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Dear America, from Canada
I’m a Canadian with a lot of fondness for all of you down there. Last time we had a consequential election, when Trudeau came to power, I posted my (conservative-leaning) take as an “explainer” for Americans. It got a lot of attention, but my cautious optimism was misplaced; Trudeau was a disaster for this country. His father was our Obama, but Justin was more like Carter, just kind of stuck in a malaise, too myopic to understand the challenges of his age. We are poorer and more dependent on government than ever; productivity growth since COVID is the worst out of the top fifty – FIFTY – world economies.
Let me try again after another consequential vote, as I process the shock of my neighbours’ sudden decision, after years of griping, to re-elect a flock of left-wing ideologues hiding behind a boring and besuited banker, Mark Carney. The personality is normal: our system tends to prefer the colourless characters of a lower parliamentary house. Your Mitch McConnell and Mike Johnson are closer to our norms of Jean Chretien and Stephen Harper (who?).
But what were we thinking? In Pierre Polievre, we had a smart, slightly nerdy Conservative on offer – not a radical, but at least a proponent of a commonsense revolution. The last Conservative government in Canada ensured the financial crisis barely touched us, left us with low debt, and generally represented us well internationally. We shook our heads when we saw Barack Obama’s radicalism, and wondered if maybe the convention that “Canadians are way left of Americans” had it backwards. The Conservative before him, Brian Mulroney in the 1980s, was more colourful and consequential. He persuaded the country that we would prosper, while remaining strong and free, if we entered into free trade with the United States.
That discussion was two hundred years in the making. The US has invited Canada to join them many times — during your revolution, when we kicked your tails in the War of 1812, after your Civil War, and in the early 1900s, to name a few. American leaders were instrumental in enticing Canada to adjust itself for free trade in the 1980s, abandoning our traditional policy of pursuing trade with Europe and Asia as a government-funded diversification strategy.
We were persuaded because we were offered access to your markets — first in the 1950s as thanks for our participation in Korea, and later as part of the 1988 FTA and 1994 NAFTA. We gave you Arctic access, equal footing in our markets, preferential treatment in our military procurement, and general access to our own sizeable market. Our economy is of course smaller than the US’s, but is not THAT small: for most of our history, we were your largest trading partner. It was a Conservative idea, but the Liberals opposed it before coming on board later.
It worked. Both countries got much wealthier. The only people who disliked it thought (incorrectly) that Canada was the reason the auto sector moved to Tennessee. Ontario got a bit of business from companies fleeing rust belt unions, but not much — our manufacturing growth was earlier and in tandem with the big car companies, offering cheap power, simple taxes, and a good workforce.
For years, if you wanted to pitch a business idea to a Canadian investor or bank, the last sentence was always “…and we think we can eventually enter the US, or sell to a US company.” If that line was credible, the answer was always “Yes, we’ll invest in your US-focused tech.”
That goodwill amongst the monied class in Canada is just a fact of business here, and represents a valuable AMERICAN asset: Canadian money would build tech that Americans would buy, first as products and later as companies, and then they’d move all the talent south: Univar, Alcan, Inco, Seaspan, Mitel, Creo, Traders Group, etc. Canadians disliked the hollowing out of our corporate sector, but accepted that it was ultimately good for us, too.
So it was unpleasant when Trump came in with sudden tariffs. If he’d given us a year’s notice to negotiate some meaningful compromises, we could have lived with it, but companies have to plan ahead, and the costs to us have been devastating.
A case in point. I know a company that has a $6 million theme park in New York and is in the middle of a $2 million construction project there. On a week’s notice, they got hit with $300k of tariffs to move their Ontario equipment in, but had to keep going to meet permitting and legal obligations. The tariffs wiped out most of the company’s profits for the year and caused their investors to permanently kill two more investment projects in the US, each scheduled to bring America around $5 million. All of the company’s investment will now go to second-tier expansion projects in Canada. The existing US satellite will get no more capital investment, despite a previously promising model. That’s why the US markets are cratering: part of these projects were going to be done with US suppliers and banks — that business is now permanently lost to the US, and both sides are poorer.
What Trump doesn’t seem to realize is that the so-called “trade deficit” matched, dollar for dollar, a capital surplus — an investment — from Canada to the US. Always and everywhere, those two things find balance. If they didn’t, the imbalance would have sent the currency either up or down until it reached balance.
Canadians are keenly aware that when we adopted free trade, our leaders had to make that technical case in a sophisticated way to our voters. We were suspicious that the US would suck away all our autonomy. The Conservatives told us not to worry, we’d get rich; the Americans benefit from this too, and will honour their deals; and that changes are only possible with years of notice and planning. The Liberals sounded unduly concerned about a then-reliable trading partner.
Trump’s mercurial trade policies just proved the Liberals right, 40 years later. That’s why they won last night.
So… now we’re stuck with boys in girls’ sports, virtue-signalling leftists, extortionate tax, state-assisted suicide for everyone (even those not sick), and ever-expanding spending and unneeded welfare programs. The election wasn’t exactly about trade, it was about judgment. The pro-American Conservatives looked like Silda Spitzer as she confronted her husband’s betrayal.
And our grey banker seized his moment: Carney promised to hold the course on Trudeau’s familiar social policies (ugh), but would aggressively pursue trade with China and Europe instead of the mercurial customs agents a few miles to our south. The Conservatives didn’t know what to say, but even a Canadian conservative has to agree that sounds like a rational way to hedge our bets. Business-friendly provincial governments have been trying to build oil pipelines and ports east and west, not south to you, for decades.
Is that really what America wants? We were so good together. We went with you to Afghanistan, holding your back there when you were in Iraq (ok, that one was a bit much for us); at your request arrested a Chinese businesswoman, Meng Wenzhou, at great diplomatic cost to us; lots of intelligence sharing; military cooperation in the Arctic; big deals with Boeing; and so much more.
But we have the world’s largest coastline and, like Australia, we can trade all over the world if you don’t want to do it with us. We will have a painful adjustment, but pretty soon there will be no room for us to adjust back.
Even today, if Trump took the tariffs back off, that Canadian investor’s goodwill is gone. He will ask not how my tech invention will end up in the United States, but about what my backup plan is. So, America: How should I answer him?
I know a Chinese guy who will buy it.
Published in General
NO, they came from negotiating with Trump.
They came from a fundamental misunderstanding of trade – not just Trump, but a lot of people. Every generation needs to re-learn this. Smaller economies (I’m Canadian) have it closer to the surface, because the idea of tariffs more clearly hits our consumers: we import almost everything, with only occasional local supplier: my computers are from Taiwan, my cars from the US (with a few parts from Ontario). My house is built with local lumber, but the screws are American and the roof shingles Chinese. (Yes, I actually know this…don’t ask). A trade deficit indeed. But I sell tourism services, 40% to Americans…it all works out in the end.
Americans are at full employment, and despite wistful memories of a time when more primitive technology made steel more labour-intensive, increasing your prosperity has only two paths: increase productivity of workers by investing in modern technology (go ahead, great idea), and buying stuff at the margins from efficient foreign producers. If all Americans who want to are working, you’re not making any of them poorer: by letting Walmart source cheaper goods, you’re actually wealthier even if you didn’t get a raise this year.
When I was coming of age in the early 1990s, I remember paying almost $100 for a basic button-down shirt. I was outraged. I couldn’t afford that! I was earning minimum wage at $4.85 an hour. Today, the same shirt is about $30, even less in 1990 prices. Why? Canadians and Americans don’t want to do that manual work, they’re busy programming robots on Alabama car assembly lines and doing high-tech oil extraction. The end of the textile treaty meant the end of sweatshops in New York, but cheap clothing for America’s poor, and a path upwards for Malaysian and Vietnamese workers.
Canadians have a few valuable things to sell you, and we’ll buy many things in return. Sometimes, we’ll buy a bit more and reinvest in the US; other times, we’ll buy a bit less and you can buy a Canadian company at a steal. We might have interest rates set a little differently for local reasons…but it’ll all work out in the end.
If it didn’t, our currency would crash!
I still want to buy a Canadian Richelieu hardtop…
The fentanyl problem is catastrophic up here in Canada, in some cities we have it much worse than most US cities (thanks, liberal policies). The best way for both countries to deal with it is to share gang information and trafficking intelligence. The pipeline from Mexico is hurting both of us, and our different legal system makes it easier in some ways, and harder in others, to track down gang activity. Let’s work together on that. Almost no fentanyl is made in Canada, or goes to the US from here. Some is mailed in from China in innocent envelopes that look like Christmas cards. Canada’s not the enemy; this is a joint problem.
Booing the anthem is juvenile, but taking Trump’s “joke” is not easy to do lightly. We are a small country, and even when we had the world’s fourth largest navy (yes, really), the idea of repelling an land invasion from the US was inconceivable. This talk is not funny to us. I didn’t think of Mr Trudeau’s father, Pierre, but he had one good line: “being Canadian is like sleeping with an elephant. It’s fine for the elephant, but we awaken with every twitch and grunt.”
That ignores the realities that employment numbers are “cooked” from start to finish, or else a lot of people would be happier than they are; and that a lot of people simply aren’t capable of programming robots, or many other things, no matter how much “training” they get. If low-skill jobs are outsourced, then low-skill workers are not only unemployed, they’re unemployable.
You’ve got a better grasp of trade economics than 90% of the people who are our leaders and political pundits. Ever think of moving across the border?
I heard you make this accusation before but I don’t believe it. Do you have any evidence at all that the U.S. employment numbers are “cooked?” Besides, you adore Trump, so how does this square with Trump being in charge while all the numbers are fake?
Attention: @kedavis
If you get a trade deficit with a country that is giving you 75% off, you take it.
Good luck with that international trade as a substitute for your US trade.
I don’t know all of the details, but it’s really obvious that Canadians know how to regulate banks far better than we do.
We should have legalized hard drugs, 40 years ago. Now the cartels are so big it doesn’t matter.
Deflation is the only intelligent path.
I was on Demerol for 24 hours, and I can tell you I am 1000% an opioid addict. I thought I was the Dhali Lama. lol
We should be in constant deflation.
Under Biden, 16 out of 19 revisions went down. It should be more like eight or nine. How is that even possible?
They lie about inflation and they lie about everything because we central plan too much.
The Office of Management and Budget guy put out a bunch of lies to get Obama care over the line. I don’t trust any of them.
Felix Zulaf says the inflation rate is double what they say it is. I believe it. Furthermore, it’s idiotic to have one number.
Nobody should have ever traded with the Chinese communist mafia. We could have imported deflation from anywhere else.
How about the “workforce” to start with? And how, for example, people who haven’t found a job after X time or just stopped looking, are no longer counted?
41 pounds? How many people would that kill?
I don’t care who negotiated the last trade deal. Trump has spied harm that still exists despite the deal and wants to modify it. This came as no surprise to anyone.
Sure, that’d be reasonable if it was accurate. A free-market Canadian like me will always chafe at the silly dairy marketing boards (you should see the way we talk about that in the family up here), and if we were actually a manufacturer and exporter of drugs, we’d all be horrified.
The problem is that it’s not true. We have a fentanyl problem here, and it’s understood here to come from China (fentanyl can be put in a packet of mail, or a package from Amazon, in disguise) Mexico and, yes, America. We have our complaints with lenient sentencing and police whose hands are sometimes tied, but law enforcement here is well-funded, highly professional, and pretty effective at keeping gangs in check where they get out of hand. I suppose it’s possible that we’ve got fentanyl labs that feed more than local demand, and is flowing massively south undetected (even by US law enforcement) but the evidence doesn’t say so:.
If anything, it’s the other way around: the Canadian customs website identifies over 80 tons of drugs of various types coming north from the US.
We sympathize with your problems on your southern border: we have a problematic southern border too!
Despite the occasional rude comment by our Canadian left-wing politicians (sorry), we’d all much rather trade with you than with China.
We’re scared, though: America convinced us to integrate our economies, and we do what we do best (sawmilling, complex oil extraction, mining, mid-tier manufacturing, beer, tourism, Tim Hortons), and are relaxed about the fact that we don’t make too much other stuff for ourselves. We don’t need to make cars, though we assemble some for you; we don’t need to make computers, although Blackberry was fun for a while; and we recognize that only America could build Microsoft and Boeing (we tried, halfheartedly, in both industries and ended up selling to Americans). Our best talent often goes south too: Elon Musk did his undergraduate studies in Ontario, but his gifts were used in America.
But after your invitation to join that (working) system, these erratic tariffs are very serious to us. We don’t need more Chinese junk, but if we can’t export to the US, our currency will be devalued and all we will be able to afford is, well, cheaper goods. Even that relationship has to go two ways: they’d be happy to buy our oil and lumber, if the US really doesn’t want it.
About a decade ago, we turned down two pipelines from the oilpatch to the West coast for export to Asia. Why? Because America wanted Keystone. Then Biden killed it, and now you’re tariffing oil. So…guess what idea is back on the table?
I forgot about that.
I don’t know how easily this is done, but supposedly all the freshwater the world needs runs off from BC into the Pacific Ocean. It would be nice to pipe that to the southwest.
Uncomfortable as it is, you have a good point. It’s hard to pipe huge amounts – if too much is siphoned off, it hurts the salmon, which is both a critical industry and the foundation of the whole coastal ecosystem. The Fraser River, the biggest, is a major commercial waterway too. Our Columbia River already sends you lots of water, and you could do what you wish when it reaches Washington and Oregon, but you choose limited damming and agriculture for the same reasons.
But we Canadians are weird about water: we have more freshwater than any other country, including Russia, and don’t allow exports unless it’s bottled here. That’s bipartisan, so it’s not even discussed much. But “clear oil” is indeed valuable. (China wants it too). Trump did put it on the table, kind of (he wants to renegotiate the Columbia River Treaty, which is a good compromise as is, but it’s the same issue). Food for thought.
Not as many as the 3,600 pounds of illegal drugs entering Canada from the U.S.
Is this your admission that Trump negotiated a poor trade deal with Canada and Mexico?
“Poor” could be synonymous with “best possible at the time.”
More likely it could be synonymous with:
“I mean, who can blame them if they made these great deals with the United States, took advantage of the United States on manufacturing? On just about anything, every aspect you can imagine, they took advantage. I look at some of these agreements, I’d read them at night, and I’d say, ‘Who would ever sign a thing like this?’ So the tariffs will go forward, yes, and we’re gonna make up a lot of territory. All we want is reciprocal. We want reciprocity.”
– Actual quote from Trump on February 24th, 2025 about the Canadian deal which he not only negotiated, but boasted about its greatness.
This idea of Trump bashing the Canadians for their trade practices is a joke. You should be ashamed for supporting this.
If you’re trying to argue that Justin Trudeau was a shark negotiator who held off Donald Trump’s dreamed-of agenda, I would have to say that would be inconsistent with the rest of the Trudeau record: he got rolled in just about everything he tried to do, except pushing through a bunch of virtue-signalling nonsense.
If Trump had really wanted to reopen everything, he could have had a larger discussion. Most Canadians thought NAFTA was working fine, but Trump opened it up, tinkered around the edges, and moved on after a few weeks. We thought he’d do the same this time, and aim his trade animus towards less friendly powers. Oops.
Kozak, you’re right that most Canadians live in the south of the country. But we have highly efficient railways in the west – 100% of our coal from eastern BC goes over 700 miles to the coast and on to China and Japan, 0% to the US. The oil is much further north and is much closer to tidewater than to Texas or even California. Phosphates in Saskatchewan are about even, and most of the mining is in BC – close to Vancouver but far from any centre of gravity in the US.
Car parts are geared to your assembly plants, but if you really didn’t want them, the manufacturing base of Southern Ontario is accessible to tidewater through the St Lawrence Seaway. Europe has tariffs too, but if we did a deal with them, they’d be much more economic to ship to than the US with a 25% tariff (or a random threat of one).
Of course, we’d much rather export to you nearby, and for most of its history the US was happy to have access to Canada’s resources; indeed, American companies operate as equals there. A world in which we export to China and you consume inefficient local substitutes is worse for everyone, but…as you wish.
A four-year-old could out-negotiate Trump.
Forget whether or not Trump wrote The Art Of The Deal, it’s becoming painfully clear he never read it either.
The company I worked for in the early 2000s had an office in Toronto.
It was official policy that when we sent someone up there from the US to do work in that office (for example, to install a server or piece of network equipment), when asked at the airport the purpose of their visit to Canada they were to answer “tourism”, because we had too many people turned back for “taking jobs that Canadians could do”.
Remember, it had to be ratified by the Senate. Maybe at the time, that was the best they thought they could get the Senate to pass, considering a possible filibuster or whatever.