Negotiating from a position of weakness
The meeting between Justin Trudeau and Donald Trump could have big consequences for Canada.
If the US renegotiates NAFTA in a way that shifts the Canadian auto sector partially to the United States, the effect on our economy would be devastating.
Even worse, a combination of NAFTA renegotiation, a border adjustment tax that imposes tariffs on Canada, and a carbon tax that will crush our economic competitiveness, could mean a huge decline in our GDP, with countless jobs lost, increased poverty, and suffering across the country.
Because we have become so dependent on the United States, we are facing a severe lack of negotiating leverage.
However, that doesn’t mean we are without tactics that could be effective.
Unfortunately, Trudeau and the government have made a big mistake ahead of the meeting.
Since Trump won, the government has expressed near total policy paralysis, and shown no willingness to stand up for our economy.
The slightest bit of a competitive attitude came from Minister Chrystia Freeland – who said Canada would retaliate with tariffs if the US imposed tariffs on us. However, the government quickly walked that back.
But that’s not the big mistake.
Doubling down on the carbon tax was the big mistake, and it could have serious short-term, and massive long-term consequences.
Had Canada announced the cancellation of the carbon tax, it would have shown that we are capable of quick adaptation on economic policy, that we are competitive-minded and will look after our own economic interests, and that we are not going to sit back and let the US make themselves a more attractive place to invest than Canada – at least not without responding.
This would have shown a level of toughness going into the Trudeau-Trump meeting, and that would have bolstered our negotiating effectiveness.
Instead – by doubling down on the carbon tax – Trudeau has shown the Trump administration that Canada will voluntarily take measures that will hurt our economic competitiveness. This will send a signal to the Trump administration that the Trudeau government can be pushed to take measures that hurt Canadian workers (with the side-effect of benefitting Americans through more jobs heading south), as long as those measures are couched in “environmental” terms.
Considering that the US will use every angle to negotiate a better deal and apply pressure, you can see the peril this creates for our economy and our country.
All of that could have been avoided had Trudeau acted swiftly to cancel the job-killing carbon tax. Instead, it acts as a lead weight on our negotiating power, and could put our whole economy at risk.
We will soon find out how big a price Canadians will pay for the misguided ideological obsessions of the Trudeau government.
Photo – Twitter