Donald Trump vs. Canada

The U.S. imposed 50 percent tariffs on $20 billion worth of Canadian goods at midnight on Friday night, after trade talks between the two broke down. Canadian Prime Minister Mark Carney has promised retaliatory tariffs that will match America’s “dollar for dollar.”

The breakdown in talks surprised many, because earlier in the week President Donald Trump had posted that the talks were going well.

Both sides accused the other of bringing up last-minute changes. The discussions and demands took place behind closed doors, so we don’t yet know exactly what went wrong.

• Canadians blame divisions between U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer, saying Lutnick objected to concessions Greer had agreed to.
• Americans say Canadian negotiators brought up last-minute changes, particularly regarding tariffs on medium- and heavy-duty trucks.

Canada is drawing dangerously close to Europe. Economically and even militarily, it is looking to shift toward Germany, giving the EU a foothold in North America.

U.S. trade negotiators addressed this geopolitical danger by proposing a clause that would limit Canada’s ability to engage in “economic cooperation and security” agreements with third parties without U.S. permission. The UK agreed to a similar clause in its trade deal with the U.S.

In blowing up the trade deal completely, American negotiators may have pushed Canada into Europe’s embrace.

The $20 billion in tariffs invoke the Smoot-Hawley Tariff Act, infamous for the disastrous role it played in the Great Depression. Section 338 allows the president to impose additional tariffs of up to 50 percent if the target country discriminates against the U.S.

• Section 338 has never been used before, but Donald Trump shows he is willing to use this economic weapon, which he could turn against other powers. It will be challenged within U.S. courts, but that will take months to resolve.

Canada has put off any retaliatory action until September 8, leaving time for a deal to be worked out. But there is bad blood between the Canadian eras of Justin Trudeau–Mark Carney and the United States.

“Carney sees Canada’s economic dependency on the United States as a sickness,” we wrote in our August Philadelphia Trumpet issue. That dependency is so strong he may be forced to agree to some kind of deal, but Canada is turning toward a revived Holy Roman Empire to the detriment of its southern neighbor and brother nation.