Our international trade system is dependent upon stability and predictability. So, the actions led by U.S. President Donald Trump’s arbitrary decisions have a tendency to undermine our expectations on matters of business. The latest issue is tariffs on steel and aluminum.
This story is about more than just steel and aluminum: it is about technology; it is about intellectual property; in sum, it is about a growing U.S. insecurity. Thus, the focus of this round of protectionism is premised upon protecting U.S. security from China, as this state is rising in power and the U.S. sphere of influence may be diminishing. Whatever the reason, this developing trend in protectionism means that Canada needs to find its own response to these changes.
For decades, Canada has sought trade strategies that would offset our dependence upon the U.S., but that is an oversimplification of what drives trade. Geography and culture are the two main factors that direct our international commerce, which bring us into a natural confluence with the U.S. This is important to understand, as it is industry that leads in trade, not government, and business will always take the easiest option.
We also need to understand that the trade strategies that Canada pursues promote the interests of big business, which usually has an international presence already. These companies are only 30 per cent of our economy; the other 70 per cent is made up of Small and Medium Enterprises (SMEs). Many of these trade agreements thus fail to truly help our businesses. In fact, the recent budget presented to parliament was mired in controversies, as it overlooked the role of small businesses in Canada.
These oversights by our governments seem to indicate a lack of foresight and understanding in what is needed to protect Canada’s economic security interests. More so, it shows a lack of leadership in our economy. Canada may be a small player within the global economy, but that is because we have never really focused upon our niche strengths. Unfortunately, the lack of support into our SMEs through trade mechanisms means that they are not flexible enough to adapt to this growing trend in protectionism, and these consequences will be felt by Canadian consumers.
If we are going to face higher prices, whether we retaliate or not, and measures are usually quite foolish, we may consider a policy of “buy Canadian.” This, too, is a transgression of internal trade rules, and whether this would be enough is difficult to predict. One thing should become evident though: we need to reduce our vulnerability to these protectionist trends in international trade. Whether there is a will for such change within both government and our businesses, however, remains to be seen.
John Kennair is an international consultant and doctor of laws who lives in St. Albert.
