Donald Trump, Justin Trudeau, tariffs, Terence Corcoran, Trade, trade war, United States

Terence Corcoran: The tariff speech Trudeau didn’t deliver

What the prime minister should have said about Donald Trump's protectionist trade policies

The following is excerpted from the speech Prime Minister Justin Trudeau should have delivered last Saturday as Canada’s response to U.S. President Donald Trump’s tariffs.

Good evening. Today, the Trump administration informed us it will be imposing a 25 per cent tariff on Canadian exports to the United States and 10 per cent on Canadian energy.

First I want to speak directly to Americans, our closest friends and neighbours. This is a choice that, yes, will harm Canadians. But beyond that, it will have real consequences for you in the United States. Tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities.

Financial Post
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They will raise prices for you, including food at the grocery store and gas at the pump. They will impede your access to an affordable supply of vital goods that are crucial for U.S. security, such as nickel, potash, uranium, steel and aluminum.

They will violate the free trade agreement that the president and I, along with our Mexican counterpart, negotiated and signed a few years ago.

While parts of the Canadian economy will suffer under these illegal tariffs, our government has no intention of joining in this illegal and irrational economic decision. We will not impose on Canadians the same destructive tariffs that are being imposed on Americans.

Canada is a trading nation that aspires to a free-trade economy that allows Canadians to participate in the global marketplace. The United States has also been part of the global economy for decades. Canada will not join this new move by the United States to build tariff walls.

If the United States wants to put up trade barriers, drive up inflation, disrupt supply chains and cause hardship to U.S. industry and consumers, Canada will not participate.

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We will not impose the same hardship and disruptions on Canadians that are now being imposed on Americans. We could, as some have argued, impose dollar-for-dollar tariffs to match the 25 per cent and 10 per cent tariffs now imposed by President Trump on $155 billion in imports from the United States. Such a move would launch a trade war that would accomplish nothing. In fact, it would only add to the economic burden on Canadian industry and consumers.

By doubling down on the U.S. tariffs with our own matching counter-tariffs, we would be effectively doubling the burden on Canadians. Why would we, the Government of Canada, impose tariffs that would harm the Canadian economy? We would be increasing inflation, forcing a lower Canadian dollar, reducing the range of goods available in Canada and severely impede our longer-term growth potential.

We should never forget that all tariffs are political in nature. They ignore and undermine the underlying elements of free trade. While trade is often portrayed as something that takes place between nations, even between governments, the reality is quite different. Let me explain.

Trade in fact takes place between individuals and enterprises, not between nations. Take the example of oranges. Oranges and orange juice are bought by individuals in Canada and are produced by individuals in Florida and California. Governments have no role to play. If Canada were to impose a 25 per cent tariff on orange juice, Canada would be interfering with a free exchange between parties separated by geography. There are no oranges in Canada.

A tariff would artificially raise the price of oranges, with the money going to the Government of Canada. What good can come of such market interference? The same question can — and must — be asked about every other product and service that crosses the border between our two countries.

In the face of the new Trump tariffs, we will not punish our consumers, our industries and our workers with countervailing tariffs. Such a move would just compound the impact of the U.S. tariffs on our economy.

Rather than impose policies that will burden Canadians even further, our plan is to let the citizens and voters of the United States bear the brunt of these ill-founded trade and tariff policies.

We will stand back while the Trump administration deals with the impact of its tariff plan on American consumers and industry. It is an absurd and dangerous policy move that threatens the future of the American economy. The risks posed by the policy will become even clearer as time goes on.

Canada does not need to engage in a destructive trade war that will only add to the harm suffered by Canadians.

Dealing with the economic impact of the Trump tariffs will require adjustments. But the principles of economics are on our side.

Canada has critical minerals, reliable and affordable energy, stable democratic institutions, shared values and the natural resources that Americans need. Canada has the ingredients necessary to build a booming and secure partnership to further the North American economy, and we stand at the ready to work together.

We will stand strong for Canada. We will stand strong to ensure Canada and the United States continue to be the best neighbours in the world. But the best neighbours in the world should not engage in trade warfare.

Financial Post

• Email: tcorcoran@postmedia.com

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