Trump touts tariffs, North America is divided

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OTTAWA – U.S. President Donald J. Trump admitted Sunday that his 25-per-cent tariffs on Canadian goods could cause harm and impact Americans, but he has no intention of backing down.

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“This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!),” he wrote on his Truth Social account.

“It will all be worth the price that must be paid. We are a country that is now being run with common sense — and the results will be spectacular!!!,” he added.

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The president then went on to say his country pays “hundreds of Billions of Dollars to SUBSIDIZE Canada” and that Americans “don’t need anything they have.”

If there is pain, he argued, it would first and foremost affect Canada.

“Without this massive subsidy, Canada ceases to exist as a viable Country. Harsh but true,” he wrote.

This is not true. United States does not subsidize Canada, and it doesn’t give anything away for free by trading with Canada.

In 2023, the deficit was $64 billion, according to the U.S. Census Bureau — far less than the “$200 billion or $250 billion” that Trump claims and less than its trade deficits with China, Germany, Mexico and Japan.

Economists say the deficit is driven by Canadian energy exports, including crude oil, which the United States buys at a discount. If energy is removed from the equation, the deficit becomes a surplus.

Meanwhile nearly 80 per cent of Canadian exports go to the United States.

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Trump cited America’s “unlimited Energy,” the car and the lumber industries, as he did in the past.

The message came hours after Prime Minister Justin Trudeau announced retaliatory measures to counter U.S. tariffs on all Canadian goods and 10 per cent on oil, starting Tuesday.

At the same time, Canada will impose 25-per-cent tariffs on $30 billion worth of targeted U.S. goods, followed by another $125 billion worth of U.S. goods in three weeks.

The president’s move was roundly criticized by Canadian, U.S. and Mexican businesses on Sunday.

But he still has allies.

Tennessee Sen. Marsha Blackburn said that “Mexico and Canada are going to learn the hard way.” Texas Gov. Greg Abbott threatened Canada, writing on social media: “careful Trudeau, the Texas economy is larger than Canada’s and we’re not afraid to use it.”

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And Canada’s Shopify CEO Tobi Lutke said he was “disappointed” by Trudeau’s response, saying he feels that “hitting back will not lead to anything good,” that “America will shrug it off” and that “Canada will decline.”

The Business Council of Canada said the country must “use caution” when using retaliatory measures.

“Our goal should be to impose the least amount of economic harm on Canadians. Over time, widespread retaliatory tariffs would amount to permanent higher taxes on every Canadian,” said the council’s CEO, Goldie Hyder.

The Wall Street Journal editorial board called it “the dumbest trade war in history” and the influential U.S. Chamber of Commerce condemned Trump’s move, calling it “unprecedented” and that it “will only raise prices for American families and upend supply chains”.

Even one of North America’s largest industrial unions and among Trump’s targeted voters, the United Steelworkers (USW) International, called on the president “to reverse course on Canadian tariffs.”

“The USW has long called for systemic reform of our broken trade system, but lashing out at key allies like Canada is not the way forward. Canada has proven itself time and again to be one of our strongest partners when it comes to national security, and our economies are deeply integrated,” said USW president David McCall.

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The chairman of the National Association of Home Builders of the United States, Carl Harris, wrote to Trump on Jan. 31 urging him to reconsider. More than 70 per cent of the imports of two essential materials that home builders rely on, softwood lumber and gypsum that is used for drywall, come from Canada and Mexico, respectively.

“Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices,” he said in a statement Saturday night.

Although he said in his executive order that he was implementing the tariffs on Canada and Mexico for national security reasons, related to border security and the flow of fentanyl, Trump did not mention those elements in his messages Sunday.

“Canada should become our Cherished 51st State. Much lower taxes, and far better military protection for the people of Canada — AND NO TARIFFS!” he wrote.

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Meanwhile, the provinces and the federal government are trying to find ways to limit the impact of the tariffs on the economy.

The Prime Minister’s Office said Sunday that Trudeau had a serious conversation with Mexican President Claudia Sheinbaum and that the two leaders “agreed to remain in close contact.”

In a statement released Saturday, Sheinbaum said that “problems are not solved by imposing tariffs, but by discussion and dialogue.”

“I am asking the Secretary of the Economy to implement the Plan B that we are working on, which includes tariff and non-tariff measures to defend Mexico’s interests,” she wrote.

As uncertainty reigns, Canada’s ambassador to the United Nations, Bob Rae, said Trump’s attitude toward both countries appears to be in contradiction with the UN Charter.

“Article One makes it clear: threats of annexation are illegal. So are unilateral tariffs in breach of a trade agreement,” he said.

National Post, with a file from Bloomberg News
atrepanier@postmedia.com

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