Retaliation to U.S. Tariff Attack

 We will hear today how Canada intends to retaliate 'dollar for dollar' to the U.S. tariff attack on Canada. As University of Calgary economist Trevor Tombe has written, it will be impossible to structure retaliatory tariffs that simultaneously satisfy three key objectives: targeting U.S. swing states; significantly impacting U.S. producers; and minimizing impact on Canadian business and consumers. Perhaps a different approach is required.

What needs to be addressed is not the U.S. tariffs in themselves -- this is not a commercial issue. What needs to be addressed and challenged are the manifestly clear U.S. objectives. They want to shift auto, metal, wood product and other major manufacturing activity from Canada to the United States and at the same time retain Canada as a source of low cost primary energy, mineral, raw log and other resources.

Our retaliation could and should directly and transparently target the U.S. attempts to turn us into a classic resource colony with a three-pronged approach.

1) Canada should tariff all U.S. manufactured goods at the same rate they tariff us. We should eliminate the tariff rate imbalance that will encourage industry to move from Canada to the U.S. even for goods sold in Canada. 

2) Canada should require retailers to clearly indicate U.S.-sourced supply. Canadians want to help defend against the U.S. tariff attack; they should be given the ability to do so..

3) Canada should impose an export tax on all primary resources destined to the United States at a rate equal to the weighted-average tariff rate the US is imposing on our manufactured goods. We shouldn't allow the U.S. to access our primary resources tariff free for their manufacturing activity while they are  attacking our own manufacturing industry. 

This three pronged approach would make clear to the Americans how and why we will respond to their current attack and the additional ones they are threatening. It would make clear to U.S. citizens we are not the aggressors; we are responding to their aggression.  And if and when the U.S. reverses its trade agreement-breaking attacks,  our retaliation would automatically end. 

This three pronged approach would provide what is sorely needed -- clarity and resolve on where escalation will lead and a set of principles setting out how deescalation can quickly be achieved.