With US president-elect Donald Trump vowing to impose a 25 percent tariff on all Canadian imports, federal government officials are at the sharp end. Their actions could be key to the outcome of what may become a devastating trade dispute. Drawing on my prior experience working on the renegotiation of the North American Free Trade Agreement and other trade files during Trump’s first term, I can imagine what’s been happening behind the diplomatic curtain, leading up to Friday's dinner meeting at Trump's Florida home.
It has been reported that late last Monday, a flurry of calls took place, including one between Prime Minister Justin Trudeau and Trump. It’s a safe bet this call was relatively brief and included an assurance from Trudeau that the Canada-US border will be secure, and a retort from Trump that the United States has no choice but to take action because the country is at risk.
Senior officials from the Government of Canada and counterparts on Trump’s senior team will have listened to that call on mute. The Canadian contingent would likely have included Chief of Staff Katie Telford; Deputy Chief of Staff Brian Clow (also Trudeau’s long-standing point person on Canada-US files); Deputy Prime Minister Chrystia Freeland and members of her senior staff; and Ambassador to Washington Kirsten Hillman, as well as senior officials from the Privy Council Office and Finance Canada.
It’s a safe bet that prior to the leader’s call, every member of the group above will have reached out to personal contacts in Washington, including former members of the first Trump administration, to warm up those relationships and reopen channels. Freeland will likely have reached out to former US Trade Representative Robert Lighthizer, with whom she developed mutual respect over the course of 2017–2020; Telford forged a similar entente with Trump’s daughter Ivanka and son-in-law Jared Kushner; and Hillman has broad and deep networks in the Senate and House of Representatives. Whether those relationships are of value in the new order remains to be seen, but they’ll be a starting point.
As happened in the first go-round, this flurry of networking will quickly extend beyond official channels. Sadly, former Prime Minister Brian Mulroney is no longer with us; his unique role as a personal intermediary between Trudeau and Trump, known and largely trusted by both, will be impossible to fill. But there are others — conservatives such as former Saskatchewan Premier Brad Wall and Ontario Premier Doug Ford, as well as veteran members of the current Trudeau Cabinet, including Defence Minister Bill Blair — who are known quantities in Washington and will get a hearing.
The message they will send, from DC to the state governors’ mansions, will be precisely focused on state-level economics and union-wage jobs south of the border. They will remind their counterparts that Canada and the United States are each other’s largest trading partners, with $3.6 billion worth of goods and services crossing the border each day; that millions of jobs on both sides of the border rely on this commerce; that Canada is the United States’ largest foreign supplier of energy; and, as of the end of 2022, its single largest source of foreign direct investment.
At the diplomatic level, judging from what transpired after the first Trump administration in 2018 imposed a
25 percent tariff on US imports of Canadian steel, with a 10 percent equivalent on aluminum, Canadian officials will inform their counterparts that any tariff on Canadian imports will be matched with exact reciprocity by Canada.
Because these two economies are so closely linked, including via many critical manufacturing supply chains in the industrial heartlands of Ontario and Michigan, the net effect would be to boost costs and prices across most sectors of the economy for both Americans and Canadians. But because more than three-quarters of Canada’s exports are US-bound, and because our economy is still overly reliant on resource extraction, the hit to Canada would be orders of magnitude greater than that to the United States. The Americans, of course, are not blind to this.
The hope will be that a frenetic round of advocacy, ahead of Trump’s inauguration January 20, will persuade influential Republicans at the state level and in Congress to reason with the incoming administration and the president. Can this work a second time? Eventually, perhaps. Economic self-interest tends to make itself felt. But that process takes time. Canadians should prepare for a shock.
A version of this article first appeared in The Globe and Mail.
