Pacheco: Why is Trump picking a fight with Canada?

The U.S. has declared war on Canada, not a military war, but a trade and diplomatic war. Upon entering office last year, President Donald Trump started referring to Canada as the “U.S.’s 51st state,” and referring to its prime minister as “governor.” He also stated that most Canadians would want to be Americans instead of Canadians. The people of Canada are just as proud of their country as Americans are of the U.S., and do not wish to become Americans. Many Canadians, who pride themselves on having built a country founded on a melting pot of immigrants, have expressed concern over the anti-immigrant position that the U.S. is pursuing.

One month into his second term last year, Trump slapped 25% tariffs on most Canadian imports and 10% on energy products. He later increased tariffs on specific Canadian goods to 35%. A lot of the goods were protected from tariffs under the U.S.-Mexico-Canada-Agreement, or USMCA, but the gesture was criticized by Canada’s government. Most recently, Trump threatened to impose 100% tariffs on Canada if it proceeded with negotiating a trade deal with China. Bloomberg News also has reported that Trump is pondering pulling the U.S. out of the USMCA, a treaty which he negotiated in his first term.

At the end of January, Trump threatened to “decertify” Canadian-made aircraft operating in the U.S. over a spat about Canada being too slow to certify new American-made Gulfstream jets destined to fly in Canada. In addition to his decertification comment, Trump also threatened to impose a 50% tariff on all Canadian aircraft exported to the U.S. This development is concerning to the major U.S. airline companies, which use Canadian-made Bombardiers for their shorter or regional flights. 

On Friday the Supreme Court struck down a portion of Trump’s previously imposed tariffs on trading partners such as Canada.

But recently, Trump has threatened to block the opening of the Gordie Howe International Bridge, which will connect Ontario and Michigan. He claims that the U.S. should “own at least half of the bridge,” which it does, as each country funded its respective side of the bridge. According to Trump, “I will not allow this bridge to open until the United States is fully compensated for everything we have given them, and also, importantly, Canada treats the United States with the Fairness and Respect that we deserve.” What he thinks Canada is being disrespectful or unfair about, he did not elaborate.

In spite of the attacks, Canada has not shied away from taking action. On Canadian Prime Minister Mark Carney’s website, he outlines what he calls a new investment strategy. According to Carney, “We are transforming our economy from one that is reliant on a single trade partner to one that is more resilient to global shocks — a stronger, more sustainable, more independent economy, built on the solid foundation of strong Canadian industries and bolstered by diverse international trade partners.”

This is not an idle statement. Despite Trump’s tariff threats, Carney traveled to China in mid-January, the first Canadian prime minister to do so in nearly a decade, to negotiate lower tariffs on Canadian-Chinese trade. This resulted in the two nations announcing the lowering of tariffs on several key products, including Chinese electric vehicle imports into Canada and Canadian canola oil imports into China. It was obvious that Trump’s actions had caused Canada to reach out to China as an alternative to the U.S.

When the announcement was made, China’s Xi Jinping lauded the “turnaround” in the Chinese-Canadian relationship, which had been on choppy waters for the last decade. As for Carney, he stated that he viewed Canada’s talks with Beijing as being “realistic and respectful.” He also said that his country’s relationship with China had been more “predictable” as of late. These are hard-hitting words, given the fact that before Carney went to China, Trump stated, “Prime Minister Carney wants to make a deal with China, which will eat Canada alive. We’ll just get the leftovers! I don't think so. The first thing China will do is terminate ALL Ice Hockey being played in Canada, and permanently eliminate The Stanley Cup.” How he believes China will cancel the Stanley Cup and hockey in general in Canada is unknown. A good possibility is that with the warming of its relationship with Canada, we will see more Chinese investment in Canada, thus helping to bolster its presence in North America.

Canada also has stepped up its efforts to strike a trade deal with India, which could provide India with cheaper access to Canada’s energy exports, including liquefied natural gas. It would provide India with badly needed minerals used in the technology industry, such as nickel, lithium and cobalt. In turn, Canada would have increased access to India’s market for Canadian companies.

To show solidarity with Denmark and its territory of Greenland, Canada opened up a diplomatic consulate in Greenland on Feb. 6. This is a clear signal that Canada stands against U.S. aggression in attempting to take control of this island.

Individually, Canadian tourists are avoiding traveling to the U.S. This has caused them to stop importing and consuming U.S. products such as bourbon, thus harming American companies’ revenues. Even though the U.S. is the world’s largest economy and Canada ranks No. 10, Canadians are voting with their money not to buy American-made products, and it is having an effect.

Some people might say I am crazy for stating the U.S. is at war with Canada, our closest ally. However, the actions of the past 14 months would say otherwise. What the U.S. is conducting is not trade policy, nor is it diplomacy. It is plain bullying for no good reason, and the results will be devastating for both countries in the future.

Jerry Pacheco is the executive director of the nonprofit International Business Accelerator. He can be reached at (575) 589-2200 or jerry@nmiba.com.