Canada will have to accept higher U.S. tariffs and unthinkable concessions

border_humper

border_humper

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And while dismissing anything from President Donald Trump’s administration has become fashionable, the logic of their position isn’t entirely without foundation.
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Trade diversification may limit the damage, but the best Canada can likely hope for is a new, less favourable equilibrium until evidence of economic damage in the U.S. or geopolitical shifts alter Washington’s position. Canada already has trade agreements with 50 other countries and trying to expand these or adding a few more countries will not suddenly accelerate our diversification. With a shared border and economic and security interdependence, Canada cannot avoid the United States.
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Recent U.S. trade deals with Europe, Argentina, Britain, Japan, South Korea and others follow a clear pattern: the U.S. imposes tariffs of 10 to 20 per cent while negotiating partners eliminate their own tariffs and grant preferential access to American products. Washington’s only concessions involve removing duties on natural resources unavailable domestically or products Americans cannot produce at sufficient scale. Prime Minister Mark Carney said countries agreeing to such terms are engaged in the “performance of sovereignty while accepting subordination.”
These agreements appear to reflect the optimal tariff argument advanced by Trump advisers Scott Bessent and Stephen Miran. The theory holds that when a large country with market power imposes import tariffs, foreign companies reduce their export prices to maintain market share in that crucial market, effectively absorbing the tariff in their margins. American consumers pay little more, while the U.S. government collects tariff revenue.
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Some evidence supports this approach. Canadian exporters, for instance, tend to lower their prices in Canadian dollars when the currency appreciates, keeping U.S.-dollar prices stable – a practice called pricing to market. Companies, however, can only reduce prices so far.
For small open economies like Canada’s, the GDP-maximizing strategy remains refraining from tariffs. Retaliation would serve only one purpose: forcing the larger country to abandon its strategy. But this path leads to tariff escalation and a game of chicken where the smaller country inevitably loses.
This explains why Britain, Japan and the unco-ordinated European Union accepted the U.S. demand to maintain zero tariffs while making concessions to keep American duties at manageable levels. It’s difficult to see how Canada can achieve better results unless small- and medium-sized countries co-ordinate their responses, as Mr. Carney suggested in his Davos speech. This would mean Britain raising tariffs on American imports when the U.S. targets Canada and Mexico, and vice versa. Yet asking populations to accept economic pain on behalf of another country is politically untenable and cannot produce a stable equilibrium.
Another possibility for the tariff strategy: the United States is simply abandoning trade benefits for national security benefits and looking for ways to make everything in-house. This strategy accepts lower per capita GDP in exchange for complete independence and rapid threat response, potentially including territorial expansion (Venezuela, Greenland) to ensure resource and action autonomy.
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Unfortunately, such realizations may not arrive before Canada must sign a new trade agreement. Let’s hope some of the concessions Canada ends up making also deliver long-term benefits to Canadians in areas such as air travel, telecom and dairy.
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That hag being sent down to negotiate CUSMA isn’t going to set Trump straight?
 
Upvote 8
border_humper said:






That hag being sent down to negotiate CUSMA isn’t going to set Trump straight?
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border_humperThe bigger the fiasco the bigger the jump in the polls. There is in actuality nobody on the side of Canada. We have separatists and people loyal to institutions. The institution's only have Trump hatred to run on.

Anybody who can see a positive end to this dusty trail... I am all ears.
 
I mean any collapse would be short-lived if the US is still strong, so unlike US accelerationism (which would lead to some awful civil war type thing), I think some sort of Canadian government collapse could actually be good for most productive members of society.

Anything outcome that wipes out the welfare leeches can't be all bad.
 
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