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There won’t be any winners in this Canada-U.S. game of trade chicken

There won’t be any winners in this Canada-U.S. game of trade chicken

CAMPBELL CLARK
OTTAWA – Globe & Mail
June 10, 2018

How will Donald Trump know, within minutes, if he can deal with North Korea’s leader? “Just my touch, my feel,” he told reporters Saturday. “That’s what I do.”

Yes, that’s what he does. He moves the world according to his animal spirits. Not just with a dictator such as Kim Jong-un but with Justin Trudeau. Angry Donald Trump blew up the Group of Seven and is threatening a bigger trade war.

And now Canada is in a game of chicken with the United States.

That’s not a game this country has been in before. Canada worked to get U.S. attention. It negotiated. Sometimes it ingratiated.

In NAFTA talks, Mr. Trudeau had a careful policy of lowering the temperature. His government deflected Mr. Trump’s bluster into plodding Canadian details. And it tried to stay out of Mr. Trump’s Twitter feed.

The key is guessing whether what we’re hearing from the Trump administration is just loud scary noise or Mr. Trump’s headlong rush to Trade-ageddon.

The spark wasn’t just differences at the G7, or that Mr. Trudeau repeated that Canada would retaliate to U.S. steel tariffs. It was the way Mr. Trudeau said at his closing G7 news conference that Canada is polite, but won’t be pushed around. That triggered the rage response.

It came after Mr. Trump’s own, spectacular news conference, in which he insisted he had laid down the law on trade and other G7 leaders realized they’d have to accept it. But what was really on Mr. Trump’s mind that day, we now know, was looking strong before meeting Mr. Kim.

That’s why Mr. Trump was so mad, his economic adviser Larry Kudlow said on a Sunday talk show. Mr. Trump couldn’t show weakness just before the North Korea summit. That’s why Mr. Trudeau’s won’t-be-pushed-around remark was a “betrayal.” Mr. Trump slapped at Mr. Trudeau to show he’s not weak.

That’s not Machiavellian calculation – it’s more primatology than political science. It’s an alpha chimp puffing himself up to confront a rival – when another chimp seemed to be challenging him, he reacted aggressively to assert the dominant rank.

Mr. Trump’s aides gathered to reinforce the aggression. Mr. Kudlow went on the air to say Mr. Trudeau “stabbed us in the back.” Peter Navarro, head of Mr. Trump’s trade council, asserted “there’s a special place in hell” for foreign leaders such as Mr. Trudeau – the first time the White House had condemned a Canadian Prime Minister to burn for eternity.

Yet, it’s a mistake to think that Mr. Trump’s animal spirits, or his tactics, are easily outsmarted, or inconsequential. He can make a game of chicken scary.

He has already imposed steel and aluminum tariffs not just on adversaries, but on Canada – despite the North American free-trade agreement.

His Saturday night tweetstorm levelled a threat to impose a similar series of hefty tariffs on automobiles – a product at the centre of a $135-billion two-way Canada-U.S. trade. If Mr. Trump takes that step, it’s not just the end of NAFTA, but the start of a massive U.S. protectionist wall that could tip Canada, perhaps the world, into recession.

But it also means a big blow inside the United States, clobbering U.S. auto makers and raising consumer prices. “The threat is ridiculous,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, because it’s a threat to devastate ”the biggest business in the Great Lakes region and the U.S. southeast.”

It seems hard to believe Mr. Trump will launch a scorched-earth campaign with Canada as his first big trade enemy.

And now he’s done something he probably didn’t expect: He has strengthened Mr. Trudeau’s political position at home.

The Trump onslaught couldn’t have been better measured to raise Canadians’ national sense of injustice. Foreign Affairs Minister Chrystia Freeland responded with tart, puritan disapproval, saying that Canada doesn’t believe in conducting its relations with ad hominem attacks.

Conservative politicians trooped out on Twitter to support Mr. Trudeau in a rally-to-the-flag moment – Alberta’s Jason Kenney, new Ontario premier-designate Doug Ford and federal Conservative Leader Andrew Scheer. Mr. Trudeau gets to pluck a chord of reasoned national pride. That can only give him some steel to stay in the game of chicken – but always hoping both countries will swerve before the end.

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