I’ve been thinking about Donald Trump again. Sorry.
It is the summer and I should be sailing and riding my bike, pretending to be young. That’s what old people do now. When I should have been biking I was thinking of that famous quote: “May you live in interesting times,” which is an alleged “Chinese curse.”
Apparently it is not. Wikipedia tells me the closest you can get to this nuance in Chinese is: “Better to be a dog in a peaceful time, than to be a human in a chaotic (warring) period.”
Much better. I want to be a dog.
In Canada, we have tied our future to free trade. I was a keen observer of the 1988 election battle between Brian Mulroney and John Turner. In the end, Mulroney saved his bacon by winning the free trade debate. Well, not entirely. More people voted against free trade than for it (the Liberals and NDP were against the agreement) but the Tories had the most seats.
Back then, Ontario (not so much Northern Ontario) was sprinkled with branch plants. These were divisions of American companies that built facilities in Canada to avoid the huge tariffs at the border. Branch plants were generally brainless (no innovation or world product mandates) but did provide lots of employment for towns like Midland, Collingwood, Belleville and Sarnia. Some have not recovered from their disappearance.
Tariffs have been an issue since Confederation. Maritimers and Westerners hate tariffs. They saw it as a conspiracy of Upper Canada to prevent them from buying cheaper stoves and fridges from the United States and being forced to buy expensive ones from Ontario. It probably was a conspiracy. Of course, we are still trying to establish free trade inside of Canada notwithstanding the demise of tariffs between Canada and other countries.
I’m not sure free trade has worked as well for Canada or Ontario as everyone thinks it has. Ontario’s manufacturing sector has not seen much of a bump since the dollar collapsed to 76 cents. The sector is so hollowed out there isn’t enough of a base to build on.
The emerging isolation of the United States with or without Mr. Trump is worrying.
Our markets have been integrated. Products are exported, parts of products are sent back and forth across the border before final assembly. For better or worse, businesses have adapted. Unwinding will be expensive, demoralizing and costly.
The Northern Ontario economy is quite different than the balance of Ontario. Although still massively dependent on resources (minerals and wood), there are pockets of intellectual capital that should be able to compete with tariffs anywhere. That is the mining supply sector where our innovative products are needed and valued worldwide.
We have lots of experience living outside of a trade agreement with America. It is brutal. It is called the Softwood Lumber Agreement war that goes on every five years or so. It never ends and is in a current stage of charges and counter charges, which is normal.
The problem a small country has with a big one is the rule of law. Contract law is important. It is the basis of commerce. You can’t lend or borrow or plan if there are no rules of the road. It is chaos. Donald Trump has never lived by rules. He lives by emotion. When the lies run out, he goes into bankruptcy and blames someone else. He is quite possibly the next president of the United States.
Like all jurisdictions that trade with the United States we need to take stock. We need to know what we make and where it goes and who depends on it.
A natural place for this analysis is the Northern Policy Institute.
The problem is who to talk to once you know what is going on. It is the federal government who negotiates trade but the province that makes it happen.
Economic development is either creating competitive products for export or inventing local solutions to replace imports.
We need to be thinking about both and, as usual, it will be up to us to understand the landscape and take action.