Sault Blog

Justin Trudeau campaigned on the slogan that Canada would adopt “Sunny Ways” again. “This is what positive politics can do!”

Prime Minister Justin Trudeau came to power at a time when “he” believed the world was going to continue in the direction of free trade, open borders, higher immigration, and global harmony based on unlimited consumerism. Canada would be the “good guy” again, shedding hard-right politics and adopting climate-friendly agendas, policies, and accords—and then came Donald Trump.

Mr. Donald Trump, who was elected POTUS in 2016, made it very clear that globalization was dead. America first was the policy moving forward, with Make America Great Again as the mantra. Prime Minister Trudeau did not want to understand the problem/challenge facing Canada moving forward, globalization out, nationalism in. Mr. Trump, POTUS, was no longer interested in being the “good guy”; viewing NAFTA as the worst deal America ever made. The rest of the world is exploiting the United States economically and militarily, precipitating tariffs on Canadian steel and aluminum.

Canada made some concessions to ratify the new US.M.CA trade agreement, giving up some sovereignty clauses. Also, Canada suffered some trade tariffs with China over political and economic issues. There were abundant signs for Canada to understand that the era of free trade was coming to an end and the new era of “tariff-trade” was beginning; however, Canada felt that returning to the status quo was good enough.

Incredibly, Mr. Trump President-elect again in 2024, and this time, Canada will come to the brutal realization that this is definitely going to be a “tariff-trade” agreement, not a free-trade agreement.

The trade numbers being thrown around by Mr. Trump, U.S. President-elect, do not make any sense, claiming that there is a major trade imbalance favoring Canada.

Is that correct? Not according to “The Centre for Future Work” report as follows:

U.S. Exports to Canada: over $440 billion (USD) in 2023. vs. Canada exports $482 billion (USD) to the U.S., representing a 5% difference.

The Canada-U.S. Trade relationship is among the most balanced of any U.S. Major trading partner, ranking 10th among U.S. Trading partners.

Most Canadian exports to the United States are used as inputs by American businesses in their own production-more than any other trading partner. Tariffs would increase costs for U.S. Producers, reducing their competitiveness.

Canadian energy exports (oil, gas, coal, and electricity) comprise 60% of the total bilateral trade deficit.

Trump’s claim Canada is subsidized by the U.S. is laughable – and Trump’s economic team certainly knows it. In at least three ways Canada is clearly subsidizing the U.S. through trade agreements that diverge from normal international trade or business practices, including:

Large shipments of secure, lower-cost energy, with unique opportunities for U.S. Companies to invest in and profit from those exports.

Large Canadian net imports of services from the U.S., many of which (such as digital, streaming, and data services) are weakly regulated, under-reported, and largely under-taxed.

Low-interest loans provided by Canadian Investors that provide the U.S. with purchasing power fully equivalent to the bilateral trade deficit, yet despite which Canada continues to incur a large net deficit in investment income from the U.S.

*Jim Stanford, Economist and Director of the Centre for Future Work.

If you remove the sale of all types of energy to the U.S. from bilateral trade, Canada would be a net trade loser with the U.S.; however, for Canada, it doesn’t end there:

In 2022, Canada exported $9.1 billion to Mexico, while importing $40.1 billion, resulting in a trade deficit of $31.5 billion.

In 2023, Canada imported $89 billion in goods from China while exporting $30.5 billion in goods to China, resulting in a trade deficit of about $58.7 billion.

The COVID pandemic demonstrated the perils of offshoring manufacturing; shortages of critical essential products and food insecurity left Canada in a very precarious state.

A failure to create and implement policies and strategy to re-shore industry and manufacturing back to Canada was burying our heads in the sand while other countries understood that globalization was waning, putting themselves “first”.

Canada is a net trade loser with every free-trade agreement. What should be clear to our federal and provincial leaders is that the days of “sunny ways” are over. Canada must now create a “Canada first” industrial policy that includes trade tariff protection.