Trump’s aggression against G7 and Canada: five questions about what’s at stake
June 11, 2018
June 11, 2018
Quebec – When Donald Trump boarded Air Force in Quebec and whisked his way to Singapore on Saturday, he left behind a stormy wake of mixed signals that bordered on rage. Hours after indicating he would sign on to a carefully drafted G7 communique, he rescinded his support, accused Prime Minister Justin Trudeau of being meek and dishonest, and threatened Canada with more trade action.
Here are five questions about what’s at stake:
The future of the G7: The leaders huddled late into the night on Friday and again on Saturday morning to find compromises palatable to all, especially on maintaining free trade and carefully managing trade disputes. With Trump rejecting those compromises and turning his back on an agreement, can the G7 remain intact? They also affirmed the importance of the “international rules-based order” and that the G7 is based on a set of “shared values.” What is lost if the G7 becomes the G6, or simply falls apart?
Canada-U.S. trade: The United States is, by far, Canada’s biggest customer. Much of Canada’s export sector is tightly linked to having an open border with the United States. That makes the renegotiation of the North America Free Trade Agreement that Trump has instigated crucial to the future of Canadian investment and prosperity. The U.S. has recently thrown up or reinforced several barriers to that open border – in aerospace, lumber, and most recently steel and aluminum. With Trump and Trudeau exchanging increasingly personal and public insults, what happens to those NAFTA negotiations? Are Canada’s supply chains at risk? Are there enough reasonable conversations taking place with thoughtful American powerbrokers behind the scenes to help Canada escape a full-blown trade war that would devastate a wide range of sectors?
Dairy: Trump has lashed out at Canada’s dairy exports repeatedly in the past few days, complaining that the U.S. pays prices that are 270 per cent higher than they should be because of unfair trade practices. Canada does not export much dairy. In 2016, sales outside Canada were worth $235 million. Half of those exports were to the United States. Does Trump mean to target those exports, or is he actually trying to undermine Canada’s supply management system? Is he after concessions for a renewed NAFTA?
Autos: Auto production in North America has been under intense scrutiny throughout the NAFTA talks of the past year. Trump has made clear he wants more auto production to take place within the U.S., pressuring Mexico for wage increases, and insisting on a higher percentage of North American content in every car. Last month, he spooked Canada and Mexico by introducing the idea of slapping tariffs on auto exports to the U.S. He doubled down on that threat in his tweets Sunday after the G7. How real is this threat, and can Canada do anything to prevent Trump from making good on it?
Trudeau’s reputation: The prime minister has made no secret of the need to maintain a cordial relationship of respect with Trump, because no country matters more to Canada’s security, prosperity and freedom. Since the day Trump threatened to tear up NAFTA, Trudeau has tip-toed around that possibility with unfailing hope that a renegotiation will eventually benefit everyone. Now the gloves are off. The likes of Republican Senator John McCain and Alberta’s conservative leader Jason Kenney both spoke out in defence of Trudeau yesterday. But will Canadians punish him at the polls next year if they feel the pinch of Trump’s wrath? Will they think the $800 million and the considerable sweat and effort required for the summit was a waste of their money?