LILLEY: Trade wars aren't won by matching punch for punch, Carney’s rhetoric has a price
· Toronto Sun
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“You’re at war when you get attacked. We got attacked,” Mark Carney said after trade talks collapsed and the United States imposed more tariffs on us.
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His words caught the mood of the country. Patriotic. Defiant. And ultimately, a cover for a bad policy.
“Canada will match Washington’s new tariffs dollar for dollar in order to protect Canadian workers, farmers, families, and businesses,” Carney declared.
That sounds good. It sounds like the right political move, especially for a smaller country like Canada going up against a much bigger country like the United States.
Tough talk, tougher reality
The call for retaliatory tariffs, which Canada will impose this coming Tuesday, frustrates Professor Eric Kam from the economics department at Toronto Metropolitan University. He describes the call for dollar-for-dollar tariffs as making politicians sound tough when they have nothing to back it up.
“It really makes me wish that they could get in a ring with twenty-year-old Mike Tyson and match him punch for punch and see how it feels, because that’s exactly what they’re saying. It’s just nothing more than political gain, political rhetoric, and it has zero economics behind it,” Kam said.
Carney’s call to action with retaliatory tariffs clearly had the backing of Ontario Premier Doug Ford, who had opposed the deal that Carney had just walked away from over tariffs of 25% on medium- and heavy-duty trucks. That would have jeopardized production at GM’s Oshawa plant and Ford’s Oakville plant.
The American side knew this thanks to calls from top executives in the Detroit offices of those companies to the White House seeking a lower tariff. The deal was unpalatable, but walking away from it wasn’t an act of war, and neither was the American response.
The new tariffs on Canadian goods cover just 5% of our exports stateside. That hardly amounts to a war, a point I’ve been making for some time and one American officials, from Jamieson Greer to Scott Bessent, keep trying to hammer home.
“I think this is very unfortunate that Prime Minister Carney has turned this into a political shouting match. I mean, we’re not at war with Canada,” Bessent said on the margins of a G20 finance ministers meeting in Asheville, North Carolina.
The politics of perpetual conflict
Constantly portraying what is happening across our shared border as a war is great politics, especially on the Canadian side, but it doesn’t help us get where we need to be. In fact, it clouds the judgment of our politicians and officials, and whips much of the public into a frenzy where even the best deal would be rejected.
“There’s not like a better deal out there available for the Canadians,” Greer told Politico this week about the deal Carney walked away from.
Let’s be blunt: Carney did the right thing in walking away from a bad deal. Since then, he has played politics with the issue to help deliver byelection wins
The goal should be finding that better deal, not winning another news cycle.
“When the Americans stop doing memes, stop throwing shade, stop trying to be tough, and start being serious about having those discussions, we can have those discussions,” Carney said when asked Tuesday about getting back to the table.
Good luck getting the Americans to stop making memes about you. In fact, you just invited a whole lot more.
Strategy, not emotion
Professor Kam says any emotional satisfaction from fighting the Americans comes at a higher economic cost.
“Trade wars, they’re not won by making sure both sides bleed equally. There’s nothing to be gained there. Canada’s job is just to make sure that we bleed as little as possible,” Kam says.
Like me, Kam isn’t advocating that Canada do nothing in return, just that we be strategic about it to lessen any pain we inflict on ourselves. That’s a point that seems lost on most politicians.
Matching punch for punch makes for a great applause line. It even gets you votes.
It may also be a great way for a smaller economy to take on more damage than necessary.
Once again, politicians get the fight. Canadians get the bill.