Great post Fred! Doesn't orange man realize it is useless to offer us used bubblegum? We are moving to cleaner countries, friendlier people, smiling, charming negotiations :)
You know we have the Greer/Trump really worried if they use the expression "you don't have the cards" . . . . ;-)
Though "we don't need anything from you" is a close second. The aluminum is a critical example -- everybody needs it right now (if doing most military or high-tech manufacturing). Almost all Canadian aluminum (used to) goes States-side. Now, at least half of it goes to Europe (and as you noted, the stuff that is sold to USA is now 25% more expensive.
It would be a pity for the US if Canada increased its exports of aluminum to Europe and elsewhere. The day may come when US industries want more Canadian aluminum and they are told “Sorry, we’ve committed our sales elsewhere…
We have survived the initial tariff threats because of the cover of CUSMA. It is likely that the future tariff regime will be designed to slice through CUSMA protections and put a minimum tariff on all trade including trade currently covered CUSMA. The goal is the eviceration of the Canadian industrial base as a prelude to turning Canada into a vasal state or that will lead to its assimilation. A 10% tariff dooms the Canadian auto industry as it is currently configured and will create significant job losses in the high hundreds of thousands in a couple years or less. Other sectors will suffer loses as profitability is lost due to tariffs that the US purchasers will have the Canadian sellers absorb as they do in the lumber sector. This is the real threat that Carney is trying to avoid. So instead of rejoicing over our recent resource sector wins we need to prepare for a world where we no longer have full CUSMA protections and industrial integration with the US is a massive threat to our future. This scenario may not happen, CUSMA may be continued, Trump may not be able to effect his tariff strategy before losing the congess in the mid terms or any number of things may allow for the continuation of CUSMA without tariff changes to CUSMA qualifying trade. But the threat of 10% minimum baseline tariffs accross the board is real and will be far more disaterous than any tariff action taken to date. Lets hope Carney and the Canadian negotiators are successful in their negotiations. As more serious trade difficulties are one executive order or one person's decision to withdraw from CUSMA away from a new reality where our dependency on US trade will be more fully exposed. We will know soon enough.
The recent wins matter, but they don't eliminate the underlying risk.
If Washington moves toward blanket tariffs that cut through existing CUSMA protections, we're talking about something far bigger than aluminum or lumber.
That's why diversification isn't a victory lap... it's a necessity.
The less dependent Canada is on a single customer, the less vulnerable we become to policy changes made in Washington.
Hopefully cooler heads prevail during negotiations, but Canada would be wise to prepare for outcomes that would have seemed unthinkable just a few years ago.
The solution to broad based tariffs is industrial reinvention based on greater internal trade, a reciprocal tariff policy, resource export taxes, trade diversification and robust maker investments that both build infrastructure and new global partnerships. Its far more complex than finding new global trade markets when the existing trade dependencies become a strucural weakness.
Great post Fred! Doesn't orange man realize it is useless to offer us used bubblegum? We are moving to cleaner countries, friendlier people, smiling, charming negotiations :)
Patsy, that's exactly the point.
Countries don't build long-term prosperity by accepting whatever is tossed over the fence.
Canada is finding new customers, new partners, and a lot more respect at the negotiating table.
Funny how smiles and cooperation seem to work better than threats and tariffs.
Yes, in any relationship Fred, threats cause people to leave. Not intelligent negotiations with the orange guy! Thanks :)
You know we have the Greer/Trump really worried if they use the expression "you don't have the cards" . . . . ;-)
Though "we don't need anything from you" is a close second. The aluminum is a critical example -- everybody needs it right now (if doing most military or high-tech manufacturing). Almost all Canadian aluminum (used to) goes States-side. Now, at least half of it goes to Europe (and as you noted, the stuff that is sold to USA is now 25% more expensive.
Grant, exactly.
The old assumption was that Canada had nowhere else to sell.
That's no longer true.
When half your aluminum can head across the Atlantic instead of south of the border, tariff threats lose a lot of their bite.
The irony is rich... policies meant to strengthen U.S. industry have helped drive aluminum costs higher while Canada gains new customers.
That's not leverage... it's self-inflicted inflation.
It would be a pity for the US if Canada increased its exports of aluminum to Europe and elsewhere. The day may come when US industries want more Canadian aluminum and they are told “Sorry, we’ve committed our sales elsewhere…
Scott, that's the risk of treating reliable suppliers as if they're interchangeable.
Markets don't sit still waiting for politics to change.
If Canadian producers sign long-term contracts with Europe and other partners, those relationships don't disappear overnight.
The U.S. may discover that supply chains are much easier to disrupt than they are to rebuild.
Once customers and suppliers adapt, the old status quo rarely comes back exactly as it was.
We have survived the initial tariff threats because of the cover of CUSMA. It is likely that the future tariff regime will be designed to slice through CUSMA protections and put a minimum tariff on all trade including trade currently covered CUSMA. The goal is the eviceration of the Canadian industrial base as a prelude to turning Canada into a vasal state or that will lead to its assimilation. A 10% tariff dooms the Canadian auto industry as it is currently configured and will create significant job losses in the high hundreds of thousands in a couple years or less. Other sectors will suffer loses as profitability is lost due to tariffs that the US purchasers will have the Canadian sellers absorb as they do in the lumber sector. This is the real threat that Carney is trying to avoid. So instead of rejoicing over our recent resource sector wins we need to prepare for a world where we no longer have full CUSMA protections and industrial integration with the US is a massive threat to our future. This scenario may not happen, CUSMA may be continued, Trump may not be able to effect his tariff strategy before losing the congess in the mid terms or any number of things may allow for the continuation of CUSMA without tariff changes to CUSMA qualifying trade. But the threat of 10% minimum baseline tariffs accross the board is real and will be far more disaterous than any tariff action taken to date. Lets hope Carney and the Canadian negotiators are successful in their negotiations. As more serious trade difficulties are one executive order or one person's decision to withdraw from CUSMA away from a new reality where our dependency on US trade will be more fully exposed. We will know soon enough.
Larry, that's a fair caution.
The recent wins matter, but they don't eliminate the underlying risk.
If Washington moves toward blanket tariffs that cut through existing CUSMA protections, we're talking about something far bigger than aluminum or lumber.
That's why diversification isn't a victory lap... it's a necessity.
The less dependent Canada is on a single customer, the less vulnerable we become to policy changes made in Washington.
Hopefully cooler heads prevail during negotiations, but Canada would be wise to prepare for outcomes that would have seemed unthinkable just a few years ago.
The solution to broad based tariffs is industrial reinvention based on greater internal trade, a reciprocal tariff policy, resource export taxes, trade diversification and robust maker investments that both build infrastructure and new global partnerships. Its far more complex than finding new global trade markets when the existing trade dependencies become a strucural weakness.