A Bad Deal with Trump is Worse than No Deal at All
Trade negotiations between Canada and the U.S. are continuing, as the revised August 1 deadline approaches. Reports indicate that despite Canadian concessions (on border security, defense spending, and the Digital Services Tax), the U.S. is refusing to remove current and threatened tariffs on Canadian products. Last week Prime Minister Carney warned Canadians that an eventual deal with the U.S. will likely include continued substantial U.S. tariffs. An emerging narrative from government and business quarters suggests that if tariffs imposed on Canada are lower than on other countries (resulting in a less severe ‘average effective tariff’ rate), then Canada should count this as a victory.
A new report from the Centre for Future Work shows this optimism is unjustified and dangerous. Because Canada’s economy is uniquely dependent on exports to the U.S. (equivalent to over 25% of Canadian GDP), even tariffs that seem relatively favourable (compared to other countries) will still cause disproportionate and unprecedented damage to Canada. Even under favourable assumptions, Canada would still be among the handful of worst-hit countries.
The report shows that Trump’s current and threatened tariffs would exact a painful and lasting toll on Canada’s economy, making us among the worst-hit countries in the world. It also lists seven economic and strategic reasons why accepting a bad deal with Trump on August 1, is worse than reaching no deal. Instead, we should continue to resist Trump’s attacks, both at the negotiating table and through countervailing policy actions.
Contrary to Trump’s claims, Canada holds plenty of valuable cards in the current negotiations, based on our status as the largest export market for U.S.-made goods and services, and a dominant supplier to the U.S. of many vital industrial inputs. The federal and provincial governments should preserve our right to play those cards, while undertaking the other steps required to reduce our dependence on U.S. exports, and build a more sovereign, value-added, sustainable economy in the future.
Please see the full report, A Bad Deal with Trump is Worse than No Deal at All, by Jim Stanford, Director of the Centre for Future Work.
Jim Stanford
Jim Stanford is Economist and Director of the Centre for Future Work, based in Vancouver, Canada. Jim is one of Canada’s best-known economic commentators. He served for over 20 years as Economist and Director of Policy with Unifor, Canada’s largest private-sector trade union.