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“I love Canada,” Trump replied.
And yet, since taking office in January and appointing Wilbur Ross as secretary of commerce, Canada has received more attention. While the U.S. has taken some trade action against China, and one minor step against Mexico, the heaviest hits have been aimed at Canada.
In July, the U.S. Commerce Department imposed a 19.52 per cent countervailing duty on emulsion styrene-butadiene rubber from Mexico. Punished alongside Mexico were rubber producers in Brazil, Korea and Poland.
China fared somewhat worse, or at least, Chinese producers of cold-drawn mechanical tubing, tool chests, aluminum foil, carton-closing staples and a chemical called 1-hydroxyethylidene-1, 1-diphosphonic acid (HEDP) fared worse. All were slapped with countervailing duties.
The total value to China of trade in all of those products combined is $ 1.77 billion.
How does that compare to the beating Canada has taken?
The value of Canada’s softwood lumber exports to the U.S. alone is estimated at $ 5.66 billion. The contract between Bombardier and Delta Airlines, now threatened by tariffs and duties imposed on the Canadian company, is also thought to be about $ 5 billion.
None of the actions the Trump administration has taken against any of its trading partners have caused the same kind of pain as its actions against Canada.
While Canada negotiates to save the North American Free Trade Agreement (NAFTA) under the shadow of an ongoing softwood lumber dispute, Mexico has been able to set aside its own perennial irritant with the U.S.: sugar.
In many ways, the dispute between Mexican and U.S. sugar producers mirrors the softwood lumber battle with Canada.
Both disputes date back to the beginning of NAFTA. As with softwood, the sugar dispute has been through a series of negotiations, in which the U.S. pressures Mexico to accept conditions that amount to a system of managed trade intended to protect U.S. producers and refiners.
This year, the Trump administration pressed Mexico to reopen the last agreement, reached in 2014, and accept more restrictive conditions.
Mexico was forced to make concessions, and yet it fared better than Canada, which was not offered the option of softwood renegotiations and was simply slapped with duties.
With Canada it’s been a different story. The Department of Commerce took the position of the U.S. lumber coalition almost to the decimal point.
There was a difference in tone too. Announcing the sugar deal with Mexico, Ross said he was “glad all parties have agreed that the new sugar agreement is fair and addresses the shortcomings of the original deal.
“Thank you to our industry partners, as well as our Mexican counterparts, for their hard work,” he said.
The day his department imposed a tariff on Canadian lumber imports, he issued an indignant statement that also referenced a dispute over U.S. dairy exports to Canada:
“This is not our idea of a properly functioning free trade agreement.”
So, why isn’t the U.S. working equally hard to create new bargaining chips with Mexico?
Canadian trade consultant Peter Clark led many Canadian trade negotiations as a public servant and was special trade advisor to the parliamentary committee on implementation of the Canada-U.S. Free Trade Agreement.
He said the answer is simple: The Americans fear Mexico more than Canada.
“They think they can probably get us to react favourably, without the type of retaliation they think they would be sure to get from the Mexicans. The Mexicans have hit and hurt them before, and they would be sure to do it again.”
Mexico is the biggest export market for America’s top agricultural product: corn. And while Mexico can’t unilaterally block U.S. corn imports under NAFTA, it buys its corn in government-supervised block purchases and it is free to buy wherever it wishes.
Already Mexico has increased corn purchases from Argentina and Brazil, causing politicians from the U.S. corn belt, like Iowa Senator Chuck Grassley, to warn the Trump administration against any further provocation.
Mexican officials have shown considerable skill in past trade disputes, targeting their trade actions in order to apply pain to particular regions and segments of the U.S. economy they feel are leading the protectionist charge against them.
“It’s been pretty clear in our informal discussions with them that they’d do it again,” said Clark.
And, he said, Mexican officials also don’t hesitate to use issues that have nothing to do with trade to make their points, including threats to abandon co-operation with the U.S. on important issues such as interdicting drugs or stopping the flow of Central American migrants through Mexico to the U.S. border.
“The Mexicans can get pretty extreme,” said Clark.
Clark’s view is that Canada could benefit from ditching its polite and reasonable approach and imitating Mexico’s more hard-nosed tactics, targeting the elected officials who are pushing a protectionist agenda.
“There’s no specific rules you have to break. You just have to be anally bureaucratic.”