A rchive Date
[ 28-03-2025 ]
Category
[ International Relations ]
sub-Categoy
[ Canada ]
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[https://driving.ca/column/motor-mouth/trump-double-crosses-canada-tariffs-trade-war
Motor Mouth: How Trump double-crossed Canada on car tariffs
This latest volley in our ongoing trade war with the United States proves we’re negotiating with the wrong people
Author of the article: David Booth
Published Mar 28, 2025
An appeaser is one who feeds a crocodile—hoping it will eat him last —WINSTON CHURCHILL
So, now we know. After weeks of posturing, countless “delegations” of trade representatives pleading Canada’s case with Trump “advisors” - and even a little tough talk from both the prime minister and outspoken Ontario Premier Doug Ford - the tariff to be applied on Canadian-built cars is what it was always going to be: 25%.
I’ll devote little more time to talking about the ramifications of what that kind of penalty will do to the Canadian auto industry - anyone who’s run a lemonade stand can understand how such a levy can impact a business - other than to re-iterate that, if these tariffs are short-term, our native auto industry will be gravely hurt, and that if they are to last the entirety of President Trump’s term, there will be no Canadian auto industry. None. Nada. Rien.
What I will, however, discuss is how we got here, why we’re in such a pickle, and why, despite Doug Ford’s contention yesterday that he had a comforting post-tariff-announcement conversation with the U.S. Secretary of Commerce, Howard Lutnick is the last person in the American government he should be listening to.
The Promise
You might remember that, a few weeks ago, Ford threatened a 25% tariff on all electricity exported from Ontario to various northeastern states. Now, never mind that Ford’s retaliation was not nearly as venomous as it sounded - most Ontario electricity sent to the U.S. is used as reserve supply - it immediately garnered Ontario’s tough-talking premier a tête-à-tête with America’s top tariff dog, Secretary of Commerce Howard Lutnick.
Lutnick’s message, according to many insiders familiar with the discussion, was simple and direct: if you’ll just tone down the rhetoric and stop upsetting the five-year-old currently residing in our White House, we’ll get you a good deal. Or, if not exactly a good deal, one you can at least live with. It even - and again, this is according to reports - had the smell of “free trade,” only in this case, it was based on equality of tariffs, the American position long being that many countries “taxed” its exports more than the U.S. did theirs.
The idea Lutnick is reported to have floated was “reciprocity,” essentially a protocol whereby America would levy individual countries with the exact same tariffs as it was levied when exporting the same products. American cars exported to the E.U., for instance, are currently liable for a 10% tariff, while a Mercedes-Benz enters the United States under the 2.5% protocol for most-favoured nations. Essentially, the plan intimated was a tit-for-tat tariff, childish perhaps in its basic premise, but at least quasi-fair in its application.
And, at first blush, such an agreement would have been good for Canada. Or, at least good for the Canadian auto industry. Under the USMCA rules, Canada imposes no tariffs on American cars. Essentially, as long as our products met the USMCA’s content rules - which Trump’s advisors say he wants to renegotiate - there would remain no tariffs on anything car-related between our two countries. This is essentially the “carve-out” some media have reported was on the table for the Canadian auto industry (this last should not be mistaken for U.S. tariff rule 9802, which allows for some ‘credit’ for parts that were originally made in the U.S. but require additional manipulation in Canada or Mexico).
Reciprocity: Part Deux
Obviously, that is not what happened. One of the problems with strict reciprocity, experts say, is that it is simply too complicated to manage. Tracking the appropriate tariffs for thousands of different products from tens, possibly even hundreds, of different countries would be a task far beyond what any administration - especially one DOGE-ing its employees to the unemployment line - could handle. Indeed, the best article I have read on our recent tariff travails details not only how complicated the process would be, but how one admittedly brilliant entrepreneur stands to make billions condensing that complication into something even government bureaucrats can understand.
Nonetheless, a better plan, say some experts, is to simply figure out an overall average tariff disparity for all the products imported from each country, and for the Yanks to then apply one overall average tariff in response. It’s simple, manageable, and easily explained to the MAGA base. So simple is it, in fact, that some claim Trump’s recent announcement of universal, across-the-board tariffs on anything automotive is simply such an average reciprocity theory writ especially large.
And indeed, when all this latest tempest-in-a-teapot settles down, I suspect that that will be Lutnick’s “what I meant was” excuse for his empty promises to Doug Ford et al. Expect to also hear that such average reciprocity also includes the “fact” that America has been “subsidizing” our NATO budget shortfalls; the unfairness of our GST to American exporters; and more. Finally, expect to hear Trump himself soon trumpet this additional unfairness as justification for his 25% auto tariffs.
I call bullshit. For one thing, while all the Canadian potentates who’ve spent much of the last month south of the border assumed that Lutnick had Trump’s ear, the truth of the matter is that while he could indeed speak to the president, he did not speak for him. For another, the 45th - and now 47th - president has about as much understanding of tariffs as a fifth-grader. He doesn’t understand the inflationary consequences of protectionism any more than he understands the complications that complete reciprocity would entail.
He will, however, parrot a few lines as justification for his latest announcement. Don’t believe it. The tariffs were always going to be 25%. The only reason he’s been pretending to waffle these last few weeks is that he liked having his ring kissed. Indeed, as I have long said, while Lutnick might be the titular Secretary of Trade, the real tariff-whisperer is Stephen Miran, chair of the Council of Economic Advisers, whose theory is that, if you’re forceful enough with your application of tariffs - and threaten sufficiently robust retaliation for counter-tariffs - currency-exchange devaluation will result in the desired emasculation of the implicated economies without raising the price of consumer products in America.
That’s a theory Trump can understand - and, more importantly, memorize - so, despite Lutnick’s posturing, that’s the program the president is going with. Indeed, Trump’s subsequent threat of “far larger” tariffs should the E.U. and Canada unite to do “economic harm to the USA” is right out of the Miran playbook.
The Blame Game
As Motor Mouth has detailed previously, American dissatisfaction with its trade partners, more specifically with the USMCA trade agreement that governs auto imports and exports between Canada, Mexico, and the U.S., is not without justification. While it appears Canadian auto suppliers have not contravened USMCA regulations, our own Stephen Beatty has detailed how some Mexican automakers and auto parts manufacturers have chosen to flout its content and wage rules. For instance, according to a recent report by the Wall Street Journal, BMW’s Mexican-built 3 Series sedan does not meet USMCA regs, the automaker seemingly choosing immediate profit over long-term viability.
Considering what’s happened of late, this has to be the stupidest kind of short-termism I have heard in my 40 or so years of reporting on the auto industry. Not only is it truly flabbergasting that automakers would cut such corners for such seemingly paltry gain, but to not understand the ramifications of what it would mean during a second Trump presidency is possibly the worst management decision made since Volkswagen decided that, hey, nobody will find out about our diesel-emissions defeat devices.
Nor are we blameless for our lack of negotiating power. For nigh on half a century now - and thanks to especially egregious mistreatment by Trudeaus père et fils - we have treated oil like dirty money, confident in the fact Alberta had no ability to retaliate against Ottawa’s heavy-handedness. Fast-forward the 45 years since the original NEP (National Energy Program) was signed, and it turns out Alberta’s heavy crude is potentially our best retaliatory weapon against Trump’s tariffs.
Except, of course, that we’ve alienated the West so thoroughly that they want nothing to do with helping Canada out of this mess. Hell, even in this moment of crisis, we can’t agree to build pipelines so Albertan oil can be exported overseas, or even sold in Eastern Canada rather than the U.S.
No wonder, then, that as I pen this column, Premier Danielle Smith is down in the States promoting the importance of Albertan oil to Americans and steadfastly refusing to go along with any Canadian export tariffs on energy. And while such tariffs are, in fact, a federal jurisdiction, any application of such exit levies might lead to an internal political instability more problematic than anything President Trump has planned for us. I’m pretty sure - actually, I’m damned sure - this is what Poet Laureate Robert Southey meant when he said “chickens always come home to roost.”
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