John Ivison: Things are about to get verrrrrry ugly

The main business of Canadian foreign policy for nearly 160 years has been to remain friendly with the United States, while maintaining a measure of self-respect.

According to Prime Minister Mark Carney, last minute changes to the prospective Canada-U.S. deal meant that his government couldn’t sign on and still retain its conception of itself as a proud, independent country.

In an ad hoc press conference on Saturday morning, Carney explained that he ordered his trade negotiators home after the U.S. side added changes that would have imposed unjustified tariffs and undermined Canadian sovereignty.

The auto industry north of the border was already at risk under the terms of the putative deal, which would have cut the current tariff level in half. But Carney said a late adjustment meant the American side wanted the deal applied only to cars and light trucks, not vehicles such as Ford’s F-series Super Duty line, which the company plans to make in Oakville, Ont., or GM’s Silverado, made in Oshawa.

That shift would have made production uneconomic over time, Carney said.

The Americans also added language that would have limited Canada’s ability to strike new international trade deals.

The prime minister was asked whether the late involvement of the U.S. Commerce Secretary, Howard Lutnick, reversed the progress all sides had claimed earlier in the week.

Carney would only say that there were differences inside the Trump administration that only emerged in the last few days.

Ottawa had been prepared to make concessions, dropping counter-tariffs on steel and aluminum provided the U.S. lower theirs to levels that would allow Canadian exports to be economic. Carney said he was prepared to encourage provinces to return U.S. alcohol to provincial liquor store shelves, and to take “administrative measures” to give more access to the dairy sector.

But, ultimately, “(the U.S.) asked too much and offered too little.”

The consequences are likely to be profound for all involved. The U.S. has already begun the process of imposing 50 percent tariffs on $28-billion of Canadian goods. Carney promised dollar-for-dollar retaliation and now Jamieson Greer, the U.S. trade representative, says the Americans are working on measures to respond to Canadian retaliation.

The impact on Canadian businesses will be felt immediately. Economist Trevor Tombe estimated up to 90,000 job losses, with the electronics, plastic and consumer goods industries hardest hit.

But the pain will be felt on both sides of the border. The absurdity is that Trump is stoking the very inflationary pressures that are partly responsible for the surging bond yields that are so concerning to him. Such is his vexation that he suggested that he may instruct the U.S. military to intervene in the bond crisis, though even for this president an order to bomb Wall Street might be considered as an overreaction.

When the details of Canada’s retaliation are announced next week, Trump will also come under pressure from the impacted businesses and members of Congress. The American side is unlikely to be as united as the justifiably aggrieved Canadians.

The vast majority of citizens here support Carney’s decision to stand fast in the face of a bad deal, according to recent opinion polling.

Conservative Leader Pierre Poilievre’s response suggests he realizes many Canadians see the Trump administration’s trade policy as an extortion racket aimed at getting paid for doing nothing. He urged Canadians to stand united and placed the blame for threatening jobs firmly on the U.S. side. That was in stark contrast to Alberta Premier Danielle Smith, who expressed her disappointment that the agreement had fallen apart and urged Ottawa to restart negotiations, without mentioning Trump.

In the normal course of events, that would be good advice.

But as Mike Tyson once said, everyone has a plan until they get punched in the face. And, if Carney’s version of events goes uncontested, it suggests Canada has just been biffed much lower on the anatomy.

How can any self-respecting country give in to a supposed partner that, in Carney’s words, “uses economic integration as a weapon and writes its signature in pencil”?

Carney is a central banker, trained to be mildewed with caution. The governing principle of such men is to sit on the fence until the iron enters their soul. Yet on Saturday he looked and sounded like a man going to war. One reporter asked why.

“Because we were attacked. You’re at war when you’re attacked.”

To paraphrase a famous anti-war comment, you can no more win a trade war with tariffs than win an earthquake.

Carney noted that Canada supplies the U.S. with 95 percent of its natural gas imports, 85 percent of its electricity imports and 60 percent of its crude oil imports. “I don’t think they want us to stop sending any of that energy,” he said cryptically. The problem with that tacit threat is that following through would risk breaking up the country, on the eve of an Alberta sovereignty referendum.

Still, Canadians are angry and resolved to remain masters of their own destiny. Americans, by contrast, are largely bemused. California Governor Gavin Newsom likely spoke for all Democrats and many Republicans in a social media post that talked about the U.S.’s most critical trading partner. “Trump is hitting Canada with 50 percent tariffs. What the actual fuck are we doing?”

The most likely resolution of this rapidly escalating conflict is that more Americans ask the same question and pressure the Capo dei Capi in the White House to rethink this lunacy.

jivison@criffel.ca

Twitter.com/IvisonJ