US border tax aimed squarely at Canada
There has been much furor and controversy over the last while about president-elect Donald Trump’s threat to penalize any US company that attempts to move operations to another country. Now we have learned on Friday, January 13th that Trump’s threat also applies to auto companies moving some or all of their operations to Canada. This will be part of a “border adjustment tax” applied to auto products imported into the US.
Sean Spicer, spokesman for Donald Trump, stated that “’When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico, and any other country seeking to put U.S. workers at a disadvantage’, then the incoming U.S. president ‘is going to do everything he can to deter that’.” (1)
Presumably, this penalty will apply to other Canadian industries not just auto. What would be the result of this new policy? After all, many Canadian companies in different industrial sectors have operations in the US, and many US companies have operations in Canada. And some companies are “North American” in their scope. Aside from all the chaos this penalty will cause, the outcome would be a strong tendency for industrial and manufacturing operations in Canada to drastically decline over time and those in the US to increase (at Canada’s expense).
Indeed, the same threat has been applied to Mexico and is already having an effect. For example, Fiat Chrysler CEO Sergio Marchionne has frankly stated that the company may end all operations in Mexico if the Trump tariffs are too high and, instead, keep production in the US. Canada now faces exactly the same threat.
This, of course, fits in with former US senator Rick Santorum’s recent comment that “We (the US) are going to be aggressively going after jobs that are high tech and other types of manufacturing jobs and a lot of those are up in Canada.” (2)
It was always a deception that so-called “free trade” actually existed between Canada and the US, as evidenced by the longstanding Softwood Lumber dispute. In fact, like the other side of a coin, protectionism was always there. The difference now is that Trump is dramatically ramping up the protectionist side.
All of this calls into question Canada’s trading relationship with the US, including the original Free Trade Agreement as well as NAFTA. It also exposes the “North American project” of continentalism, i.e. putting Canada under US economic, political and military domination, as a trap and a disaster for Canada.
The Trump administration is threatening both Canada and Mexico with the tearing up of NAFTA unless it gets its way. It’s time for Canada to call Trump’s bluff. We need to move towards a more self-reliant economy and seek trade arrangements based on mutual benefit. That means we need our own nation-building project, one that is not hopelessly entangled with an increasingly erratic and aggressive US.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: firstname.lastname@example.org
- Olorunnipa, Toluse. “Trump team signals auto border tax could also hit Canada.” January 13, 2017.
- Ewart, Peter. “Will the Trump administration view Canada as its 21st Century colony?” 250 News. November 21, 2016.