From Amelia Hadfield – Professor of European and International Relations.

I admit it. I’m a foreign policy junkie. I admit to getting a buzz during the G7, the EU, the UN. Not even Brexit has worn down the intoxication of the international. But I wasn’t prepared for the adrenalin rush of the recent G7, and the war of words between the US and …Canada?

Donald Trump vs… Justin Trudeau?? Flashbacks of Nixon vs. Trudeau Senior! It’s all so close to the UK-US press conference in the Mike Nichols film Love Actually, when Hugh ‘I can play Conservative or Liberal leaders with equal aplomb’ Grant tells the reassuringly sleazy US President to stop being a bully (after the latter flirted with the former’s non-quite-but-probably-final-scene-girlfriend).

Having won the foreign policy shoot-out, Grant then indulges in some impressive interpretative dance throughout No. 10 to the strains of ‘Jump’ by The Pointer Sisters to prove his quintessential coolness (a major omission from the otherwise magisterial 3-part A Very English Scandal, in my opinion). Not sure if young Justin Trudeau can bop with similar aplomb along the oak-lined corridors of 24 Sussex Drive (that’s the official residence of the Canadian PM), in Ottawa (that’s the capital of Canada). If the raw material for such hip swinging is a good old, fashion foreign policy spat, then he’s off to a good start. Of course, like any good spat, it needs to be made clear at the outset that THEY started it.

 

The Tariff Tango

Let’s recap. Back in April, President Trump first floated the threat of tariffs, demanding that Canada, Mexico and the EU agree to voluntarily limit their exports to the US. They said no, unlike Argentina, Australia, Brazil and Korea. A couple of weeks ago, Trump then made good on his threat to implement 25% tariffs on steel imported from the EU, Canada, and Mexico and a further 10% on aluminium (yes, I know, Canada and the US alike pronounce it al-u-minum).

Why? Because there is a surfeit of cheap steel in the global market, driven by Chinese practices of dumping low-cost steel in other markets? That’s one reason. Because US steel can’t compete however low they drop their own prices, and require government subsidies to survive? That’s another. Because US steel is consequently an imperilled part of a poorly managed national economy? Yes again.

BUT (and here’s the key question), is US steel vital to the national security of the US and therefore entirely to be defended via tariffs? Rubbish. US steel is an economic sector. It is one part of the wider national economy. It is not on its own strategic to US national or even economic security. As argued by Professor Alan Winters of the Sussex Trade Policy Observatory, while “World Trade Organisation rules permit members to impose trade restrictions in the name of national security… the USA has not made a plausible case of immediate national security threats. Rather, US government statements refer to the travails of the US steel sector – that is, the tariffs are simply protection for an economic sector, not of a national economy”.[1] As such, the tariffs are therefore clearly illegal.

 

The Land of Consequences

By slapping trade tariffs on steel and aluminium imports, Trump has created three major hurdles for himself, with damaging repercussion for the US both at home and abroad.

First, Trump has made a collective trade foe of EU, Canada and Mexico. Slapping tariffs on their steel and aluminium, insisting on the strategic (even military) rather than economic role of steel, and finally throwing a temper tantrum when Trudeau reasonably pointed out with other leaders at the recent G7 that such tariffs won’t be taken lightly reveals that Trump’s adolescent approach to world affairs won’t mature anytime soon. More on the implications for the land of the maple leaf in Part II of this blog.

Second, Trump has given rise to genuine ‘bad faith diplomacy’ between him, and the rest of the G7 (at a minimum). As the fabulous ‘Last Supper’ photo of a resentful Trump opposite a deliciously peeved Merkel indicated, Trump has continued to alienate both the key personages within grouping like the G7, and the underlying system and values that they represent. Not wise. If contemporary political history teaches us one thing, it’s that you don’t ride roughshod over hard-won allies. Bridge building with North Korea may seem cool and edgy, but bullying those historically supportive of America – both remote and proximate – is a singularly injudicious approach (that’s Canadian for stupid).

Trump’s approach will have political consequences. And it will have trade consequences – some of which have already begun. The EU, Canada and Mexico have responded identically: with limited but target tariff retaliations of their own. The EU swiftly opened a case at the WTO, with EU trade Commissioner Cecilia Malmström announcing reasonable, proportionate, WTO-compliant retaliatory tariffs on classic US products from, bourbon whiskey to peanut butter and jeans, concluding that “this is not the way we do business, and certainly not between longstanding partners, friends and allies”.[2] Britain’s UK international trade secretary Liam Fox also declared US tariffs as ‘patently absurd’, while (possibly football obsessed) Germany argued that hitting symbolic US products like Harley Davidson would show Trump a red card[3]. Even EU diplomacy supremo (supremette?) Federica Mogherini weighed in, arguing that the EU supported free and fair trade, and busy “multiplying the trade agreements with our partners in the world” rather than foreclosing on key opportunities.[4]

Beyond the shores of Europe, many within the US, both Democrats and Republicans, arguably support the pithy observation of Republican Senator Ben Sasse from Nebraska that Trump’s approach was – in a word – “dumb”. In foreign policy terms, Sasse suggested that “you don’t treat allies the same way you treat opponents”; and further, that “blanket protectionism is a big part of why America had a Great Depression. ‘Make America Great Again’ shouldn’t mean ‘Make America 1929 Again’”.[5]  Compelling stuff.

Third, in terms of the global system of trade, ‘Trump’s Tariffs’ represents a genuine threat to the wold trading system, which has underpinned the majority of post-war global prosperity, boosting income increases and sectoral decreases in poverty. Trump is famously antagonistic to multilateralism in general, and key institutions like the EU, the UN, and the WTO in particular. Taking aim at the WTO, Trump has refused to agree to the appointment of judges to the WTO’s Appellate Body, which as Winters points out will prevent the WTO from hearing appeals on disputes, halting the entire system, with the result that “there will be no enforcement mechanism for the rules-based system”. Worse, steel and aluminium tariffs are only the beginning. Trump has launched an inquiry into making a case for US national security out of car and car part imports – a vastly larger sector. Tariffs here – whatever the raison d’etre of their imposition – would result in “massive and widespread economic costs and vigorous retaliation” from China, Japan, the EU and more.[6]

The Canadian G7 marks an exciting new low point in transatlantic relations; its febrile atmosphere emphasised exquisitely in the above-mentioned pic of Angela “look me in the eye when I’m talking to you, dammit” Merkel staring down Donald “I’ve got a plane to catch” Trump. Donald’s chickens may come home to roost. The EU, Canada and Mexico together can easily combine their respective retaliatory tariffs to make it genuinely costly for a whole range of US exporters – from farmers to whiskey producers – to ship their products abroad. And they’ve got the moral high ground in simply being seen to stand up to Trump (including a satisfyingly chastened Macron).

Surely the right response to is to keep the rules-based system in place by supporting rather than hobbling the WTO; working on a compromise with allies to reduce the overall output of steel; and targeting Chinese (and global) steel overcapacity in a more balanced series of measures. Fallacious arguments suggestion steel, aluminium and cars represent American national security interests won’t wash with anyone. Trump should look more closely at the US’s own steel imports which in 2017 represented $29 billion (only $1billion of which came from China in terms of steel, and $1.7 billion in aluminium), and ask whether its domestic balance is where it should be. A basic lesson in economics wouldn’t go astray for the current White House resident: a trade deficit is very simplistic measure by which to measure national growth and sustainability.

 

‘No More Mr Nice Canada’[7]

Onto the fun stuff. First, in terms of local signalling, were Canada and Mexico given any notice of Trump’s decision to impose steel and aluminium tariffs? Based on the “earnest negotiations” that both have undertaken with the US against the backdrop of renegotiating the North American Free Trade Agreement, or NAFTA, a decent smoke signal would have been expected across both America’s north and south borders.[8] But it transpires that neither country was notified by the White House of the tariffs, nor the broader picture of US intentions regarding NAFTA, which will likely be impacted should tariffs boil over into an all-out trade war. Neither side took kindly to the Trump rationale either. As Canadian Foreign Minister Chrystia Freeland chippily observed, “Canada considers it frankly absurd that we would in any way be considered to be a national security threat to the United States.” Turning to the domestic sectors, Freeland went on to “absolutely assure” Canadian steel and aluminium sectors “that the government is absolutely prepared to and will defend Canadian industries and Canadian jobs”.[9] This from a Canadian politician! Well, if you’re trade minister, and on the brink of a trade war, you get to haul out the big guns…

As I’ve suggested, the retaliatory tariffs levied by the US, Mexico and Canada on symbolic American products are a natural consequence of Trump’s own strategy. But Trump underscored his strategy with a national imperative: that steel and aluminium are fundamental to America’s collective security. Canada in particular has reacted strongly at the suggestion that it (via its imports) somehow poses a national security threat to America. Only Trump’s bizarrely illogical take on bilateral relations would interpret Canada’s refusal to cave to the tariffs as  intrinsically weak, or that Trudeau’s suggestion (made ever so politely) that neither Canada & Mexico nor the EU would ‘take them lightly’ rendered him feckless.

 

Trump’s Tantric Tantrums

Trudeau’s response is in no sense weak. Indeed, from bourbon to peanut butter, from diary to gherkins, it’s pretty darn robust. Trudeau’s stance provoked a full-blown Trump Tantrum, labelling Trudeau weak on Twitter. Peter Navarro, Trump’s trade advisor colourfully suggested to Fox News Sunday that “there’s a special place in hell for any foreign leader that engages in bad faith diplomacy”.[10]  The presidential hissy fit has in consequence scuppered that final G7 communique (which the US refused to endorse), and prompted both international and national unity.

Trudeau – and Canada as a whole – were happy to act as G7 hosts. I suspect Trudeau and Canadian Trade Minister Freeland would likely have considered alternatives to the ballooning trade war, not only with their EU and Mexican colleagues but against the backdrop of the faltering NAFTA negotiations (a deal even worse than Iran? Probably). But not now. Now it’s a national issue. As Jen Gerson neatly pointed out, ‘Trump may be a polarizing figure in the US, but he is turning out to be a great unifier of Canadians’.[11] We may not all be card-carrying members of Trudeau’s Liberal party, but trade tariffs and insults suggesting Trudeau – and by extension all Canadians – are meek and mild, are a step too far.

 

Warning: Angry Canadians Ahead!

Well done, Donald. Worse than cosying up to Kim Jong Un, you’ve actually upset the Canadians! That’s virtually unheard of. It’s also a classic foreign policy blunder. Do you realise how hard it is to genuinely upset a Canadian? How virtually impossible it is – bar hockey defeats – to upset the entire Canadian nation? I’m going to quite Gerson again, because she’s got this spot on:

“If a nation of millions can have a collective character, then it is true what is said about Canadians. We are a stoic, rule-abiding and polite people. We are also smug, passive-aggressive [except in hockey, that’s just flat out aggressive-aggressive] and proud.”[12]

Canada’s easy-going attitude only extends so far. You don’t mess with bilateral trade, and you don’t bully her. Or, indeed, anyone. Canadian values, culture, and support for international peace and multilateralism are entrenched in its respect for differences, in the need for honesty, decency, and the judicious interplay of individual interests that produces good deals collectively. All of these are hallmarks of how Canada is – for the most part – generally prepared work with others at home and abroad.

But you don’t mess with our apparently overpriced cheese. Maybe last week, we could have negotiated the supply of steel, aluminium, and even our delicious, if overpriced dairy products. But not now. We may the nice guys internationally, but we won’t be insulted or treated as a cheesy client state. Like it or not, Trump has arguably taught Canada a valuable lesson. At this point – and echoing Angela Merkel’s sombre assessment – we can no longer trust, or rely, engage maturely with America as we have before. They are neither a trusted trade partner, nor a political ally. Under the Trump administration, America is a liability. We need to rethink our trade policy, and also our foreign policy.

 

Tricky Trade

Trump needs to reflect on the key message found in the US Department Commerce’s January 2018 report. Essentially, that there is no self-standing American steel industry because its various supply chains are so comprehensively tied to Canada. It’s more a cross-border dual market than two single markets. The report suggested that while tariffs might work in America’s favour in signalling the US’s inability to tackle world-wide excess steel production, failing to exempt Canada from such tariffs would produce retaliations that would consequently harm the entirety of America’s own exports in a far more profound way in the long-term. The bad news is that any tit-for-tats would ultimately harm Canada too. As Margaret Macmillan recently observed, “the recent spat has backed Canada into an uncomfortable position: while attempting to remain steadfast against a belligerent trade partner, it must also reckon with the fact that much of its economic productivity is tied to seamless free trade with its southern neighbour.”[13]

 

Rewriting Canada’s Reputation

As Justin Ling argued in Foreign Policy, history is strewn with superbly droll examples of Canadian tenacity. The maple leaf hit parade starts with the War of 1812 when British forces (somehow conflated to represent Canadians) led by General Robert Ross set fire to Washington DC, including the newly-built White House. Other hit singles include Lyndon Johnson telling Lester B. Pearson not to ‘piss on my rug’ when the latter suggested a halt to the Vietnam War, and Richard Nixon calling Pierre Trudeau (Justin’s father) a ‘pompous egghead’ and an ‘asshole’ after the latter attempted to explain the inextricable nature of cross-border supply chains.[14] These quarrels still rankle with our southern neighbours. Indeed, Trump himself rather hilariously underscored his ‘tariffs = security’ philosophy by citing Canada’s malevolent White House arson (probably to the ironic approval of most Canadians).

But the latest addition to this list arose at the G7 when Trudeau said simply that Canada (like other key US trade partners) would respond to Trump with proportionate tariffs of their own. Trump then conflated Canada, Canadian trade and the Prime Minister by suggesting that Trudeau “stabbed the US in the back” for having the temerity to even defend Canada against his aggressive trade measures, and cheekily suggesting to the leader of the free world that “Canada will not be pushed around”. Forget 1812. This is a new nadir for US-Canadian relations (predictable hockey allegory here). While the two countries have generally accepted that their relationship remain “as efficient and profitable as possible”, the fundamental trust and respect accompanying reliable, and progressive bilateralism has under Trump withered on the vine.[15]

 

The Lone North

Trudeau – and Canada as a whole – have had two nasty awakenings. First, however handsome and youthful you are, there’s no such thing as a Trump whisperer. The latter will do what the hell he likes, regardless of logic, evidence or the sound judgement of others. Second, only a minority of key US politicians can now be reliably included in Justin’s ‘Team Canada’ approach to cross-border relations. As Macmillan argues, “although there is little to suggest that his aggressive trade policy has spirited support within his party… Trump has seized on the duties as a weapon he can wield without needing congressional approval.”[16] Canada: you’re on your own.

Trudeau’s response that Canada won’t be bullied suggests that he’s got the message. About time? As Ling suggests, “for a country with a famously polite political and cultural reputation… it’s that reputation, more than anything, that’s in need of revision”.[17] We don’t need to be rude. Heavens, no. But we do need to stand our ground. Ling suggests that between now and the US mid-terms, Canada needs to prepare for “an end run around Trump” by lobbying congress and the US Treasury alike to scrap trade penalties. Agreed. I think Canada also needs to help dial down the security rhetoric, even if THEY started it. It may fall to the ‘True North’ to remind Trump of J.F. Kennedy’s tear-jerkingly famous words that “Geography has made us neighbors. History has made us friends. Economics has made us partners, and necessity has made us allies.” I’m tempted to conclude that “those whom God has so joined together, let

[1] https://blogs.sussex.ac.uk/uktpo/2018/06/01/the-imposition-of-tariffs-by-the-usa-on-steel-and-aluminium/.

[2] http://europa.eu/rapid/press-release_IP-18-4006_en.htm

[3]https://www.politicshome.com/news/world/united-states/donald-trump/news/95614/liam-fox-slams-donald-trumps-%E2%80%98patently-absurd%E2%80%99

[4] https://eeas.europa.eu/headquarters/headquarters-homepage/45708/remarks-hrvp-federica-mogherini-following-eu-china-strategic-dialogue-wang-yi-chinas-state_en

[5] http://uk.businessinsider.com/trump-trade-war-tariffs-on-steel-aluminum-rattles-washington-2018-5

[6] https://blogs.sussex.ac.uk/uktpo/2018/06/01/the-imposition-of-tariffs-by-the-usa-on-steel-and-aluminium/.

[7] An irresistible by-line: the work of Justin Ling, in Foreign Policy, June 15, 2018: http://foreignpolicy.com/2018/06/15/no-more-mr-nice-canada/

[8] https://www.politico.eu/article/donald-trump-duties-steel-aluminum-global-trade-war/

[9] https://www.thestar.com/news/canada/2018/05/30/ottawa-readying-its-options-as-nafta-and-tariff-talks-stall-with-us.html

[10] https://www.thestar.com/news/world/2018/06/10/special-place-in-hell-canada-us-relations-reach-new-low-as-trump-aides-heap-insults-on-trudeau-to-impress-kim-jong-un.html

[11] https://www.theguardian.com/world/commentisfree/2018/jun/11/trump-canada-bully-trade-trudeau

[12] https://www.theguardian.com/world/commentisfree/2018/jun/11/trump-canada-bully-trade-trudeau

[13] https://www.theguardian.com/commentisfree/2018/jun/11/trump-canada-relationship-us

[14] http://foreignpolicy.com/2018/06/15/no-more-mr-nice-canada/

[15] http://foreignpolicy.com/2018/06/15/no-more-mr-nice-canada/

[16] https://www.theguardian.com/commentisfree/2018/jun/11/trump-canada-relationship-us

[17] http://foreignpolicy.com/2018/06/15/no-more-mr-nice-canada/