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Enjoy it while it lasts: Why America’s love for Canada may be doomed

Free trade is good for the economy. But not according to the tortured logic found in the U.S. election so far.


 
President Barack Obama and Canadian Prime Minister Justin shake hands following the conclusion of their joint news conference, Thursday, March 10, 2016, in the Rose Garden of the White House in Washington. (Pablo Martinez Monsivais/AP)

President Barack Obama and Canadian Prime Minister Justin shake hands following the conclusion of their joint news conference, Thursday, March 10, 2016, in the Rose Garden of the White House in Washington. (Pablo Martinez Monsivais/AP)

Enjoy it while you can, Canada. When it comes to relations with our closest neighbour and most important trading partner, it’s all downhill from here.

Last week’s official visit by Prime Minister Justin Trudeau to Washington became a media sensation as the American press discovered Canada’s photogenic first family. President Barack Obama was in fine form as host, riffing on everything from Trudeau’s copacetic political outlook to the Canadian habit of buying milk in plastic bags. He also announced the long-standing Canada-U.S. softwood trade dispute will be settled in “the coming weeks and months.”

It may be a long time before Canadians again enjoy such camaraderie and reassurance from the White House.

Related: Paul Wells on Trudeau’s lobby day in Washington

As the interminable Republican and Democrat primary campaigns enter their final stages, it’s becoming depressingly clear the next president will share little of Obama’s interest in Canada or the beneficial aspects of free trade.

While the promotion of trade was once Republican boilerplate, frontrunner Donald Trump repeatedly describes America’s international trade experience in terms of deliberate violence: his country is “getting killed” or “absolutely crushed” by trade. From Trump’s blustery perspective, the North American Free Trade Agreement is a “disaster” and trade with China “the greatest theft in the history of the world.” He’s even threatened to impose a trade-annihilating 45 per cent tariff on Chinese goods. Sen. Ted Cruz, running second to Trump, has lately adopted a similarly hostile stance.

Over on the Democrat side, insurgent candidate Sen. Bernie Sanders boasts he’s never supported a free trade deal during his many decades in the House of Representatives and Senate. Hillary Clinton, who enjoys a substantial lead in the Democratic primary, once described the important Trans-Pacific Partnership (TPP) trade deal involving 12 Pacific Rim countries, including Canada, as “the gold standard in trade agreements to open free, transparent, fair trade” when she was Obama’s secretary of state. Since she’s been running for president, however, she’s repudiated any past fondness for free trade. “I can’t support this deal,” she said in October. While such a reversal solidifies her reputation as someone who’ll say anything to get elected, it also means the top two candidates in both parties are opposed to the TPP, and free trade in general.

There was a time when America aggressively promoted free trade as a form of non-military global intervention. Raising incomes around the world by encouraging economic intercourse with the massive American marketplace was considered cheaper and less dangerous than sending troops abroad to defend capitalism and democracy. However, many years of mediocre domestic growth have soured the American public on such Yankee idealism. Trump and Sanders have tapped into the “angry white male” voting cohort that blames free trade for their economic lassitude and figures—entirely incorrectly—that curtailing trade will improve their prospects. To keep pace, all major candidates have now accepted this tortured logic.

Optimists may argue the mercantilist fervour currently animating American politics poses no direct threat to Canadian interests. Trump’s rhetorical violence is directed at low-wage countries such as China; Canada is unlikely to face a 45 per cent tariff, and our massive cross-border business should continue unabated. By the same token, Clinton’s duplicitous turnabout on trade could be mere pandering—to be reversed once more if she wins the November election. Even if both scenarios are correct, however, the outlook for Canadian trade remains grim. Without a strong and consistent American commitment on the TPP, this deal—meant as counterweight to China’s growing economic and political power in Asia—will die an ignominious death. Trump’s plans to punish low-cost competitors with massive tariffs will inevitably result in retaliatory tariffs from other countries, and a collapse in future free trade initiatives. It’s hard enough to build momentum for lowering trade barriers without the world’s largest economy undermining the process.

Related: What would a Trump presidency look like?

The long-standing problem with selling the concept of free trade to voters is that it involves uneven costs, benefits and timelines that are difficult to sort out. It took decades for the full impact of the 1987 Canada-U.S. Free Trade Agreement to be fully appreciated. Only in 2004 did University of Toronto research clearly show that while 100,000 jobs disappeared in the manufacturing industry in the short run, over the long haul, productivity improved by 15 per cent in sectors that lost their tariff protection, overall employment grew nationwide and consumer prices fell. In the final regard, the outcome was hugely positive for Canada.

Unfortunately, economic subtlety and long-term vision are entirely absent in U.S. political discourse today. Trade is the unquestioned villain of the 2016 election. Walls are more fashionable than ports and bridges. And champions of economic common sense are nowhere to be seen. Canadians should brace themselves for bleak tidings following November’s presidential election. The party’s over.


 

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