PINDER: Stay calm, fluttering like pigeons just encourages Trump

This commentary from Saskatchewan businessman Herb Pinder, the last of three dealing with Canada-US trade issues, talks about setting the right tone in the tariff war with the USThe issue of the moment (which is evolving by the minute) is Trump's threats of tariffs levied on American consumers who purchase Canadian sourced goods. The concern is legitimate as the potential damage could be devastating.We have seen this movie before. As a broad approach, the emotional reaction thus far is what encourages President Trump. Canada’s imposition of limited and strategic tariffs during his first administration, together with a quietly measured response — steel and aluminum are examples —ultimately saw those tariffs removed.The Free Press, a digital publication (that warrants your subscription, right after you have subscribed to Western Standard,) had an interesting feature from journalist Salena Zito. She spent a lot of time with Trump in a variety of locations over many years, becoming his favorite journalist.Her key message that captures Trump better than any other, “the press takes him literally, but not seriously; but his supporters take him seriously but not literally.” This is consistent with both his negotiation style and need to be the powerful centre of attention. So, the starting point from this observer is not to react aggressively with threats of retaliation as already seen from the prime minister, Ontario's premier and many others. Visceral reactions are understandable, but it is probably wiser to make it as easy as possible for him to back away, and that certainly isn't by threatening.Regarding energy, there are some inconvenient truths for President Trump about US need for Canadian oil imports, the dearth of other alternatives, and the risk of his tariffs to other priorities of his agenda. Trump appears unaware that Canada supplies oil, especially refineries configured to process medium/heavy from the oil sands.The growth of oil production in the US is a function of the so-called shale revolution which produces primarily light oil. This is one of the reasons the US exports oil, roughly 4 million barrels per day (b/d,) almost matching the 4.3 million b/d imported from Canada. Canada’s primary customers are refineries in the West and Midwest (PADDS 2 and 4) which need Canada's production as much as Canada needs them as customers.As explained in Part II published yesterday — 'Pipelines to the Pacific promptly, please!' — the continental marketplace developed for reasons, which in these circumstances, are also limitations. Most export destinations have no alternative pipeline access, nor are they proximate to tidewater.Why risk supply, or resort to trucking or rail cars when a pipeline in place serves all stakeholders? That would be inefficient, costly, environmentally less worthy, and just plain dumb. It won’t happen.Also mentioned in the recent series about trade, Trump has appointed outstanding people in the energy, commerce, and trade portfolios, unanimously favouring free trade. They will be making the valid case to Trump that tariffs will result in increased costs for Americans, more inflation, and retaliation from trade partners around the world. How does this “make America great again”?According to a 2021 US Chamber of Commerce report, US importers paid an estimated $32 billion more annually from previous Trump tariffs. More than 90% of certain antibiotics and other critical drug components come from China. These are examples of a much longer list.There are two probable alternate outcomes. Canada reacts, reducing the price by the amount of the tariff, or worse an export tax. Or, standing firm with WTI pricing, adjusted for transportation only.As a starting principle, the industry needs to stand firm, thereby placing the cost of any tariffs with the buyer where they belong. When Trump fully understands there is no alternate source of oil elsewhere, there will be consumer, refinery, and political pressure to avoid a “Mexican standoff”.Even if faced with shutdowns, the industry needs to remain resolute. This longer view is a better risk than returning to the high differential years that cost Canadians so much. This critical negotiation should led by Premier Smith, with or without federal approval. Her charm, knowledge, commitment, and trust of the industry — none of which exists elsewhere — makes her the industry appointee. Ottawa be dammed!This also needs the support of Saskatchewan Premier Moe.The long-term health of the industry depends on full price for our resources, and the ever higher necessity of building infrastructure to Asia. Regrettably, our decades long dream trade partner is now unreliable.Early progress is crucial as a growing and successful energy sector, with diversified markets, is an important step in Making Canada Great Again.

PINDER: Stay calm, fluttering like pigeons just encourages Trump

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