lilley: trump tariff threat comes tuesday, canada isn't ready
trump says no room for canada to escape tariffs.
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in the moments after donald trump announced that tariffs would come into effect for canada and mexico on tuesday, markets seemed to tumble. in the end, they were down about 1.5% in new york and toronto, the canadian dollar barely moved.
hadn’t trump been clear the tariffs were coming?
“tariffs, 25% on canada and 25% on mexico,” trump said. “what they will have to do is build their car plants frankly, and other things, in the united states, in which case they will have no tariffs.”
these tariffs were originally described as being imposed to force canada and mexico to take action on the border to deal with fentanyl and other drugs crossing into the united states, along with illegal immigration. there was talk that if either country could show progress on the issues trump said mattered to him, that tariffs could be avoided.
“no room left for mexico or canada,” trump said monday afternoon.
of course, while he says there is no room, trump could still change his mind.
that’s essentially what everyone has to hope for because otherwise, the canadian economy will take a very hard hit. more than 76% of canadian exports in 2022, amounting to close to 20% of the canadian economy, flowed to the united states.
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by comparison, just 17% of american exports headed to canada that year. while we are impressive trading partners, the impact of a trade war on our economy will be much bigger than anything they will experience.
“if trump is imposing tariffs, we’re ready. we are ready with $155 billion worth of tariffs and we’re ready with the first tranche of tariffs, which is $30 billion,” foreign affairs minister melanie joly said in ottawa after trump’s announcement.
she pointed to border investments, meetings that top ministers had in washington and said the efforts are ongoing. trump though says there is no room for us to escape, unless he changes his mind.
there is plenty to be critical of the trudeau government for on this file, including the political games they have been playing. at the same time as they were sending public safety minister david mcguinty down to washington with the newly appointed fentanyl czar to try and avoid tariffs, the liberal party was running attacks ads on conservative leader pierre poilievre that used trump as a punching bag.
that’s an incredibly childish and stupid move in the middle of a negotiation.
that said, at this point it doesn’t look like mexico under president claudia sheinbaum has fared any better and she and her government have been acting like adults on this file compared to trudeau and his gang. it looks like these tariffs, and likely others would have been coming no matter what.
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“tt would be nice if trump had a plan beyond liking the word tariff,” one republican friend from south of the border texted monday afternoon.
trump clearly likes tariffs, and he sees them as more than a negotiating tool, he sees them as a tool to reshape the american economy and the global trading order. many countries have been extremely unfair to the united states, charging huge tariffs on american goods while enjoying easy access to the american market.
trump wants to change that and by hitting allies like canada and mexico hard, he’s sending a message to the rest of the world that he’s not afraid to get tough. sadly, we will feel the brunt of this shift in how trade works going forward.
as much as our officials will try, it’s going to be hard to convince the american public, at least in the short term, that trump’s policies are bad for them. his comments on tariffs were made as he announced a $100-billion investment by taiwan semiconductor manufacturing co. to manufacture computer chips in the united states.
“semiconductors are the backbone of the 21st century economy. and really, without the semiconductors, there is no economy,” the president said.
the news comes after apple announced an investment of $500 billion over four years. trump said there are so many investments, he doesn’t have time to do all the announcements.
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this is what canada is up against as the tariff wars begin.
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