Canada’s former Ambassador to the United States believes the country has escaped “the guillotine” with Donald Trump’s decision to hold off on applying his country’s planned steel and aluminum tariffs.
“It’s a big win,” TD Bank deputy chairman Frank McKenna told BNN in an interview on Friday. “We were really lucky to escape the guillotine on this one and I think it is more than temporary.”
“It’s hard to tell a country that ‘you’ve got a national security exemption’ and then, a few months later, un-ring the bell and say ‘I guess we were just fooling. You really don’t have a national security exemption.’”
McKenna, who served as Canada’s Ambassador to the U.S. from 2005 to 2006 and as New Brunswick’s premier from 1987 to 1997, also said that Trump’s talk about moving steel and aluminum into the North American Free Trade Agreement renegotiations in lieu of imposing tariffs is not a threat Canada should take seriously.
“He’s said it, but in terms of doing it, I don’t think they actually will do that because it creates more friends for [Canada],” he said.
“He’s talked about getting Mexico to pay for the wall in the negotiations, too, and he’s backed away from that because it’s not going to happen. He says a lot of things, but at the end of the day, he’s got a short attention span and I don’t think this necessarily means these two commodities will be put right in the middle of the negotiations.”
Canada is too important to the U.S. steel industry to have the trading relationship threatened with tariffs, McKenna added.
“Remember, we’re the biggest supplier of steel to the U.S. but we’re also the biggest buyer of their steel and we also have to remember that if you get higher steel and aluminum prices in the United States, you’re going to have big job losses from industries that use aluminum and steel.”
“I think that there’s a very good chance [the Canadian steel and aluminum industries] are safe. I think this is a great triumph of diplomacy … I think they did a terrific job.”
McKenna also doesn’t think Trump will be able to completely pull the U.S. out of NAFTA if negotiators fail to reach an agreement.
“I don’t think he can get a tearing-up of NAFTA past Congress,” said McKenna. “There will be a lot of sound and fury and it will be very unnerving for all of us as we go through the process, but at the end we might get a zombie state where NAFTA’s not renewed but it’s not torn up either,” he said.
But, the uncertainty currently hanging over the Canadian economy remains a major challenge, said McKenna. He also said more should have been done by the Federal government, including in the most recent budget, to encourage investment and help Canadian industries compete against the United States.
“Certainly, when I go out West I can tell you the giant sucking sound you hear is money going into the United States energy sector from Canada,” he said. “I think we need something to stimulate investment. Something that would force people to move their plans ahead or to choose Canada over the United States.”
McKenna also believes it’s not just trade uncertainty hurting Western Canada, but a flawed regulatory system.
“There’s very little new capital taking place in the oil sands, for example. Whereas the Permian in the United States is attracting massive amounts of investment. In Canada, we’ve got - whether it be taxes or whether it be the regulatory environment - the inability to get anything done. For a lot of reasons, I’d say it’s a risk-[on] for Canada right now.”
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