The news that the Trump administration is imposing huge tariffs on steel and aluminum from Canada and other countries has come as a shock to many. Various political leaders are warning that this move will bring on a major trade war in the world and, indeed, Canada and Europe have already announced retaliatory tariffs. So where is all this going and how should Canada be responding?
To answer that question, some myths have to be done away with. First of all, some pundits are claiming that all of these aggressive trade moves should be blamed on President Trump and his personality. This is a big mistake. The trade measures Trump has been taking are on behalf of powerful financial and oligarchic interests in the US. It is true that Trump is often erratic and unpredictable, but this should not obscure the fact that he is acting on behalf of definite economic, financial and political interests.
The second myth being propagated is the one that claims “everyone will be hurt” and “no one will win out” as a result of these aggressive, protectionist moves. While it is true that workers, businesses and communities in all these countries, including the US will suffer, it is also true that various oligarchic and political factions in the US will benefit hugely by having severe tariffs imposed on foreign competitors and will use these tariffs to wipe these competitors out.
The third myth is that if somehow Trump is forced to back down or is even removed from office that trade relations in the world will return to “normal.” But it is too late — the genie is out of the bottle.
The US spearheaded the establishment of what is often referred to as the rules-based international economic order after the Second World. In doing so, it set up mechanisms, such as the WTO, IMF and other regulatory bodies, which greatly favoured it in international trade and economic affairs and used these to dominate the world in alliance with the oligarchs of certain other countries.
However, in recent decades this neo-liberal, free trade “board game” has not been working as well for the US despite the fact that the rules were set up in its favour. Increasingly, other countries, such as Germany, China and others are using the existing rules and arrangements and are out-competing the US in various areas. Even Canada has repeatedly defeated the US on the softwood lumber file when these disputes have been taken to international arbitration.
As a result, in their arrogance, the Trump administration and its oligarchic backers want to turn upside down the very “board game” which the US itself established and do so with aim of recalibrating world trading arrangements even more in favour of the US oligarchs.
This danger was raised by many people back when the federal government in Canada pushed the original Free Trade Agreement and later NAFTA. Opponents pointed out that these deals, along with various military agreements, would put Canada further under the thumb of the US and make it vulnerable to arbitrary, predatory and self-serving measures by the US, which is exactly what is happening today. Indeed, the very “free trade” plans for Canada touted by successive Conservative and Liberal governments has led us into a blind alley.
As the old neo-liberal trade and economic relations disintegrate and the existing rules-based system is discarded, the result will be an even greater volatility in world affairs and, accompanying that, the danger of major wars breaking out. As the old saying goes, trade wars lead to military wars.
Canada needs a long term plan and participating in an escalating trade war is a measure, not a plan, and it is a measure fraught with risk. Instead, Canada should embark on its own nation-building project with the aim of establishing an all-sided, manufacturing economy that trades with other countries for mutual benefit but is not dependent on them – an economy that prioritizes processing of our raw materials, including logs, oil & gas and other resources.
And, very importantly, it should disentangle itself from the US war machine and establish Canada as a zone of peace.
Peter Ewart is a columnist and writer based in Prince George, BC. He can be reached at: email@example.com