What would a full-on trade war look like from Canada's POV?

[Machjo]

To be clear, I think that however wrong Trump was to turn to protectionism, Canada was foolish to retaliate. However, given how things are and that it's clear that most Canadian voters now want a trade war and our politicians will now have no choice but to take Canada down that path, the next question becomes, if fight we must, then how do we do so?

I'm thinking the following.

1. Eliminate all federal, provincial, territorial, and municipal taxes except any tax on wealth and addictive products and any royalty on natural resources. This would mean eliminating most Canadian taxes since the vast majority of Canadian taxes fall outside of any of these categories. The Government of Canada could then make up for the revenue shortfall by introducing import and export tariffs to and from the USA.

2. Unilaterally drop all import and export tariffs and subsidies and any other intentional trade barriers on all countries except the US that don't have any UN sanctions imposed against them. This would provide Canada with the trade partners it needs to compensate it at least in part for the loss of the US as our previous trading partner.

Starting with export tariffs,

3. Canada could impose a 1/3 export tariff on animal products and byproducts, natural resources, and addictive products (like tobacco and alcohol) to the USA. It could even consider broadening the definition of addictive products to smartphones and tablets that do not include comprehensive parental-control features built in.

4. Canada could introduce a 1/3 import tariff on any product from the US on which it would impose an export tariff if it were being exported to the US. By targeting less desirable products, Canada could integrate tariff policy into broader public policy so as to reduce health-care costs and promote public health.

5. Expand Canada's  tariffs to other products to the US so as to make Canadian tariffs towards the US our main source of revenue which the Federal government could then share with other levels of government.

5. Deny legal recognition of any US intellectual property in Canada.

5. Withdraw from NATO and NORAD and seek out other cost-saving measures to balance our books.

6. Cut all ties with the Trump administration and return to friendly relations once Trump is out.

The above would undoubtedly hurt the Canadian economy in the same way as any war economy hurts a nation's finances. It's just the nature of the beast. We fight the war until we win or destroy the North American economy trying. Even if we lose, let's just make sure the US knows not to try to fight such a fight again.

 

 

 

 

3. 

[bush_cheney2004]

12 minutes ago, Machjo said:

....The above would undoubtedly hurt the Canadian economy in the same way as any war economy hurts a nation's finances. It's just the nature of the beast. We fight the war until we win or destroy the North American economy trying. Even if we lose, let's just make sure the US knows not to try to fight such a fight again.

 

 

Several problems with this approach....

1) The U.S. economy is not nearly as dependent on exports, and U.S. exports are far more diversified.   Canada exports 75% to the USA...and Americans own 50% of Canada's manufacturing base plus a good portion of oil/bitumen production capacity.  Canada created this dependence by choice.

2)  Canada/Trudeau/Freeland have sought to keep the "high ground" by not escalating tariffs/non-tariff barriers, only responding "tit-for-tat".

3)  Other nations would move to quickly fill any gaps created by Canada, just as Brazil has done in the past.

4)  IMHO, Canadians overestimate their status as #1 ally of the USA....this is just not true.   It probably is true that the USA is/was Canada's #1 ally...a big difference.

 

Have no worries...because Economics Trumps Virtue.    These trade matters will be resolved sooner rather than later, regardless of all the drama on either side of the border.

Edited June 30, 2018 by bush_cheney2004

[-1=e^ipi]

Most Canadians don't want a trade war, they want reciprocity. Having US put on tariffs but not retaliating proportionately would violate reciprocity.

 

Put supply management on the negotiating table and then negotiate for a reciprocal reduction in trade barriers.

[Michael Hardner]

4 hours ago, bush_cheney2004 said:

 

1) IMHO, Canadians overestimate their status as #1 ally of the USA....this is just not true.   It probably is true that the USA is/was Canada's #1 ally...a big difference.

 

2) These trade matters will be resolved sooner rather than later, regardless of all the drama on either side of the border.

1) Very true.  But the flip side is that Canadians are far more united in this than Americans.  This is the downside of never thinking about Canada.  Canadians are also stubborn.

2) I hope so.  Your rare venture to make a prediction in this case heartens me.

[betsy]

It isn't as simple as waiting for Trump to exit.  

 

Quote

Stephen Harper: Trump's 'America First' Approach Is 'Bound To Outlast His Presidency'

https://www.huffingtonpost.ca/2018/06/27/stephen-harper-trump_a_23469562/

Edited June 30, 2018 by betsy

[betsy]

I saw a clip of Polievre delivering a statement yesterday in response to Freeland's announcement for aluminum/steel workers.   I can't find it on youtube, but he did raise a very important reality.

 

We are entering this trade war in a very weak state due to our deficit.   Trudeau had done so many reckless spending that there isn't anything left for a rainy day.  Of course Trump knows that, and will take advantage of our situation.  The US economy is SURGING!  They can afford the waiting game - can we?

The new Liberal feel-good slogan must be, "we've got your back."  Heard that one repeated by Liberals.     We're all backed to a corner, folks.....that's the truth of it.

Edited June 30, 2018 by betsy

[bush_cheney2004]

4 hours ago, Michael Hardner said:

1) Very true.  But the flip side is that Canadians are far more united in this than Americans.  This is the downside of never thinking about Canada.  Canadians are also stubborn.

2) I hope so.  Your rare venture to make a prediction in this case heartens me.

 

1) Hey, it's worth it just to undermine Trudeau's claim that Canada is the first "post national" country.    Even with tariffs, many products in the USA will still be less expensive than in Canada.   As a U.S. consumer, I can't think of anything to boycott from Canada...just isn't a big factor.

2) Well, tariffs are not new and Trump isn't the first president to impose them on Canada.  This too will pass.

[paxamericana]

7 hours ago, Michael Hardner said:

1) Very true.  But the flip side is that Canadians are far more united in this than Americans.  This is the downside of never thinking about Canada.  Canadians are also stubborn.

2) I hope so.  Your rare venture to make a prediction in this case heartens me.

What if we promises to rejoin the tree hug..er i mean paris accord to sweeten the deal. Will you then do bilateral free trade where possible(excluding national security industries etc..)? 

Edited June 30, 2018 by paxrom

[Michael Hardner]

Sure.  Also I would go for 'Hands Across America II'

[paxamericana]

4 hours ago, Michael Hardner said:

Sure.  Also I would go for 'Hands Across America II'

That't wouldn't be possible, you'll be immediately shot upon hand chaining in texas, man love has yet to be widely accepted in the rural parts. 

[paxamericana]

17 hours ago, Machjo said:

To be clear, I think that however wrong Trump was to turn to protectionism, Canada was foolish to retaliate. However, given how things are and that it's clear that most Canadian voters now want a trade war and our politicians will now have no choice but to take Canada down that path, the next question becomes, if fight we must, then how do we do so?

I'm thinking the following.

1. Eliminate all federal, provincial, territorial, and municipal taxes except any tax on wealth and addictive products and any royalty on natural resources. This would mean eliminating most Canadian taxes since the vast majority of Canadian taxes fall outside of any of these categories. The Government of Canada could then make up for the revenue shortfall by introducing import and export tariffs to and from the USA.

2. Unilaterally drop all import and export tariffs and subsidies and any other intentional trade barriers on all countries except the US that don't have any UN sanctions imposed against them. This would provide Canada with the trade partners it needs to compensate it at least in part for the loss of the US as our previous trading partner.

Starting with export tariffs,

3. Canada could impose a 1/3 export tariff on animal products and byproducts, natural resources, and addictive products (like tobacco and alcohol) to the USA. It could even consider broadening the definition of addictive products to smartphones and tablets that do not include comprehensive parental-control features built in.

4. Canada could introduce a 1/3 import tariff on any product from the US on which it would impose an export tariff if it were being exported to the US. By targeting less desirable products, Canada could integrate tariff policy into broader public policy so as to reduce health-care costs and promote public health.

5. Expand Canada's  tariffs to other products to the US so as to make Canadian tariffs towards the US our main source of revenue which the Federal government could then share with other levels of government.

5. Deny legal recognition of any US intellectual property in Canada.

5. Withdraw from NATO and NORAD and seek out other cost-saving measures to balance our books.

6. Cut all ties with the Trump administration and return to friendly relations once Trump is out.

The above would undoubtedly hurt the Canadian economy in the same way as any war economy hurts a nation's finances. It's just the nature of the beast. We fight the war until we win or destroy the North American economy trying. Even if we lose, let's just make sure the US knows not to try to fight such a fight again.

 

 

 

 

3. 

This sounds like a desperate measure. You can avoid all this by submitting to Trump and admitting that you are all his subject.

Seriously though, if you guys don't reform your trading system, cut back on government program, deregulate,  you'll turn into Venezuela.