Threats are one thing, trade tariffs are another

The recent trade war between the United States and Canada has provided people around the world with plenty to talk about, but if enacted, or increased, new or more tariffs on exported and imported goods could have a very negative impact on the Strait area.

Before, during and after the recent G7 summit in Charlevoix, Quebec, U.S. President Donald Trump’s administration and the Canadian government traded barbs over the duties imposed on American goods by Canada.

The Americans continually raised the issue of Canada levying a 270 per cent tariff on American dairy products, as if that is the only tariff between the countries, or as if this tariff is so profound as to pose an existential threat to the dairy industry south of the border.

Of course, this is not the only tariff Canada imposes on American goods, nor is it the largest tariff between the countries, as evidenced by the 700 per cent tariff the U.S. imposes on Canadian tobacco.

At this point, it seems as though this is merely a war of words and empty threats, without genuine action. If this spat doesn’t get beyond tough talk, it will undoubtedly be a relief to the millions of people who rely on trade to and from the United States to put food on the table.

But it’s also very possible this trade war is only heating up; with the Trump administration focused on retaliating against Canadian tariffs, then Canada hitting back with a tariff, and so on in a tit-for-tat cascade of events that only promises doom for both countries.

That latter scenario must be keeping some people up at night because the imposition of even modest tariffs could mean the loss of many jobs and damage to important economic sectors on both sides of the border.

This is the confusing part.

According to the U.S. Department of Commerce, our neighbours to the south enjoy a $3 billion trade surplus with Canada, Americans are far more dependent on Canadian trade goods than vice versa, and Canada is the largest single market for American goods.

The U.S. has far more to lose in this war than Canada, so why did they start this, and why are they continuing to battle?

An answer might come from the presidential election in 2016 when then Republican candidate Donald Trump promised to bring jobs back to rust belt states like Ohio, Pennsylvania, Michigan, and Wisconsin, areas with coal mines and steel plants, two commodities targeted in this trade war.

The Trump administration seems to be forgetting the many Americans employed outside of coal and steel, and that those other sectors are actually more vital to the economy.

If the U.S. was to start imposing tariffs on Canadian lumber, it could very well hurt operations in this country, but it would heavily damage the construction industry in the U.S., which is very dependent on a constant and affordable supply of wood from Canada.

The U.S. could also decide to punish the Canadian seafood industry in this trade war, which would be another gut shot to local employers, but that would also hurt American industry as well.

Both cases show that Americans can very well put an economic hurt on Canada, but that this country can almost decimate the U.S. economy with one swoop of a pen.

Imperiling the U.S. economy, as well as millions of jobs in other industries to save two sectors (or at the very least stave off death for a short time), seems an unnecessarily high price to pay.

Hopefully this trade war will tone down soon so no one witnesses these dire consequences.