I know, I know...the tariff situation isn't exactly a new thing that happened overnight, but either I'm looking into it too much, or things escalate quite a lot lately.
As a non-Canadian, I initially considered their position only 'less enviable' than my own because the closer location made the trade all the more important (the position "oh, so US citizens and companies have to pay extra tax for our goods? Meh...we'll sell elsewhere if it becomes priced too high" is harder to maintain). That whole 51st state bullshit also started as mere ramblings of a mad man.
In more than one sense, that fever dream is still ongoing with that guy. Renaming landmarks and have it enforced through US-based tech firms make it a sour joke...but still nothing but a joke.
That changed with recent "trade negotiations". Between brackets on purpose, because not only did the USA add some last minute additions(1), the whole document was simply an extortion piece. Local media here headlined that "Carney walked away from the negotiation table", neatly conceiling that the paper contained clauses that limited Canada's ability to trade with other countries and stipulated what LANGUAGES they printed on their goods (even internal ones).
One could also wonder why international trade agreements from NAFTA exist. Or a previous trade agreement made with a certain Donald J. Trump in his first term.
Now...the US certainly has a much larger economy than Canada, but while in theory that would give them the best chances, it also means they have far more to lose in a trade war that. Carney flat out stated the countries are at war in the Davos convention in January, and that recent breakup over negotiations haven't diminished that.
Perhaps it's the youtubers I follow on the subject, but the boycott that slowly gained traction during the initial 51st state rhetoric (and I argue lessened a bit during the world cup) is now stronger than ever. Road border crossings are at an all time low. Plane flight schedules have reduced US coverage and the Northern US states really feel the impact on lessened tourism. Despite the economic upheaval, Carney is about as popular in Canada as guess who is unpopular in the USA.
...but a trade war isn't a popularity contest. As a country semi-bordering the United Kingdom, I've followed the brexit debate more closely. The conclusion: shielding yourself from your closest neighbor is bad for the economy. And because the EU is much larger, they're more capable to endure the impact -> the UK has had the most economic outfall.
You can (rightfully) argue that the UK chose their course and that Canada is the victim of the circumstances, but that won't change the outcome.
The real question is how nasty both countries are going to play it. When the USA put tariffs in place, they didn't do so for ALL goods. Likewise, thus far Canada acted like the EU: tax specific goods from republican/swing states, in the hopes that those captains of Industry will come knocking on the white house's door to cut out the bullshit. Well...those "pesky" countermeasures are taking place. More so: Canadian superstores decide not to stock things like Kentucky bourbon regardless of whether there's a tax or not. And that's a much stronger signal. After all: taxes and subsidies are meant to increase or decrease the willingness for the public to buy a good or not(2). If it's already being boycotted by the public, then the government's job is easy.
But to get back to my point: Canada can put taxes on goods EXITING Canada. Things that the US isn't taxing because it relies on those. Scarce goods, or goods that are part of a production chain. If a crucial part of the enging of a "US-made car" requires material that comes exclusively from Canada, then halting exports effectively halts US cars from being made.
And while I was writing this, Von Der Leyen reached the hand to Canada, effectively starting talks to a closer economic alliance. And all of the sudden, I have to change this 'doom & gloom' tone to a positive one. Canada may not exactly seeking EU membership, but from what I understand the aim is to be the next best thing. So a better trade deal than the Britons currently have, really (not to badmouth the UK, but they can't exactly wish great status with the EU while wanting to be at the same time having nothing to do with it).
You know who tweeted that he considers this a hostile move, but since neither of us is a US state, and the alliance isn't hindering any already applied trade deal, we can just shrug it off as the old guy opinion that it is.
It also means that if I were a purely economic being (or a machiavellian, now I think of it), I should encourage that white house resident to keep his opinion. Why? Because the USA will geographically always be the better partner for Canada. if they have a good they want to export, the actual transport costs will always be cheaper to the USA than to the EU. It's only because the USA is putting up all these roadblocks to the free market(3) that the EU becomes more valuable.
Americans may argue that it's only a matter of time before the current president is replaced, but I'm afraid the world of the world doesn't see it that way. You elected him TWICE! And with all the "protests" going on, he's still just as happily doing his own thing as if nobody ever made a peep. That says it all about the current USA, really. It MIGHT improve, but a large chunk of the population is either to apathic or is in favor of harming everyone outside the borders, and when that happens nobody's going to effectively stand up. So it won't end with the current president. Canada is taking steps.
And I'm glad for them. Not just for personal reasons (it's good for the EU as well, and I'm part of that club), but it shows that there is a way around the USA.
(1): and pretended it was Canada's fault
(2): if it's a luxury good, at least. I'd certainly go without Russian gas if we had sufficient alternatives, for example
(3): it's outside the scope of this blog, but there's a word for when the government directly dictates the companies what they can and can't export. It's called "communism". It's currently not that, but it's a serious shift in that direction
As a non-Canadian, I initially considered their position only 'less enviable' than my own because the closer location made the trade all the more important (the position "oh, so US citizens and companies have to pay extra tax for our goods? Meh...we'll sell elsewhere if it becomes priced too high" is harder to maintain). That whole 51st state bullshit also started as mere ramblings of a mad man.
In more than one sense, that fever dream is still ongoing with that guy. Renaming landmarks and have it enforced through US-based tech firms make it a sour joke...but still nothing but a joke.
That changed with recent "trade negotiations". Between brackets on purpose, because not only did the USA add some last minute additions(1), the whole document was simply an extortion piece. Local media here headlined that "Carney walked away from the negotiation table", neatly conceiling that the paper contained clauses that limited Canada's ability to trade with other countries and stipulated what LANGUAGES they printed on their goods (even internal ones).
One could also wonder why international trade agreements from NAFTA exist. Or a previous trade agreement made with a certain Donald J. Trump in his first term.
Now...the US certainly has a much larger economy than Canada, but while in theory that would give them the best chances, it also means they have far more to lose in a trade war that. Carney flat out stated the countries are at war in the Davos convention in January, and that recent breakup over negotiations haven't diminished that.
Perhaps it's the youtubers I follow on the subject, but the boycott that slowly gained traction during the initial 51st state rhetoric (and I argue lessened a bit during the world cup) is now stronger than ever. Road border crossings are at an all time low. Plane flight schedules have reduced US coverage and the Northern US states really feel the impact on lessened tourism. Despite the economic upheaval, Carney is about as popular in Canada as guess who is unpopular in the USA.
...but a trade war isn't a popularity contest. As a country semi-bordering the United Kingdom, I've followed the brexit debate more closely. The conclusion: shielding yourself from your closest neighbor is bad for the economy. And because the EU is much larger, they're more capable to endure the impact -> the UK has had the most economic outfall.
You can (rightfully) argue that the UK chose their course and that Canada is the victim of the circumstances, but that won't change the outcome.
The real question is how nasty both countries are going to play it. When the USA put tariffs in place, they didn't do so for ALL goods. Likewise, thus far Canada acted like the EU: tax specific goods from republican/swing states, in the hopes that those captains of Industry will come knocking on the white house's door to cut out the bullshit. Well...those "pesky" countermeasures are taking place. More so: Canadian superstores decide not to stock things like Kentucky bourbon regardless of whether there's a tax or not. And that's a much stronger signal. After all: taxes and subsidies are meant to increase or decrease the willingness for the public to buy a good or not(2). If it's already being boycotted by the public, then the government's job is easy.
But to get back to my point: Canada can put taxes on goods EXITING Canada. Things that the US isn't taxing because it relies on those. Scarce goods, or goods that are part of a production chain. If a crucial part of the enging of a "US-made car" requires material that comes exclusively from Canada, then halting exports effectively halts US cars from being made.
And while I was writing this, Von Der Leyen reached the hand to Canada, effectively starting talks to a closer economic alliance. And all of the sudden, I have to change this 'doom & gloom' tone to a positive one. Canada may not exactly seeking EU membership, but from what I understand the aim is to be the next best thing. So a better trade deal than the Britons currently have, really (not to badmouth the UK, but they can't exactly wish great status with the EU while wanting to be at the same time having nothing to do with it).
You know who tweeted that he considers this a hostile move, but since neither of us is a US state, and the alliance isn't hindering any already applied trade deal, we can just shrug it off as the old guy opinion that it is.
It also means that if I were a purely economic being (or a machiavellian, now I think of it), I should encourage that white house resident to keep his opinion. Why? Because the USA will geographically always be the better partner for Canada. if they have a good they want to export, the actual transport costs will always be cheaper to the USA than to the EU. It's only because the USA is putting up all these roadblocks to the free market(3) that the EU becomes more valuable.
Americans may argue that it's only a matter of time before the current president is replaced, but I'm afraid the world of the world doesn't see it that way. You elected him TWICE! And with all the "protests" going on, he's still just as happily doing his own thing as if nobody ever made a peep. That says it all about the current USA, really. It MIGHT improve, but a large chunk of the population is either to apathic or is in favor of harming everyone outside the borders, and when that happens nobody's going to effectively stand up. So it won't end with the current president. Canada is taking steps.
And I'm glad for them. Not just for personal reasons (it's good for the EU as well, and I'm part of that club), but it shows that there is a way around the USA.
(1): and pretended it was Canada's fault
(2): if it's a luxury good, at least. I'd certainly go without Russian gas if we had sufficient alternatives, for example
(3): it's outside the scope of this blog, but there's a word for when the government directly dictates the companies what they can and can't export. It's called "communism". It's currently not that, but it's a serious shift in that direction
