It is quite possible that the escalating Canada-U.S. trade fight could end with the countries’ trade agreement being torn apart, warns a former Canadian diplomat.
“I don’t know how this all ends, but right now it looks like it’s going to end in tears,” Colin Robertson, former Canadian diplomat and vice-president and fellow at the Canadian Global Affairs Institute, told BNN Bloomberg.
The looming U.S. deadline for imposing 50 per cent tariffs on $20 billion worth of Canadian goods, including autos, dairy, and alcohol, is a week away on Aug. 19.
Robertson says it’s important for Canada’s current negotiating team to match the U.S. strategy precisely, which means if U.S. President Donald Trump applies a temporary tariff threat, Canada should offer temporary policy adjustments.
“What we want is reversible tariffs for reversible tariffs and any permanent concessions on the Canadian part for truly durable gains within the United States again,” says Robertson who was part of the negotiating teams for the original North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA), which replaced NAFTA.
“That’s what negotiations are about.”
Current deal similar to original NAFTA agreement
Robertson says the current deal reminds him of the original bilateral NAFTA talks more than the later NAFTA or CUSMA renegotiations. This is because Canada is dealing one-on-one with the U.S. without Mexico at the table.
“This really is a Canada-U.S. negotiation right now,” says Robertson.
However, he says there is a major difference this time around.
“The fundamental difference this time is you’ve got a president who loves tariffs,” he says, adding that previous U.S. administrations saw value in maintaining a North American economic platform.
“Bringing Mexico into NAFTA was because you didn’t want a failed state; Americans didn’t want a failed state on their southern border, and it worked,” says Robertson.
“This is the great tragedy in all of this: is that this North American platform is very durable and should endure. And American businesses like it, but the president doesn’t and wants to tariff everything.”
Robertson says it’s important the deal has movement on both the American and Canadian side, as well as developments in negotiations between the U.S. and Mexico.
“Because this was, after all, a trilateral deal,” says Robertson.
‘Trust factor is all gone’
Beyond the tariff dispute, Robertson says the relationship between Canada and the U.S. has already undergone a significant shift.
He says the Americans he has discussed believe relations between the countries will eventually recover, however, Canadians appear less convinced.
“The trust factor is all gone,” says Robertson.
He says the need for Canada to diversify its trading relationships and reduce its reliance on the U.S. will take time. And while Canada already has trade agreements across the Atlantic and Pacific, businesses do not use those agreements to their full potential.
“The easiest market for them to enter is the United States. You cannot change geography, nor would we want to,” says Roberson.
“The biggest market in the world is still the United States. We have so much in common.”
The U.S. tries to ‘divide and conquer’
Robertson says it’s important for Canada to maintain a united front domestically as provinces defend different economic interests, like Alberta’s focus on oil and Ontario’s focus on the auto industry.
“Trying to bind all that together is really important because the Americans will be picking holes at it if they can,” says Roberston.
“They’ve learned this in the past to try and divide and conquer. It’s always the big challenge.”
He says resistance to the administration’s tariff policy is already building in the U.S. as more than 20 states take the administration to court.
“They’re feeling the pinch,” adds Robertson.
