The article argues against Canada's traditional tit-for-tat retaliation against US tariffs, highlighting the negative consequences of trade barriers in today's interconnected global economy. Instead, it proposes a strategy of resilience, focusing on strengthening social safety nets, rebuilding infrastructure, and leveraging Canada's strengths in technology and innovation to drive economic growth.
President-elect Donald Trump talks to reporters after a meeting with Republican leadership at the Capitol in Washington, on Jan. 8.Dan Ciuriak is an economist, senior fellow at the Centre for International Governance Innovation and an expert on global trade.
Canadian officials have indicated they will follow the same route this time, presumably by singling out pain points in the U.S. economy and society to generate internal pressure to force Mr. Trump to withdraw the U.S. tariffs, presumably with a face-saving bargain, just like last time. As Canada well understands, static productivity growth, lagging innovation, stagnating per-capita income growth and the failure of firms to scale constitute a pernicious nexus of economic ills. In fact, they are simply different facets of one and the same problem – namely, the inability to scale firms. Engagement in trade enables companies to grow, drives innovation and fuels productivity gains; the converse is also true.
U.S. Section 301 tariffs, which were motivated by America’s enormous bilateral trade deficit with China, did eventually crimp trade with the latter, as firms reshuffled trade through third countries. But the tariffs did not reduce America’s total foreign trade deficit – it actually widened substantially. Worse, the complications for U.S. firms generated by these tariffs led to tens of thousands of applications for exemptions.
Politics Trade TRADE WAR TARIFFS CANADA UNITED STATES GLOBALIZATION INNOVATION TECHNOLOGY
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