link: https://www.cbc.ca/news/politics/trump-tariffs-canada-trade-deal-jamieson-greer-interview-9.7104990
U.S. Trade Representative Jamieson Greer said that any new trade deal with Canada (CUSMA), will have tariffs included in the agreement. After President Trump’s state of the union speech, Greer said that Canada would have to open up its markets, particularly in dairy, in exchange for accepting “higher tariffs”. These statements suggest a significant shift away from established North American trade practices and a move towards reassuring important industries such as automotive, steel, and aluminum. The U.S. has already implemented tariffs on several categories of goods including steel and aluminum, soft wood lumber and auto parts, and has also criticized Canada for its retaliatory actions and lack of access to U.S. products. Canadian government representatives responded by stating that they are committed to continued dialogue with the U.S. regarding trade issues and that they are looking to expand their trade base and develop alternative strategies to help industries impacted by tariffs.
There is an increasingly uneven balance in the relationship between Canada and the United States when it comes to trade. Tariffs are now being used by the US as a permanent fixture of trade negotiations, not as a temporary negotiating tool, representing a larger trend of protectionism and economic nationalism. As a result of these developments, there is an increasing amount of uncertainty for industries that rely heavily on the integration of two countries’ supply chains. Additionally, the increased focus on strict rules and regulations represent a broader global movement in terms of reassuring and competing with China. This is important because it has the potential to disrupt the regional economy and could impact the investment decisions made by manufacturers and companies in the resource sector.
In response to these changes, Canada may accelerate its own trade diversification strategy by developing stronger relationships with Europe and Asian trading partners. In addition, Canada may support workers in the steel, aluminum, and auto industry who are negatively impacted by the tariffs. The US will likely continue to use tariffs to negotiate for concessions and trade agreements. Industry associations will advocate for both governments to create greater certainty in order to maintain supply chain continuity.
These issues are connected to some of the major topics studied in class, including globalization and the implications of power and balances in international trade agreements. CUSMA demonstrates how powerful states influence the rules of the economy. Canada’s decision to pursue diversification represents an attempt to decrease its reliance on the US economy, while the debate over tariffs illustrates the tension between the principles of free trade and the economic policy of nationalism.