This is the third article in a series of three from Herb Pinder, discussing Canada's trade outlook for 2025By a timely coincidence, Donald Trump’s threat to trade partners Mexico and Canada arrived as I was drafting this article, the third is a series of three dealing with what Canadians can expect if 25% tariffs become a reality. (View the second, here below.).PINDER: In praise of trade deficits and cheap imports.Howard Lutnick is Trump's appointment as the next Secretary of Commerce, a cabinet role to manage economic growth and trade relationships. In a recent interview on NBC’s Squawk Box, he frankly stated “the tariffs are a bargaining chip that should not be put in place across the board.” He also revealed one of Trump's tactics by stating that “when you're running for office, you make broad statements so that people understand you”. As well, recently named Treasury Secretary Scott Bessent was quoted in a Financial Times interview that “my general view is that at the end of the day he [Trump] is a free trader”. These comments from trusted colleagues help Canada and Mexico understand the next President of the United States and his sometimes bullying tactics. What remains difficult to understand is his unwillingness to honour the USMCA agreement he force-fed only a few years ago, during his first term. Unpredictable and perhaps untrustworthy? Or is it just his need to one-up those who preceded him, in this case himself?So, what should Canada do?The first suggestion is to appoint a group of seasoned and respected Canadians with international experience respected by counterparties across the border. Examples who come to mind include Derek Burney, Joe Oliver, Paul Tellier and Frank McKenna. These are big-picture thinkers with direct experience, likely known to Trump and respected by his trade negotiators. The obvious disdain Trump and his colleagues have for the likes of Trudeau, Chrystia Freedland and the Liberal government generally suggests negotiations be delegated to seasoned pros.The second significant step is to withdraw the current legislation that would enshrine Canada's dairy supply management cartel from any future trade agreements. Even better would be to honour the spirit of free trade by terminating such trade preferences, anathema in principle and damaging economically to states such as Michigan and Wisconsin with dairy industries — not to mention to Canadians. Such a step would give Canadians lower prices for food products of fundamental importance — milk, eggs, poultry and butter. This would not play well in Quebec, but leads to a fair question: What principle justifies allowing a single province to risk upsetting a comprehensive and critical agreement with Canada's largest trade partner? Always favouring Quebec is a practice, not a principle. Frequently favouring Quebec is untenable. It is also damaging to the rest of Canada’s citizens, is divisive and must end.Regrettably, the Quebec-centric Liberal Party, with a Quebec Prime Minister, needs a dust-up with Donald Trump before eventually doing the right thing for all Canadians — and still only maybe. Apparently, Trump thought this issue was already dealt with by way of USMCA, making it an ideal target for his often belligerent need to winIn this case, perhaps it is justified.An additional imperative is to address the unsatisfactory border issues, a broad Canadian problem as emotion-driven immigration levels have overwhelmed healthcare, housing, and education capacity. We don’t know what immigrants then cross the border to the US, causing understandable resentment, especially given our lax admission process.With respect to energy, sharing Canadian supply in exchange for access to the US and creating a mutually beneficial continental energy market, was in place decades prior to NAFTA. Many US refineries, for example, are served by Canadian pipelines, mostly configured to process Canada's heavier gravity oil. There is no easy alternate source, and the US relies on Canadian supply as our producers rely on US refineries. Albeit the largest producer in the world, the US still imports oil, including almost 4 million barrels each day from Canada. Regarding natural gas, roughly the same level of imports from Canada is exported by the US to Mexico. There is nothing to be gained by making oil or natural gas more expensive and alienating US consumers. All this suggests a separate deal-making process.Given the persistent desire of Ottawa to undervalue and damage Western Canada's energy sector, there should be a group of Western Canadians appointed to negotiate energy issues with the Trump administration. Respected leaders such as Alex Pourbais (pipelines and oilsands ,) Mike Rose (natural gas,) Mac Van Wielingen (energy company builder and business leader,) and Hal Kvisle (everything energy-related,) come to mind.The good news from south of the border is the newly appointed Energy Secretary, Chris Wright.He is a highly successful CEO of an energy company and is also very involved in sensible policy advocacy. There is great potential, with the right representatives from Canada, to reinstate the efficient continental market so damaged by Obama and Biden who, among other ill-advised steps, twice cancelled Keystone XL. This has broken trust and damaged a unique, prosperous, and decades-long commercial collaboration.But, at least until the anticipated change in the federal government, Premiers Smith and Moe (and perhaps other Premiers) should demand hands-off the process by the anti-oil protagonists in Ottawa, as well as those considered Laurentian Elites. Here’s betting that Trump would also insist on others for constructive energy deal-making.Part of the problem, and ultimately a long-term opportunity for Canada, is the animosity between Trudeau and Trump. The clash is far deeper than personalities and past interactions. Few would argue that Justin Trudeau is one of, if not the developed world's leading advocate, for progressive poppycock. Attack fossil fuels to solve the purported “climate crisis” for example, versus Trump's “drill baby drill” and his view that the climate crisis “is a hoax.”Trump's identification with and support from disaffected workers contrasts with Trudeau and his global hobnobbing with progressive elites. Getting rid of permissive drug laws, relatively open immigration, DEI, ESG, men dressing with women, and competing with them, and much more are also likely driving Trump's motivation. This a battle of philosophies and belief systems.It is hard to imagine two more different protagonists from two countries with a long history of collaboration, especially regarding trade and energy. In a curious and perhaps surprising irony, they are similar in at least one respect. Just as the Trudeau-led government arbitrarily dictates what Canadians can and cannot do, especially for Westerners for whom the energy sector is critical, neither does Trump trust fellow Americans to commercially transact freely with non-Americans, even we friendly Canadians, without his approval.These are arrogant propositions of those with perceived superiority, who believe they should determine actions and beliefs of others. The conflict between elected tyrants is poetic justice for the Trudeau crowd, but very risky for the continued prosperity of Canada. As to likely outcomes, we turn to the comments of key players and trusted colleagues of the president-elect. Introduced above, Lutnick also said, “we should put tariffs on the stuff we make and not put tariffs on stuff we don't make.” And let's hope that Scott Bessant is right, predicting that Trump will “escalate to de-escalate”. The danger is that by dealing with Trudeau, Trump might escalate, then escalate more.This is the third article in a series of three from columnist Herb Pinder, discussing Canada's trade outlook for 2025.
This is the third article in a series of three from Herb Pinder, discussing Canada's trade outlook for 2025By a timely coincidence, Donald Trump’s threat to trade partners Mexico and Canada arrived as I was drafting this article, the third is a series of three dealing with what Canadians can expect if 25% tariffs become a reality. (View the second, here below.).PINDER: In praise of trade deficits and cheap imports.Howard Lutnick is Trump's appointment as the next Secretary of Commerce, a cabinet role to manage economic growth and trade relationships. In a recent interview on NBC’s Squawk Box, he frankly stated “the tariffs are a bargaining chip that should not be put in place across the board.” He also revealed one of Trump's tactics by stating that “when you're running for office, you make broad statements so that people understand you”. As well, recently named Treasury Secretary Scott Bessent was quoted in a Financial Times interview that “my general view is that at the end of the day he [Trump] is a free trader”. These comments from trusted colleagues help Canada and Mexico understand the next President of the United States and his sometimes bullying tactics. What remains difficult to understand is his unwillingness to honour the USMCA agreement he force-fed only a few years ago, during his first term. Unpredictable and perhaps untrustworthy? Or is it just his need to one-up those who preceded him, in this case himself?So, what should Canada do?The first suggestion is to appoint a group of seasoned and respected Canadians with international experience respected by counterparties across the border. Examples who come to mind include Derek Burney, Joe Oliver, Paul Tellier and Frank McKenna. These are big-picture thinkers with direct experience, likely known to Trump and respected by his trade negotiators. The obvious disdain Trump and his colleagues have for the likes of Trudeau, Chrystia Freedland and the Liberal government generally suggests negotiations be delegated to seasoned pros.The second significant step is to withdraw the current legislation that would enshrine Canada's dairy supply management cartel from any future trade agreements. Even better would be to honour the spirit of free trade by terminating such trade preferences, anathema in principle and damaging economically to states such as Michigan and Wisconsin with dairy industries — not to mention to Canadians. Such a step would give Canadians lower prices for food products of fundamental importance — milk, eggs, poultry and butter. This would not play well in Quebec, but leads to a fair question: What principle justifies allowing a single province to risk upsetting a comprehensive and critical agreement with Canada's largest trade partner? Always favouring Quebec is a practice, not a principle. Frequently favouring Quebec is untenable. It is also damaging to the rest of Canada’s citizens, is divisive and must end.Regrettably, the Quebec-centric Liberal Party, with a Quebec Prime Minister, needs a dust-up with Donald Trump before eventually doing the right thing for all Canadians — and still only maybe. Apparently, Trump thought this issue was already dealt with by way of USMCA, making it an ideal target for his often belligerent need to winIn this case, perhaps it is justified.An additional imperative is to address the unsatisfactory border issues, a broad Canadian problem as emotion-driven immigration levels have overwhelmed healthcare, housing, and education capacity. We don’t know what immigrants then cross the border to the US, causing understandable resentment, especially given our lax admission process.With respect to energy, sharing Canadian supply in exchange for access to the US and creating a mutually beneficial continental energy market, was in place decades prior to NAFTA. Many US refineries, for example, are served by Canadian pipelines, mostly configured to process Canada's heavier gravity oil. There is no easy alternate source, and the US relies on Canadian supply as our producers rely on US refineries. Albeit the largest producer in the world, the US still imports oil, including almost 4 million barrels each day from Canada. Regarding natural gas, roughly the same level of imports from Canada is exported by the US to Mexico. There is nothing to be gained by making oil or natural gas more expensive and alienating US consumers. All this suggests a separate deal-making process.Given the persistent desire of Ottawa to undervalue and damage Western Canada's energy sector, there should be a group of Western Canadians appointed to negotiate energy issues with the Trump administration. Respected leaders such as Alex Pourbais (pipelines and oilsands ,) Mike Rose (natural gas,) Mac Van Wielingen (energy company builder and business leader,) and Hal Kvisle (everything energy-related,) come to mind.The good news from south of the border is the newly appointed Energy Secretary, Chris Wright.He is a highly successful CEO of an energy company and is also very involved in sensible policy advocacy. There is great potential, with the right representatives from Canada, to reinstate the efficient continental market so damaged by Obama and Biden who, among other ill-advised steps, twice cancelled Keystone XL. This has broken trust and damaged a unique, prosperous, and decades-long commercial collaboration.But, at least until the anticipated change in the federal government, Premiers Smith and Moe (and perhaps other Premiers) should demand hands-off the process by the anti-oil protagonists in Ottawa, as well as those considered Laurentian Elites. Here’s betting that Trump would also insist on others for constructive energy deal-making.Part of the problem, and ultimately a long-term opportunity for Canada, is the animosity between Trudeau and Trump. The clash is far deeper than personalities and past interactions. Few would argue that Justin Trudeau is one of, if not the developed world's leading advocate, for progressive poppycock. Attack fossil fuels to solve the purported “climate crisis” for example, versus Trump's “drill baby drill” and his view that the climate crisis “is a hoax.”Trump's identification with and support from disaffected workers contrasts with Trudeau and his global hobnobbing with progressive elites. Getting rid of permissive drug laws, relatively open immigration, DEI, ESG, men dressing with women, and competing with them, and much more are also likely driving Trump's motivation. This a battle of philosophies and belief systems.It is hard to imagine two more different protagonists from two countries with a long history of collaboration, especially regarding trade and energy. In a curious and perhaps surprising irony, they are similar in at least one respect. Just as the Trudeau-led government arbitrarily dictates what Canadians can and cannot do, especially for Westerners for whom the energy sector is critical, neither does Trump trust fellow Americans to commercially transact freely with non-Americans, even we friendly Canadians, without his approval.These are arrogant propositions of those with perceived superiority, who believe they should determine actions and beliefs of others. The conflict between elected tyrants is poetic justice for the Trudeau crowd, but very risky for the continued prosperity of Canada. As to likely outcomes, we turn to the comments of key players and trusted colleagues of the president-elect. Introduced above, Lutnick also said, “we should put tariffs on the stuff we make and not put tariffs on stuff we don't make.” And let's hope that Scott Bessant is right, predicting that Trump will “escalate to de-escalate”. The danger is that by dealing with Trudeau, Trump might escalate, then escalate more.This is the third article in a series of three from columnist Herb Pinder, discussing Canada's trade outlook for 2025.
