Trade or Protectionism

It’s hard to believe that two neighbouring nations with the world’s longest unprotected border are in a trade war. When the US announced in March that it would impose tariffs on Canadian steel and aluminum, Canada had no choice but to retaliate.

Who wins these standoffs? Somehow, it seems no one does other than perhaps a politician or two. It looks more like a mud wrestling match than a serious discussion between the leaders of two modern nations. In mud wrestling, usually the “bigger” bully wins, thanks to the advantages of shear size and weight. If this is an accurate comparison, Canada could be in trouble.

Trump’s tweets may be intended to sway the American public’s view on specific topics with the hopes that this will give him the support to make the moves he wants. Or his tweets may just be a diversion. Regardless, we can all agree that misinformation leads to bad policy.

Canadian industries will obviously be affected by these tariffs, often in unexpected ways. For example, one steel processing company located in Canada purchasing steel from another Canadian company has still been hit by tariffs because it’s owned by a US firm (source anonymous).

Agriculture is also an industry that is being affected by US tariffs, as other countries have also imposed tariffs on US products. We all have heard about the milk issue dozens of times. However, the pork industry is also now experiencing consequences from tariffs on US pork. China and Mexico have placed tariffs on pork cuts, decreasing US pork exports, which in turn affects our exports to the US. Not only that, but the American breeding herd has increased by 2-3%, adding to the growing pork supply south of the border and decreasing the price. The ripple effects of trade wars are often felt very far downstream.

So, who wins? Probably not the average, hardworking Canadian. Probably not the average small business owner or average Ontario farmer. Trade is extremely important to the Canadian economy. Perhaps we need to be more serious about diversifying our trading partners and seek business with other countries.

After last week’s meeting with provincial counterparts, the Honourable Lawrence MacAuley, Canadian Minister of Agriculture and Agri-Food, told press, “We’re not going to speculate on what might develop or might not develop, but there’s a framework in place with the Canadian Agricultural Partnership now…There is a system in place to make sure if we hit any major problems that we’re able to deal with it.” The Canadian Agricultural Partnership, along with a renewed $55-million dollar AgriRisk Initiatives Program, will help protect farmers against business risks they face.

Through it all, we need to stand together, including both levels of governments and industry leaders. We can get through the mud if we all move together in the same direction.

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Paul Bootsma is Field Services Manager for the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKXFM Chatham, and CKNX Wingham.

Posted by Paul Bootsma on July 27, 2018

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4 Comments

  • Dick Kuiperij says:

    As in a mud wrestling match, there are and will be spectators. If unfair tactics are employed or advantages taken, those spectators may get involved. Even though the bully may win the battle, he may not win the war that results. That may not soften the initial loss in the battle, but it may level the playing field for the future. Trump is certainly getting push-back from the rest of the world and certainly from his fellow countrymen as well.
    You pose the question “So who wins?”. I don’t believe the average, hardworking American wins either. Nor the average American business owner nor the average American farmer. Ultimately it may be the American people that eventually stop the nonsense. Bullies play by different rules…if they lose their support base they generally back down.
    Dick Kuiperij

  • James Korvemaker says:

    It seems to me that canada’s ability to negotiate was seriously undermined by our government’s focus on non-economic issues like gender equality stipulations and so on. I wish that they had focused on real trade issues. Perhaps they would have been taken more seriously.

  • Bethanee Jensen says:

    It is true that we should get serious about diversifying our trading partners, but we should also get serious about supporting “Canadian”. Maybe this is an opportunity to start processing and consuming our own products, from agriculture to manufactured products to oil. GDP is the same, whether exported or consumed internally.

  • Gary Maxwell says:

    My feeling that marketing boards for products place a “user tax” on those who buy the product. The subsidies paid to producers in a free market means that everyone pays a “user tax” whether we buy the product or not. I prefer the user pays system.

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