Canada now left as the only major economy in an all-out trade feud with the U.S.
Prime Minister Mark Carney met Chinese Presisdent Xi Jinping at the APEC Summit this week. “We are committed to renewing the relationship in a pragmatic and constructive way,” Carney wrote on social media. / TWITTER PHOTO
So it’s come to this: the news emanating from Mark Carney’s sit-down dinner with leaders of the Asia-Pacific Economic Cooperation summit in South Korea was that President Donald Trump smiled at Canada’s prime minister from across the table.
With Canada’s near-term economic survival hanging in the balance, everyone was searching through the diplomatic propwash in Asia this week for even the slightest sign of a warming in relations with Washington.
But the situation actually got worse. After Trump’s meeting with Chinese President Xi Jinping, which the U.S. leader described as an “amazing” breakthrough, Canada was left as the only major economic player in an outright feud with the shoot-from-the-hip American administration.
"On a scale from zero to 10, with 10 being the best, I would say the meeting was a 12," Trump declared after his 90-minute chat with his Chinese counterpart. While the U.S. president tends to exaggerate this sort of thing, any diminishment of the bitter, years-long standoff between the world’s two largest economies is important.
Trade deconfliction
And Trump and Xi appeared to make a start, however limited, in trying to defuse their trade conflict and lower tariffs. Xi said China would resume purchasing U.S. soybeans and Trump indicated tariffs imposed on Chinese imports would be cut to 47% from 57%. This would be done by halving the rate of tariffs related to trade in fentanyl precursor drugs.
In contrast to all this upbeat talk among declared global antagonists, U.S. relations with longtime ally Canada—until this week, one of only two remaining holdouts along with China in the worldwide charm offensive with Trump—remained stuck in the deep freeze.
After the closely-watched APEC leaders’ dinner, Trump said he had a “very nice conversation” with Carney. But the prime minister was still waiting for his phone to ring a week after Trump, furiously accusing Canada of fraud over Ontario’s hard-hitting anti-tariff ads on U.S. TV, halted trade negotiations with Ottawa. As for the U.S. president, he had told reporters earlier in the week that he won’t be meeting with Carney “for a long time.”
And Pete Hoekstra, the outspoken U.S. ambassador, said Canada has burned its bridges with the U.S. and trade negotiations are likely to remain on the shelf for who knows how long.
Left in limbo
This means Canadian businesses trying to keep their heads above water in the U.S.-declared trade war are still completely in limbo. Worse, the collapse in the trade talks viewed as a life-or-death matter for the sputtering Canadian economy came at a time when the months of negotiations were about to yield some success, if Carney is to be believed.
“There were a series of very detailed, very specific, very comprehensive discussions. . . up until the point of those ads running,” Carney said Monday while speaking to the media at the ASEAN summit in Malaysia.
Carney always reminds Canadians that, regardless of the state of trade negotiations in Washington, this country continues to have the best access to the U.S. market of any nation because of the Canada-U.S.-Mexico free trade pact.
Still, the breakdown in talks with the U.S. casts a shadow over Carney’s much-previewed pro-growth budget on Tuesday, as the business community would much rather see a reduction in sectoral tariffs on steel, aluminum and energy than more expensive government bailouts.
And Canadian entrepreneurs continue to be whipsawed by bruising tariffs from both Washington and Beijing. On top of the huge burden on Canadian producers imposed by Trump, China has brought in tariffs on Canadian canola oil, canola meal and peas as well as on seafood and pork products. This came in retaliation for the 100% tariff on Chinese electric vehicles introduced by Ottawa last year to stay in line with the former Biden administration’s policy.
Carney managed a meeting with Xi in Asia this week, an important step for the prime minister in his bid to improve relations with China at a time when the U.S. has reshuffled the deck on global trade patterns. But Carney unfortunately came away with no concessions in Ottawa’s trade war with Beijing.
