One trade lawyer says he is critical of the way Canadian politicians are reacting to tariff threats from U.S. President Trump, adding that retaliatory efforts by Canada are likely to have a muted effect on the U.S. economy.
Mark Warner, a trade lawyer and principal of MAAW Law, said in an interview with BNN Bloomberg Wednesday that Canada’s response to tariff threats has moved back and forth between “initially showing weakness” and more recently “showing belligerence” through “the language of trade wars and retaliation and inflicting maximum punishment.”
“My guess is both weakness and belligerence lead to Trump digging in as opposed to having a more reasoned conversation with him, but that’s where I think we are right now,” he said.
On Monday, Trump signed the America First Trade Policy after his return to the White House, which ordered U.S. federal agencies to study trade policies and deficits, The Canadian Press reported Tuesday. The move came after threats of implementing an across-the-board 25 per cent tariff on Canadian goods on Trump’s first day in office.
The order directed the secretary of commerce and secretary of homeland security to assess migration as well as fentanyl coming from Canada, Mexico and China. Trump’s order indicates the report on trade with Canada is not due until April 1, however Trump suggested hitting Canada and Mexico with tariffs on Feb. 1.
“The challenge is that Canada is one tenth or maybe even one twelfth the size of the United States in terms of the size of the economy,” Warner said.
Amid calls for “dollar for dollar retaliation” from Canada to the U.S. he said Canada would be “hurt a lot” if the U.S. were to respond in kind.
“There’s only one state in the United States that is more dependent on trade with Canada then all the provinces are for trade with the United States,” Warner said.
“I think that gives an indication that yes we do have, as Team Canada keeps telling us, some leverage because they do buy a lot of from Canada (and) that we do have very integrated markets, but there’s just no question that we are a more trade dependent economy.”
He added the U.S. is the “largest economy in the world” and could “basically sustain any retaliation that Canada might muster.”
Warner’s comments come after a range of reactions among Canadian political leaders regarding the best way to react to the tariff threats.
On Tuesday, Industry Minister François-Philippe Champagne said Canada needs to move from a defensive to an offensive posture.
His comments came on the same day Bloomberg News reported Prime Minister Justin Trudeau said Canada has complaints about the border as well, highlighting concerns around guns and drugs coming into Canada from the U.S. Trudeau added it is in the interest of both nations to strengthen border security.
Ontario Premier Doug Ford had previously suggested cutting off energy flows to the U.S. but later moved to advocate for a “Fortress Am-Can” strategy to enhance the alliance between the two nations. Meanwhile Alberta Premier Danielle Smith refused to endorse a joint statement last week with other premiers and the prime minister.
‘Focus on the signal, not the noise’
Warner said the approach from Canada’s politicians appears to be disorganized, adding that leaders are seemingly moving in different directions.
“I think a lot of politicians in Canada see some electoral advantage to being seen to be standing up to Mr. Trump and I think that that’s an unfortunate thing if this most important economic relationship gets politicized in that way,” he said.
According to Warner, it is also important to make “credible threats” given the circumstances, adding that threats to cut off electricity or oil to the U.S. are not sincere.
“In this environment where we really don’t have a strong prime minister, we have a leadership campaign at the federal level… everyone is basically trying to take advantage of the situation for their own advantage, and unfortunately it makes us look weak,” he said.
Instead, he said it’s important to “focus on the signal, not the noise” when dealing with the new Trump administration, adding that the threat of tariffs is unlikely to go away for the next four years.
“So, we can’t keep reacting to every threat… We have to try to be a bit more disciplined about it and focus on the real deadlines,” he said.
With files from Bloomberg News and The Canadian Press