CANADA HAS a heroic record of standing up to President Donald Trump, in political advertisements written by Canadians, that is. In the real world, Trumpian bullying is racking up the wins.
By chance, your correspondent found himself in Canada at a gathering of business leaders and politicians on October 24th, the day after Mr Trump denounced as “fake” a Canadian-made television advertisement that borrowed Ronald Reagan’s own words to explain the dangers of protectionism. Rewriting history without a qualm, Mr Trump claimed that Reagan “loved tariffs”. To punish what he called an “egregious” abuse of Reagan’s legacy, he declared trade negotiations with Canada “hereby terminated”.
CANADA HAS a heroic record of standing up to President Donald Trump, in political advertisements written by Canadians, that is. In the real world, Trumpian bullying is racking up the wins.
By chance, your correspondent found himself in Canada at a gathering of business leaders and politicians on October 24th, the day after Mr Trump denounced as “fake” a Canadian-made television advertisement that borrowed Ronald Reagan’s own words to explain the dangers of protectionism. Rewriting history without a qualm, Mr Trump claimed that Reagan “loved tariffs”. To punish what he called an “egregious” abuse of Reagan’s legacy, he declared trade negotiations with Canada “hereby terminated”.
If life were a 60-second campaign spot, the assembled industrialists and financiers would have met Mr Trump’s threats with roars of “elbows up!” That battle cry from ice hockey was used by Mark Carney to signal defiance of America, including in election ads during his successful bid to become prime minister this year. Their actual views are sober and pragmatic, and revealing about globalisation as seen from Canada.
The television spot that provoked Mr Trump was commissioned by Doug Ford, the pugilistic premier of Ontario, a border province. A self-styled “big Ronald Reagan fan”, Mr Ford’s stated ambition was to remind “every Republican district” in America that their party’s 20th-century hero was a free-trader. Behind closed doors in Canada, Mr Ford’s claims cut no ice. Republicans know that Mr Trump is traducing Reagan’s legacy, scoffs a chief executive: “You don’t need to remind them.” He describes a recent visit with other Canadian bosses to Washington, DC, to lobby for the preservation of the USMCA free-trade pact between America, Canada and Mexico. That deal was negotiated by Mr Trump in his first term to replace an earlier agreement, NAFTA. Its future is in doubt, undercut in public by American tariffs imposed in the name of national security—notably on Canadian aluminium, cars and energy—and in private by Trump aides warning that America may seek separate trade deals with Canada and Mexico, reviewed each year. “Congressmen from both sides of the aisle told us, we’re sorry, we love Canada and USMCA is a good deal,” reports the boss. The same members of Congress then muttered that Canada should woo Mr Trump, who takes all big decisions. “They are not willing to stand up to him,” he sighs.
Washington politicians are not alone in putting self-preservation before valour. Behind closed doors, Canadian corporate and political leaders report signs that Mr Trump’s aggression is being rewarded. The USMCA still covers most Canadian exports, so that Canada currently enjoys some of America’s lowest average tariff levels in the world. For all that, companies are hedging. An executive guesses that 30% of Canadian firms, especially those with factories on both sides of the border, have begun shifting production and investments to America, or may do so soon.
A manufacturer of outdoor goods confirms that he is planning to move more production to America, where most of his customers live. He is also considering buying an American rival. Though his exports to America remain tariff-free for now, the uncertainty is too much to bear. The American market is irreplaceable, he says. Canada can ill afford to provoke Mr Trump.
A divide can be detected between businesses. One camp, composed of traditional industries and producers of such commodities as aluminium or timber, depends hugely on America, which absorbs three-quarters of Canadian merchandise exports. Often, sales rest on cost advantages, such as the cheap hydro-electricity that powers aluminium smelters in Quebec. Many in this camp treat America as a second home market, as if Canada really is a “51st state”, to adapt an insult with which Mr Trump loved to torment Mr Carney’s predecessor, Justin Trudeau.
In the telling of a Canadian politician, that defiant Reagan-quoting advertisement of Mr Ford’s reflects fear, deep down. Mr Trump says that he wants Canadian car factories to move to America, and some foreign carmakers have announced that some new models will be made south of the border. “Ontario is going to have to reinvent itself,” says the politician.
Mr Trump’s willingness to impose and endure pain to advance his agenda is startling, the politician says. America produces 16% of the aluminium that it uses, making it dependent on imports, mostly from Quebec, for years to come. A 50% tariff on Canadian aluminium is thus an act of self-harm, as well as a serious blow to Canada. “We didn’t vote for it, but Canada is living through North America’s own version of Brexit,” sorrows the politician.
America teaches partners not to trust it
A second camp involves advanced industries of the future, with global supply chains and customers. This camp has more options. Too many Canadian businesses have been “lazy”, relying on the vast, familiar American market for decades, says the boss of one such firm. Global Canadian-owned companies concede that Trumpian trade policies are hurting them, pointing to a detectable slump in investment in Canada, as corporate boards postpone big decisions. But they are not waiting for salvation via a deal with Mr Trump. It is not possible to rely on any future trade pact involving annual reviews, says a boss: America’s greater clout means that each revision will make the terms worse. As for shifting production wholesale to America, Mr Trump’s homeland “does not have the people it needs” to staff advanced factories, grumbles another chief executive. Finding new markets in Europe or Asia would be a “ten-year project” but also an unavoidable one.
Mr Trump’s hold over industries of today is vast. As a result, governments fear him—in Canada and beyond. That same aggression, though, makes America’s grasp on the future less sure.