Last Friday night, as Canadian and U.S. negotiators seemed close to a trade deal, I went to bed angry.
For my entire adult life, I’ve championed free trade and free enterprise. I proudly began my career in the government that negotiated the original North American Free Trade Agreement. As an entrepreneur and business advocate, my experience reflects what the data tell us: that when commerce moves in freedom — with transparent rules, protections for workers and reasonable allowances for local priorities — every participating nation becomes more prosperous.
I was raised in a pro-American family. My Uruguayan parents met because my mother worked at the U.S. Embassy in Montevideo. My father later spent a year at MIT in Boston and admired the American free enterprise spirit his entire life.
That’s why it has been so painful to see Donald Trump’s administration dismantle almost everything that made America great. This includes its leadership of the rules-based trading system that has helped the U.S. achieve astonishing wealth and global influence, largely because it also benefited its allies and partners.
Last week, like many businesspeople, I watched with dismay as a lopsided deal took shape in the shadow of 18 months of violations of the continental trade agreement Trump had signed — and threats of even more if Canada didn’t agree to a deal by his arbitrary deadline.
Trump’s new tariffs attack a wide swath of Canadian business
Would Canada accept permanently high U.S. tariffs harming the competitiveness of our key industries, agreeing that Trump could simply ignore our trade agreement? Would we align ourselves with U.S. tariffs against other countries, breaking our own agreements and sacrificing our ability to choose our own partnerships? Would we give up the leverage of our modest retaliatory measures — such as automotive counter-tariffs and provincial booze bans — without the U.S. offering fair, reciprocal and proportionate concessions?
When Canadians went to bed last Friday, it looked as if we would. But when we awoke on Saturday morning, it was clear we would not — at least not now.
The road ahead will be hard. Trump’s new tariffs deliberately attack a wide swath of small- and mid-sized Canadian businesses: makers and sellers of alcohol, food products, sports equipment, furniture and other items that together comprise about five per cent of Canada’s U.S. exports. Some 36,000 jobs rely on these industries. These businesses and workers deserve support, and they will get it.
Americans will suffer, too.
U.S. chambers of commerce oppose Trump’s tariffs because they understand who pays them: American businesses and consumers. The most unpopular U.S. president in history, Trump also has the distinction of being the only leader of any major nation today who has deliberately made life less affordable for his people. Americans are losing patience with his agenda as costs soar and jobs vanish.
Trump loves unpredictability. Businesses — who expected better from a Republican president — hate it. When businesses see unpredictability, they don’t invest, and they don’t hire. The U.S. now trails Canada in job creation.
In a trade war against a more powerful enemy, these dynamics present economic opportunities for Canada.
Canada is leading the G7 in per-capita foreign direct investment because we are seen as a reliable partner in an uncertain world — a nation finally achieving internal alignment and gradually reforming its reputation as a complicated place to do business. We can continue this momentum with bold tax reform, and attractive incentives for businesses ready to invest in themselves.
In the U.S., Canada has considerable leverage from our twin status as America’s most important customer and supplier. Notwithstanding Trump’s bluster, Americans rely on Canada to grow their crops, fuel their cars, build their houses, heat their homes, supply materials for their military, and buy their products.
Canadian economic retaliation must be surgical
Leverage can be asymmetric, if it’s used wisely.
Any Canadian retaliation must be strategic and surgical, and done in close consultation with chambers of commerce in every region. The goal must be to increase pressure on Washington while minimizing costs to Canadians. For example, we can avoid targeting essential components or products that are difficult to find or make here, and focus instead on finished products where there are clear Canadian alternatives.
With America going to the polls this fall, we must work with our growing list of allies across the country — and we have many: both Democrats and Republicans, and the legions of businesses that want fewer barriers to trade, not more.
Finally, we must redouble efforts to build our own economy, eliminate interprovincial trade barriers once and for all, aggressively help businesses diversify their trade, reform taxes, and make Canada a highly attractive place for businesses to invest in themselves.
If we can do all this, we can we get through these dark times, and wake up to many more hopeful mornings.
