If the USMCA is Done, Canada Should Pivot Trade to China
Let’s face it. Trump’s economic sanctions in the form of tariffs are solely designed to hurt Canada to the benefit of the United States.
The, ‘Why’ is equally simple to understand.
Trump wants to annex Canada into the United States as the 51st state, something he has repeated in the last two weeks, multiple times.
However, by removing the USMCA, which Trump has effectively done, and by violating the GATT and WTA agreements, there is a silver lining inside for Canada.
Canada can now pivot its trade away from the U.S. and to China. Emerging and growing markets are almost all Asian. Canada’s links to the Asia have been growing, but now, they can accelerate in order to meet Canada’s needs, and to be much less dependent upon the United States.
America’s protectionist sentiments and the fact that the U.S. share of global growth continues to shrink, to a point where it is now half of what it was ten years ago.
Slow growth, advanced economies in Europe is unlikely to provide what Canada now needs, as only 9% of Canada’s trade is with the EU. Canada needs to look to two growing and potentially greatly growing economies, India and China.
India has strong ties with Canada, and Canada should pursue a comprehensive free-trade agreement with both. Unfortunately, Canada has, once again, waited too long to engage in diversification. However, the impetus provided due to Trump stabbing Canada in the back, for the second time, should mean that irrespective of the threats, Canada should immediately send trade delegations to greatly expand trade with these growth economies.
Trump, if he carries through with his tariff threat on Canada, will impose the greatest tariffs since 1930, which made the Great Depression that much worse. As the threat is so significant, that Canada has no option but to impose countervailing tariffs designed to specifically hurt America.
“Comparisons to the 2018 tariffs imposed upon China understate the economic impact for Americans. Canada and Mexico account for a combined 29% of US imports as of 2023 (13.6% from Canada and 15.4% from Mexico) — more than twice the share combined compared to China (13.8%). In 2023, Canada was the top import source for 23 states and second largest for 11 others. Canada was also the top export destination for 36 states, and the second most important for another 8.”
https://thoughtleadership.rbc.com/a-us-canada-trade-shock-first-economic-takeaways/
This time, irrespective of how this ends up, Canada has to stay the course, which means a divergent path from that of the U.S.
Trump cannot be trusted, and it’s obvious that America has become a predatory country in the landscape of trade.
We should never be caught between a rock and a hard place, ever again, when it comes to America.
Canadians need to realize that America is no longer our friend, or a trustworthy partner.
In fact, America wants to steal whatever it can.
Time to end our relationships with America. America only wants to play a zero sum game, and will deliberately damage our economy to force either a fire sale, or to annex this country.
America wants to subsume Canada, and do so at the cheapest price possible.
Instead, we need to arm ourselves and gird ourselves for the inevitable childish explosion of threats and acts by Trump.
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