On the afternoon of February 13, the president of the United States of America declared that commercial ties with his country’s 51st state could hardly be better.
Keep reading. This was news.
“We have a very outstanding trade relationship with Canada,” Donald Trump said at the White House as Canadian Prime Minister Justin Trudeau looked on. “We’ll be tweaking it. We’ll be doing certain things that will benefit both our countries. It’s a much less severe situation than what’s taken place on the southern border.”
Indeed, the U.S. exported goods worth more than (US) $266 billion to Canada in 2016, significantly more than any other country. The two most northern countries of North America have had a unique economic bond for as long as anyone can remember. Yet Trump’s statement of that fact was treated as significant. “That’s the first reassurance Trump has ever provided on Canada trade, first time he’s made clear he sees us as different from Mexico. Big deal,” tweeted Daniel Dale, Washington correspondent of the Toronto Star. From Emma Loop, a Canadian who covers Capitol Hill for BuzzFeed: “That sound you just heard was everyone in Canada letting out a sigh of relief.” And Avery Shenfeld, chief economist at CIBC World Markets: “The NAFTA comments, and favourable comparison of the trade relationship with Canada relative to Mexico, should give at least some comfort to Canadian economy watchers.”
How very strange are things here in the Upside Down. At other moments in history—like three months ago, for example—the “big deal” in Trump’s remarks might have been confirmation that he intends to overhaul (sorry, “tweak”) the trade rules that are the foundation of Canada’s economic well-being. And rather than comfort, Canadians in the pre-Trump period might have heard menace in those words.
I see little reason to celebrate Trudeau’s day trip to the American capital any more than a fan of the Ottawa Senators (64 points, tied for 11th most in the National Hockey League on the eve of Valentine’s Day) might cheer a successful first period against the Washington Capitals (84 points, most in the NHL). Trudeau did what he needed to do: he survived. There is still a lot of game left to play.
It is difficult to imagine Trudeau and Trump becoming friends. The U.S. president talks about the world in dystopian terms, the opposite of Trudeau’s revival of “sunny ways.” When asked what he had learned from his first month of intelligence briefings, Trump said, “we have a lot of problems that a lot of people have no idea how bad they are, how serious they are.” This could be a political tactic; an emphasis on fear was a feature of his successful campaign. Or maybe the president actually believes the world is as terrible as he describes? Whatever, Trudeau couldn’t be more different. Canada’s prime minister said his citizens wouldn’t want him to visit another country and lecture that place’s elected leader. Yet he twice reminded his audience at his press conference with Trump that the U.S. and Canada have a history of working together on international environmental standards. (The president said nothing about the environment.) Trudeau also mentioned the 40,000 Syrian refugees that Canada has welcomed, a pointed contrast to Trump’s attempts to ban immigration from seven mostly muslim countries. Trudeau said Canada simply wants to set a “positive example.” The implication, intended or otherwise, was that the man standing next to him was setting a negative one.
But such is the power of economic gravity that American presidents and Canadian prime ministers don’t necessarily have to get along for commerce to function. Trudeau appears to want to achieve two things in the early days of the Trump administration. The first is to make sure a group of administrators new to power understand that Canada is important: the prime minister said Canada and the U.S. were each other’s “most essential” partner, an assertion that might have surprised some of the members of the White House press corps, if they were paying attention at all. (Trudeau’s reminder that 35 states count Canada as their biggest export market was probably all he needed to say.)
The second is to get to work. The Prime Minister’s Office and the White House released a joint statement that promised co-operation on making regulations more “business friendly,” infrastructure, and the pre-clearance of exports. Trump appeared enthused. He said that he and Trudeau have “great ideas” on trade and that they would be “implemented quickly.” (He didn’t elaborate.)
Still, it’s Donald Trump. The day before Trudeau arrived, the president, out of nowhere, tweeted that Mark Cuban, the entrepreneur and owner of the Dallas Mavericks basketball team, was “not smart enough” to run for president. (It appears that he may have read a story about Cuban as a potential contender for the Democratic nomination in 2020.) During the press conference with Trudeau, Trump referenced his “very, very large electoral college vote,” still apparently in the denial of the fact that about 40,000 votes in a few key states would have flipped the electoral college in favour of his opponent, Hillary Clinton.
The point is that Trump will say anything, at any time, and for no apparent reason. So yes, he confirmed on the record that his issues with Canada are “less severe” than his problems with Mexico. But we knew that: the U.S. trade deficit in goods with Mexico was more than (US) $63 billion in 2016, compared to a deficit of about (US) $11 billion with Canada. The reality is there was no news on February 13. As Edward Alden, a senior fellow at the Council on Foreign Relations noted, it is unclear how the North American Free Trade Agreement can be tweaked for one member and fundamentally overhauled for another. The future remains as uncertain as ever, unless of course you are willing to move your operations to the United States. Trump spoke in glowing terms of Ford; Intel; General Motors; Fiat Chrysler; and Jack Ma, the founder of Alibaba. All have indicated they intend to invest billions of dollars in the U.S. and hire thousands of people.
Trudeau’s challenge is to keep Canadian companies off Trump’s list. The longer the future remains uncertain, the more difficult that task will become.
- Trump’s guiding rule is “America First.” Canada won’t be an exception
- Canada needs a free trade deal with China, says Teck Resources CEO
- This is exactly how many American jobs depend on Canada–U.S. trade
- Even in the age of Trump, there are U.S. trade opportunities for Canada
- To grow Canada’s exports, we have to look past the U.S. market
- How globalization is changing the game for central banks
- What’s worrying Canadian CEOs now (and what should worry them more)
- Brexit has awakened dangerous forces in the world economy
- Why are Canadians turning their backs on free trade?