Trump and his team have said that his so-called reciprocal tariffs are non-negotiable. But like much of what Trump says, the truth is the exact opposite. There is no question that all of these tariffs will be subject to negotiation. The tariff rates are too illogical, having no basis in reciprocity, and too destructive for the U.S. as much as everyone else to last.
There have been the post hoc arguments of Trump and his coterie of manifestly incompetent economic advisers that the self-inflicted chaos following the release of the country-by-country 'reciprocal tariffs' was expected and will be short-lived. It was all designed to bring down US interest rates and restore US manufacturing. The immediate economic downturn, they argue, will lead to lower US interest rates and the higher prices and reduced competition from foreign suppliers will lead to unprecedented investments in US manufacturing. But the downturn will only be as short-lived as the bat-shit crazy tariffs, the reduction in US interest rates will only take place when the threat of tariff-induced inflation is removed and the investment in US manufacturing will only take place when the uncertainty and unpredictability of US trade policy is eliminated.
The 'reciprocal' tariffs won't last. Call it what you will ---the 'art of the deal' or completely immoral extortion by the rich of the poor; there will be negotiations and a new, hopefully less universally destructive US tariff regime will be put in place.
In Canada's case there is an explicit understanding there will be negotiations following the Canadian elections. All political parties are making their case that they will stand up to the Americans in these negotiations- they will get the best possible deal. That much is clear. What isn't clear is what they hope to achieve.
We know what Premier Smith of Alberta would want -- a carve out for Canadian oil and gas exports. She wants Alberta's main industry inside the US protectionist tent and what happens elsewhere doesn't much matter. I suspect the Pollievre conservatives would want pretty much the same, but from a national perspective --getting Canadian industry inside the tent. One can imagine the fundamental bargain that would be made: unimpeded US access to our energy, critical mineral, raw log and other resources, some accommodation of US concerns about what they consider to be unfair or unacceptable Canadian tax, cultural and other policies, and some restrictions on trade-relationships with other parties all in exchange for continued, mostly tariff-free Canadian manufacturing and other industry access to US markets.
What is less clear and arguably more interesting given their front runner status in the election polls is what the Carney Liberals want to achieve. Are they looking to get Canada inside the US protectionist tent despite some loss of control over resources and over tax, third-party trade and other policy, or will they hold out for a more balanced truly reciprocal bi-lateral relationship even at some cost to our access to the US market?
If we want maximum relief in the short term, getting inside the US protectionist tent is the best bet. If we want to reduce our dependence on the US market and on the good faith of future US policy, it is a more balanced reciprocal bi-lateral relationship we should seek. That means maintaining control over our resources and our sovereignty over tax, third-party trade and other policy despite the short term costs that may entail.
It is time for political leaders to be clear. We know they want to stand up to the Americans, but to what end. Do they want to get inside the US protectionist tent or do they truly want to develop a new relationship with balanced, truly reciprocal access through the door?
