A Body Check to U.S./Canada Relations
- A Body Check to U.S./Canada Relations
- The Foundation of the American Housing Market is Still Cracked
- Looking Past Chinese Growth Spurts
My timing in life is terrible. When I book a flight, cumulus clouds immediately begin plotting to cover the destination on the appointed day. When I plan a special menu for a dinner party, the supermarket runs out of a key ingredient. And when I offer a benign economic outlook, the likelihood of an unexpected shock to the global financial system rises significantly.
Nevertheless, I was hopeful that the timing and tone would be ideal for my trip to Western Canada last month. The White House rhetoric on trade was cooling, and Canadian Prime Minister Justin Trudeau had held an encouraging meeting with President Trump early in the year. Most of the international anxiety in the past month has centered on North Korea, and most of the continental focus has been on relations between the United States and Mexico.
But two days before my departure, the White House announced punitive tariffs on Canadian lumber and promised to upend the North American Free Trade Agreement (NAFTA). As an early point of retaliation, the Canadian government implemented enhanced screening procedures for American economists visiting the provinces. I was eventually allowed to cross the border, but my presentation booklets were deemed subversive and confiscated by the authorities.
The sudden contretemps between Washington and Ottawa was more than a personal annoyance. It suggests that U.S. trade policy remains unpredictable and unproductive. And it creates an unnecessary risk for the Canadian economy, which shares a significant economic partnership with the United States.
Canadian/American cooperation has historically been a model for other nations to follow. The countries share a 5,525 mile boundary that is largely unguarded. Each is a very significant trading partner for the other, and there is significant cross-border sourcing between the two. Neither, presumably, is anxious to put all of that commerce at risk.
Last week’s salvo on softwood lumber imports from Canada (which was quickly dubbed the “timber tantrum,” or “lumbergate”) was a surprise on several fronts. Firstly, the U.S. administration had been backing away from its harsh anti-trade talk. Its posture on China took a nearly 180-degree turn after President Xi’s visit to Mar-a-Lago; and the border tax, which would have proven inflammatory to America’s trading partners, was not a component of the tax reform proposal announced last week. The White House approach to trade seemed to be maturing, along with its appreciation of globalization’s benefits.