Canadians need to learn more about what’s going on south of the border and get engaged in order to survive the trade war with the United States, a Canada-U.S. expert told local business people last week.
Gitane De Silva, Alberta’s senior representative to the U.S. from 2016-19 and an expert on Canada-U.S. relationships, spoke to St. Albert and District Chamber of Commerce members at the St. Albert Inn on March 12.
“There is no more important relationship to Canada than our relationship with the United States, whether we like that or not,” said De Silva, noting Canada is the top export market for 30 of the 50 U.S. states.
Trade conflicts with the U.S. impact every Canadian, regardless of what industry they work in, De Silva said. The effect of U.S. tariffs on the American economy alone have a knock-on effect on the Canadian economy without factoring in how the tariffs affect Canadian producers.
Simply switching trading partners overnight is not a feasible option, De Silva said, noting Canada sells more to the U.S. in three weeks than it does to China, its next largest trading partner, in an entire year.
But Canada’s existing trade agreements with other countries do provide opportunities for some industries to pivot, and supports for entrepreneurs to access those markets should be explored, she said.
The most achievable and lucrative action Canada can take, in De Silva’s view, is to reduce inter-provincial trade barriers, which she said could result in a boost of up to $200 billion to the economy — up to a nine per cent increase in GDP.
Harmonizing regulations in sectors like trucking and health care would be the quickest changes and have the greatest impact, along with removal of alcohol taxes and restrictions between provinces.
But lowering internal trade barriers could be painful for some industries, particularly those that benefit from domestic protectionism, such as smaller microbreweries who might find themselves competing against bigger Ontario brewers, De Silva said.
“Every trade agreement has winners and losers.”
Those barriers can’t come down overnight, but would still be quicker to implement than building new east-west pipelines for international oil markets, she said, but added the process for building new energy infrastructure should also be “depoliticized,” with cabinet approval at the start of the process rather than at the end.
De Silva said Canada needs to look for asymmetrical strategic tariffs with the greatest impact on specific industries that will put political pressure on Trump to change course.
“We’re really looking for that economic Achilles heel,” she said.
For that reason, De Silva is opposed to tariffs or export restrictions on oil and gas. There’s a direct correlation between gas prices at the pump and presidential popularity in the U.S., but any action by Canada on energy “muddies the waters” and would allow Trump to escape the blame for the effects of his tariff policy, she said.
Despite the conflict, De Silva said Canadians shouldn’t assume the Canada-U.S.-Mexico Agreement (CUSMA), which replaced the North American Free Trade Agreement (NAFTA) in 2018, is dead.
Rather, it’s a question of how to negotiate with Trump, whose sudden policy switches and outbursts make for uncertainty — “he creates his own weather,” said De Silva. The trick is to “peacefully stay in our own weather system,” figure out what Canada’s true bottom lines are on trade and find the grains of truth in the noise.
For De Silva, those grains of truth are around defence — the U.S. foots most of the bill for international security, and Canada needs to spend more on its own defence — and on Trump’s view of economics, which focuses on U.S. access to resources and logistics and sees tariffs as both a policy tool and a source of revenue to pay for tax cuts.
Canadian business people “need to learn to speak American”; that is, to understand the political system in the U.S. as it pertains to their industries, De Silva said, noting some businesses may find more advantage learning more about how state or local governments affect their trade than federal.
Canadians also need to be engaged, reaching out to individual Americans they know to carry the message back to their representatives.
Acting locally by buying Canadian goods over American ones is also important, she said.
