President Trump has gotten off to a rocky start with one NAFTA partner — Mexico. On Monday, he turns to the other partner, Canada, when he hosts Prime Minister Justin Trudeau at the White House.
Hundreds of billions of dollars of trade pass between Canada and the U.S. each year, $540 billion in 2015 alone. Yet Trump has called NAFTA the worst trade deal ever and is threatening to rip up or at least renegotiate it.
Mark Manger, an associate professor at the University of Toronto’s Munk School of Global Affairs, says NAFTA is not as contentious an issue in Canada as in the U.S. He says the trade deal has helped provide a lot of jobs, many in the auto industry, and that Canadians worry about what Trump has in mind.
“There’s a very genuine fear in Canada, and I think Canadian auto workers in particular are very worried about it. We’re talking about over 100,000 jobs here in Canada that are essentially in the auto industry,” he says.
Ford, Chrysler and GM are among the U.S. automakers that provide jobs in Canada.
Barry Campbell, a former member of parliament now running the Toronto communications firm of Campbell Strategies, says so far, Canada has managed to stay under the radar of Trump’s ire over NAFTA.
“Canada has not been in the crosshairs, we’ve not had a target on our back,” he says. “The anti-trade rhetoric has been directed first and foremost at Mexico.”
Canada has had a strong trade relationship with the U.S. since long before NAFTA took effect in 1994. Campbell says three-quarters of Canada’s exports go to the U.S. and 35 states count Canada as their leading export market.
“Our two-way trade is roughly in balance, unlike U.S.-Mexico trade, so that argues in favor of leaving things the way they are,” he says.
But there’s uncertainty about whether Trump will want to leave things the way they are. A major concern is whether the U.S. will impose tariffs, which could spark a trade war.
To try and get ahead of any possible conflicts, the Canadian government has gone on a charm offensive, sending senior Cabinet members to Washington for meetings even before Monday’s visit by Trudeau.
Canadian Minister of Foreign Affairs Chrystia Freeland told reporters last week that discussions have included a possible new border adjustment tax on imports going into the U.S. She said she found there are many contrasting points of view about that idea.
“I came away from those conversations with an appreciation of the extent to which the political debate in the United States … is only beginning,” she said.
Still, Freeland said she warned U.S. officials that Ottawa strongly opposes any new tariffs, which she said would be mutually harmful.
There’s concern that Canada may get swept up in any disagreement or trade war between the U.S. and Mexico. Canada’s ambassador, David MacNaughton, is on record saying Canada needs to avoid becoming “collateral damage.”
Campbell, the former lawmaker, says in no way should Ottawa be seen as abandoning Mexico — with which it has limited trade — but Canada needs to protect its interests.
“I think you have to plan for the reality you’re dealing with,” he says. “We have to balance outreach and engagement with this administration with protecting our own sovereign interests.”
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