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Canada could benefit from U.S. unpredictability

Posted on April 5, 2018 by Vauxhall Advance

After 14 months of handwringing about how a Trump presidency could effect a Canadian economy, crisis after crisis is presenting opportunity after opportunity.

It’s high time for the nice northern neighbour to get off the back foot and go on the offensive.

As surprising as Donald Trump’s election was in late 2016, his follow-up actions have hardly been off-script for the real estate tycoon who considers himself a real hard bargainer. Looking past his shock campaign, the strategy of bombshell statements, the braggado and erecting tariffs harem scarem is hardly surprising or anything an experienced bargainer hasn’t seen before.

When an opponent asks for the impossible, it’s usually a route to gain ground or find concessions on some seemingly unrelated matter.

There should be sympathy here for trade negotiators and the federal liberal government that has to figure out what the true motivation of America’s chief executive.

They have had to make a quick survey of the new continental trade landscape following any number of earthquakes.

However, with NAFTA discussions heading to their eighth round in 12 months this spring, our national government should be getting ahead of these gambits.

One should hope that the Canadian government is preparing some major move to call the bluff. However, news surrounding side trade agreements with Europe, China and India — the most encouraging new markets — is hardly encouraging. The Canadian economy is hardwired to our southern neighbours, making any pivot more difficult.

It’s not all doom and gloom, however.

While businesses judge success and failure in dollars and cents, an unhealthy side effect of Trump era is that it’s a hard time to make longer-term investment decisions.

Imagine the gut-check required for a major conglomerate that is considering a new plant site in North America.

A massive U.S. tax cut is no doubt a major consideration, but steel and pipe prices are rising due to tariffs. What’s next?

They could easily lead to a trade war with China — the world largest, and still growing, economy, and where most new export-heavy industries want to grow sales. And the tax plan itself may not last longer than this autumn’s mid-term congressional elections.

For an investor looking to get into renewable energy — a veritable whipping post of the Trump agenda — the decision is easy.

Just as Ireland became a gateway to the European trade block for outside investors, Canada can be that gateway to North America.

And if Trump can argue national steel production is a matter of national security, so too can a case be made to export liquefied natural gas to Canada’s allies in Europe.

In terms of East-West trade, might the real nationbuilder could be a doubling of rail capacity through the rocky mountains.

If B.C. communities don’t want bitumen flowing in pipelines, let’s send it in tanker cars.

Tangible steps should be made in every sector to broaden our trade and internal capacity.

Any move against the Canadian cattle sector should be met with a plan to help ranchers with stranded herds work to expand what’s been a shrinking head count since 2005.

There are long-term solutions of potentially great benefit in the offing.

While any trade war will be costly, long, nasty and have real casualties, the United States’ unpredictable president could be the best thing that ever happened for the Canadian economy.

For 100 years Canada has struggled to move beyond simply providing bulk resources like wheat, beef, metal, timber and petroleum, for others to refine, package and sell at a mark-up.

It was Wilfred Laurier who called the 20th century as Canada’s century. Twelve decades later, much work remains to be done. America’s 45th president presents a great case and motivation to pick up that work with vigour.

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