While the president-elect says he will impose a 25 percent tariff on everything Canada exports, Trudeau remains confident about forestalling that outcome.
[Read: Trump Plans Tariffs on Mexico, Canada and China That Could Cripple Trade]
[Read: Trudeau Flies to Mar-a-Lago to See Trump Amid Tariff Concerns]
Matina Stevis-Gridneff, our Toronto bureau chief, reports that the dinner was attended by top aides from both countries and lasted about three hours.
But at its end, no one offered any insight into what it may have achieved.
During his first presidency, Mr. Trump did slap tariffs on exports of aluminum and steel from Canada, Mexico and the European Union on ostensible national security grounds. Mr. Trudeau’s government eventually negotiated those duties away, although not without a brief period during which Mr. Trump reimposed the aluminum levy.
This week, as is often the case with Mr. Trump, skepticism emerged about whether he would follow through with his plan to introduce the tariffs, along with 10 percent duties on China, during his first day in office, Jan. 20.
But even if the tariff threat proves to be just a negotiating tactic or bluster, my colleague Ana Swanson, who has reported from Washington on trade for over a decade, writes that “it is also a gambit that has immediate real-world consequences.”
[Read: Tariff Threats Show Trump’s Commitment to Upending Global Trade]
“The threats offered a preview of what could be another four years of trade tumult, mirroring Mr. Trump’s first term when he scrambled the country’s economic and diplomatic relationships,” Ana writes. “The president-elect has long viewed tariffs as a powerful source of leverage that, when coupled with his unpredictable style, encourages other countries to swiftly make concessions.”
That leverage could be particularly powerful against Canada, whose economy not only relies heavily on exports but also became heavily integrated with that of its neighbor after the Canada-U.S. Free Trade Agreement of 1989.
But the two biggest sources of Canadian exports to the U.S. come from industries for which the border disappeared long before the government of Brian Mulroney and the Reagan administration signed that pact. As a national security measure during the Cold War, the United States encouraged the development of Alberta’s oil and gas industry and became Canada’s biggest customer, far outstripping its domestic market. Today, about 60 percent of U.S. oil imports flow through pipelines from Canada.
And in 1965, Lester B. Pearson, the prime minister at the time, and then-President Lydon B. Johnson amalgamated the previously inefficient Canadian car industry with its U.S. counterpart through a managed trade agreement.
Given that there is no unwinding the continental links in the auto industry or in oil and gas, what will the consequences be for them if the tariffs are put in place?
Jack Ewing and Neal E. Boudette, who cover the auto industry for The New York Times, spoke with a consultant who described it as “a two-alarm fire for the auto industry.”
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