“We strongly support your right to determine your own future,” President Donald Trump declared Tuesday night. In the next breath, he declared that “one way or the other” America would seize control.
Trump was talking about Greenland, but Canadians should see themselves in that bizarre threat from a power-mad president.
We are in just the second month of Trump’s chaotic return to the White House, and he has already roiled supply chains, wrecked trade agreements, defunded global aid, sold out Ukraine, pivoted to Russia, and vowed to conquer Greenland and the Panama Canal.
As we gear up for an imminent election, Canadians need to become singularly focused on electing leaders with a plan to withstand this trade war, diversify Canada’s economy, build new trade routes, build up our defences, and improve global security — not just one or two items on that list, but all of them.
Last week, I chided the Liberal candidates likely to replace Prime Minister Justin Trudeau for being big on rhetoric but light on real, practical ideas. Readers, in turn, criticized me for not offering some solid ideas of my own. Fair play. So here are some tangible things we could do now, in the coming months, and in the next decades.
I should start by saying that we are getting the basics of our response right. Escalating, targeted, retaliatory tariffs plus symbolic and small acts — ripping up contracts, boycotting American goods — will put pressure on the Americans with the power to make Republican politicians feel nervous.
But we are going to feel more pain than they will. The Brookings Institute that Canada is likely to see a 2.5 per cent reduction in employment and more than a 3 point reduction in GDP growth. Neither Ottawa nor anyone else has illustrated a plan to manage that pain, but it will absolutely require direct government supports to businesses and individuals.
There is some good news on this front: suggests that the targeted and short-term business subsidies during the pandemic actually helped make firms more productive. Any subsidies we do introduce should focus on skill upgrades, improving productivity, and diversifying trade.
We have lots of room to recalibrate our tax system to welcome more skilled professionals and entrepreneurs from America, while spurring investment and innovation. Washington’s total breach of our USMCA deal could also be a good invitation to ignore its more stringent rules on intellectual property and pharmaceutical patents.
Finding new markets needs to become a Canadian obsession. While America paints itself into a corner by declaring trade war on everybody, Canada needs to figure out how to trade with anybody.
Dropping internal trade barriers is a great start, but it won’t be enough. We should look to Mexico, for one, as well as Europe and the Indo-Pacific — particularly with the nations who have ratified the Trans-Pacific Partnership (CPTPP). This new realignment may also require swallowing a bitter pill and reprioritizing economic ties with India.
But in order to move goods, we need more logistics capacity: New and expanded ports, railways, airports, pipelines, airships, refineries, and trucking routes. Those things weren’t as necessary when our chief trading partner was next door. But recalibrating our trade to run east and west, instead of merely south, is going to require a lot of building.
The Liberals are promising trade diversification, the Conservatives want more energy exports. We need to do both, and a lot more: That means also pursuing hydrogen, new renewable energy sources, and working with Mexico to salvage our electric vehicle industry. We should celebrate bold ideas.
But we shouldn’t respond to Trump’s mercurial selfishness by turning inwards. Trump is in the midst of making the world, and America, poorer, more unstable, and less safe — we should try and counteract that where we can. That means becoming influential and reformist at the international fora that have fallen into irrelevance and dysfunction: The World Trade Organization, the Arctic Council, and the United Nations, for starters.
The U.N. needs to be reformed into an organization that actually advocates for democracy and security again. To that end, we ought to take a page from Donald Trump’s playbook and pitch a bold idea: Move the U.N’s New York City headquarters to Montreal. (It’s not as crazy as it sounds: Canada had at a previous nadir of American prestige, in the mid-00s.)
There’s no doubt we need to become a more significant actor in NATO. We should push the idea that the alliance needs to double-down on its shared industrial base. Currently, many nations — including Canada — seem intent on swearing off American production and trying to localize its defence production. This kind of economic nationalism isn’t likely to work: We need to build new supply chains with our allies, without America.
Canada’s foreign policy also needs to stop pursuing internationalism when bilateralism will do. Ottawa loves to be one signature amongst many on vague and lengthy statements, but pursues few bilateral deals. France is angling to become a new pillar of European security, and we would be smart to liaise with them on it. It is also high time we formalize the CANZUK partnership with the United Kingdom, New Zealand, and Australia.
We also need to take responsibility for the things that are on our doorstep. Canada needs a strong navy again. That’s particularly true in the Arctic, where we desperately need a functional naval base with a deep-water port, and all the ancillary infrastructure required to build and maintain it. Ottawa has promised to build the port, but has yet to earmark money for it.
We also need to be engaged with preventing more instability. Haiti’s state has functionally collapsed, Israel is set to renew its war on Gaza, and there are a slew of bloody civil wars and genocides raging throughout Africa and Asia. American retreat could supercharge all these problems. We need to stop waiting for someone else to contribute solutions: We could broker peace, contribute peacekeepers, or, at a minimum, step in to fund domestic security measures. Otherwise, we are likely to see more suffering, more disrupted trade, and more irregular migration.
And then there’s Ukraine. Trump is in the middle of shaking down Kyiv for its rare earth minerals — something Canadians should also be familiar with. We should continue to arm and support Ukraine, but we should also offer Kyiv a better mineral deal than America can. Canada is, after all, home to half of the world’s publicly-listed mining and mineral exploration companies.
For the past century, America has become the world’s primary superpower through a mix of military might, realpolitik, and soft power. In just a month, Trump essentially shredded American prestige abroad. China, Russia, and Iran are going to race to fill that void — we, with our allies, need to compete with them.
None of this is going to be easy. In fact, it’s going to hurt. It’s going to be expensive. It will require forgoing other priorities and incurring debt, which we can only afford if we continue to grow our economy. That’s why governments will need to spell out the short-term costs and long-term benefits, rather than just papering over these enormous challenges with feel-good jingoism. Transparency will significantly improve our pain tolerance.
An election couldn’t come at a worse time, but it is sorely needed. We need real, detailed, plans from our politicians, and we should punish anyone who isn’t taking this seriously. When the next Liberal leader is selected, they should ask Trudeau to stay on as caretaker prime minister during the election to continue co-ordinating our response.
Solidarity — both inside Canada and in the liberal world — is going to be critical. Otherwise, we risk being enticed by America into betraying each other for marginal gain. If one province undermines the rest of our federation, or if one of our allies breaks the common front to strike a deal with Trump, we risk weakening our entire bargaining position.
The fact is that there is no pleasing Trump: He is interested only in deals where America becomes a net winner and everyone else loses. We could shut down our auto industry and close our borders and it still wouldn’t be enough. Vassalage will be more painful, humiliating, and permanent than standing up and fighting now.
Canada has been complacent and stagnant for too long. We should take this opportunity to forge new trade routes, modernize our economy, forge new alliances, and make the world a safer place. If we can’t do that, maybe we should just become the 51st state.
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