Last week the American side announced that a trade agreement with Canada was all but wrapped up. In anticipation of the signing the United States paused implementation of 50% tariffs on non energy or critical mineral goods and services from Canada not covered under the USMCA agreement for three days.
Canada's prime minister, Mark Carney, then announced his refusal to sign and those tariffs are now in effect.
There are three things to notice about all this:
- These tariffs affect less than 2.5% of Canada's total exports to the U.S. and will hit the middle classes and small businesses hardest. As a result this will not matter to the current government except as a positive means of whipping up anti-American sentiment.
- Cancellation of the USMCA (possible on 6 months notice under section 34.6 of the agreement) will, in contrast, affect nearly 90% of non energy exports to the United States and directly affect large businesses owned or controlled by the six or so richest families in Canada.
More importantly, many of Carney's public claims about export diversification and foreign investment in Canada (e.g. a recent agreement with mainland China) depend on the continuation of tariff free access to the U.S. market from Canada.
As a result the Carney government will not maintain its position against this action - an action I expect the American administration to announce this week.
However, Carney faces impending separatist referenda in Alberta and Quebec - both of which will almost probably take place within the six months window before the USMCA ends.
As a result I expect Carney et al will bluff, use anti-American sentiment to survive the referenda, announce an energy export tax on Alberta the day after it fails here, and then fold completely the day after its fails in Quebec.
- No member of Carney's negotiating team resigned in protest when he threw out the agreement they had worked to develop. From that I conclude that they knew perfectly well what was coming and agree with Carney's all-in strategy of betting the country on the mid-terms crippling Trump et al.
I sincerely hope, and very much want to believe, that he loses the bet and the GOP retains both houses of Congress - but there's a zinger, one I didn't see until recently and Carney et al may not have adequately considered: what happens if the rich and cynical democrats he hangs out with and thinks control party policy and presentation, turn out not to?
European folk tales are full of puppets coming alive at inopportune times - and if the democrats win the mid terms they'll run somebody like AOC for president (Fetterman if they lose) with either Ro or Jon as VP - and all three are actors beginning to believe they really are the characters they're playing. Bad news for Carney: they owe him nothing, hate the people he represents, and will, if they win, at least partially escape their strings.
What does all this mean for Canada? Well,. little P.P. and his poll readers aren't going to step up and end this, the Alberta referendum is both ambiguous and led by idiots (so Carney's bet on its failure is pretty much a sure thing) and the one in Quebec - well it's ultimately funded by the same people who control Carney's liberals and they can either stall or kamikaze the thing, so that's a pretty good bet too.
Bottom line: it's up to the GOP grass roots to save Canada from its own idiocy. Win the damn mid-terms already! ok?
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