same again that I realized the moment had come to take a deep breath.
It is not because a thing is conceivable that it will necessarily happen. Without going into denial, it’s important to remember that geography plays an absolutely disproportionate role in trade and diplomatic relations, and these are not things that one presidential term or a knee-jerk Canadian reaction can easily alter in the long run.
If we put all of our eggs in one basket and assume that our relationship with the United States will never be the same, this might justify in some people’s eyes decisions that could be qualified as a tad radical. For example, take the idea that Canada should develop its own perfectly self-sufficient automotive industry. In French, we say that “the ridiculous does not kill,” and that is generally true, but it can certainly impoverish us.
It’s really a grisly kind of symmetry: Trump is using a false “national security emergency” to justify imposing destructive tariffs, and our politicians are using a more melodramatic interpretation than necessary of an already serious situation to justify measures that will harm us. It’s a negative-sum game, a race to the bottom.
Some are saying that our relationship with the United States has changed forever. There is no doubt that this is true in the short run, and we need to strengthen our competitiveness, as we should have done a long time ago. But will the current president’s policy really endure in perpetuity?
The U.S. president was elected for a second and final four-year term. While the administration is currently enjoying its full scope of power, the midterm elections are already on the horizon, and the president’s approval rating is falling, especially when it comes to his handling of the economy. A stinging defeat in Pennsylvania, while only at the local level, clearly shows the fragility of Republican support.
An opposition to the tariffs is starting to form, both in the Democratic and the Republican camps. We saw it with the positions taken by senators like Rand Paul, but also from more conventional Republicans like Ted Cruz and Mitch McConnell. This could therefore indicate that the current policy will be short-lived, given the reaction of the markets and the price increases for goods and services that are to be expected, especially if the U.S. dollar continues to fall.
But suppose for the moment that this does not come to pass. Given that the current administration will not be in power forever, the continuation of Trump’s economic policy could be explained in one of two ways: 1) significant support for this “war against Canada” among the American population, or at least among Republicans; or 2) the possibility of generating such support thanks to the popularity of tariffs as such.
Regarding the first option, the answer is clear: there is simply no support for this frontal attack on Canada among the American electorate. The docility of the American political class stems more from a lack of courage, or insufficient interest in the issue, than from ideological alignment with Trump’s chosen approach to dealing with Canada. Even celebrity podcasters like Joe Rogan have recently pointed out the idiocy of this policy. And this docility is already starting to tamper down.
Secondly, tariffs will increase the cost of consumer goods in the United States. This worries the Trump administration so much that it is exerting pressure on private sector leaders to keep them from raising their prices following the imposition of tariffs. In short, these are going to be unpopular with the American population, especially given that the prospects of reinvigorating the American manufacturing sector are completely fanciful.
Basically, the good news is that fundamental factors and the general course of the free world favour a return to normal for Canada-U.S. trade relations in the medium term. The bad news is that it is more profitable politically for some to ignore these facts and to promote an economic program that will prove counterproductive in order to capitalize on the winds of panic that are blowing through our country.
The autarkic tendencies that have been on display for the past few weeks are a bad omen. The future prosperity of Canada will be built by multiplying our potential to export our natural resources and goods and services with real added value, not by cutting ourselves off and trying to invent new niches for which no real demand exists.
Daniel Dufort is President and CEO of the MEI. The views reflected in this opinion piece are his own.