“A trade war Canada will lose” has been a common theme in recent Canadian media headlines after the United States announced plans to impose tariffs of 25 per cent on Canadian steel and 10 per cent on Canadian aluminum last week.
In response, Canada has announced targeted tariff increases on a broad range of United States manufactured goods that are imported into Canada.
Is this a full blown trade war?
At the moment, call it a trade tariff related dispute designed to increase pressure on the NAFTA negotiations.
But I believe it is also important to be mindful of the year 2008, when the Canadian dollar not only reached parity and rose in value against the US dollar.
I mention that due to the fact that although the 25 per cent tariff on steel is both punitive and in my view completely unfair to Canada, it ultimately negates the Canadian currency advantage that U.S. steel and aluminum buyers benefit from.
This tariff approach follows a similar pattern to the U.S. imposition of a tariff on Canadian softwood lumber, cancelling out a currency advantage that historically works in Canada’s favour.
I believe it is also important to point out that our prime minister has largely shown restraint in not getting involved in U.S. domestic politics despite how that might otherwise be politically convenient to do so.
I believe most political pundits would agree that our Liberal government has made considerable effort to work proactively with the United States administration in several areas, and I believe these efforts will continue.
As the official Opposition, we will continue to hold the prime minister to account for the failure thus far to conclude a successful new NAFTA deal.
It should also be pointed out that holding someone accountable to produce results for Canadians is not necessarily the same thing as assigning blame.
In this case, we have to deal with U.S President Trump, who was elected in part with a promise to renegotiate trade deals such as NAFTA.
Here in Canada, we have a prime minister who has expressed an agenda to also change trade deals and promote “progressive trade values” that to date other countries continue to strongly reject.
In my view, we should recognize that if or when our Canadian dollar returns to parity with the U.S. dollar, either through natural market forces or through artificial means such as punitive tariffs, we will still have to be able to compete.
On that note, a national carbon tax and increased payroll taxes won’t help Canada businesses.
Recent comments from the International Monetary Fund have also highlighted the lack of Canadian tax competitiveness compared to the U.S.
I believe in the absence of a new NAFTA deal, Canada needs to focus on measures that increase our international competitiveness.
To date, the federal government and many provinces, including British Columbia with an incoming new health employers tax, will achieve the opposite.
My question this week relates to NAFTA: Do you believe Canada should show more flexibility to achieve a new NAFTA agreement or aggressively pursue the status quo?
I can be reached at Dan.Albas@parl.gc.ca or call toll free at 1-800-665-8711.