Negotiating with the Trump Administration: A First-hand Perspective
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Eight years after the first “Trumpian” era, the start of 2025 sounds familiar: tonitruous statements on social media that set the tone for the coming years, disrupting international trade in a time of global instability and economic uncertainty. It is already clear that the US consumers and businesses would suffer the most from the tariffs proposed by Donald Trump.
During the last Trump presidency, the final result ended up being more benign than what was initially feared. Ultimately, both Canada and the United States continued to prosper together.
Fast forward to today. Without being complacent, political actors have so far kept their calm for the most part as many believe that eight years later the same scenario could unfold. Many US analysts and commentators were quick to point out that tariffs often end up hurting the importer country more than the exporter by increasing prices and inflation, one of the main reasons US voters supported Donald Trump.
The President-elect has sent an “advance warning” that prices can be expected to increase after his trade policies are implemented. How this can be handled politically remains to be seen. The early appointments made by the Trump administration reflect a stronger representation of the “MAGA movement” within its ranks, which may lead to more difficult, less pragmatic negotiations than during Donald Trump’s first stint in the White House.
Canada is a major buyer of US exports: in more than 30 states Canada is the main destination of exports. Canada buys more American exports than what the US exports to Denmark, France, Germany, Italy, Spain and the UK combined according to the US International Trade Administration. Canadian softwood lumber is used to build American homes and our metals (steel and aluminum) are key to manufacture cars and many defense-related products.
Paradoxically, unjustified attacks from Donald Trump and grotesque allusions to annexation projects are putting pressure on the Canadian dollar, thus making our exports more attractive to the Americans.
Lessons from CUSMA
During the first Trump administration, it first took Canada some time to act as a coherent force with the federal government, provinces and industry. The Council of the Federation (COF), established in 2003 by my predecessor Jean Charest, proved particularly useful.
Building on this experience, the COF was this time quicker to react to the new threats of a Trump 2.0 presidency. Premier Ford, its current chair, quickly asked for an emergency meeting with the Prime Minister and rallied his colleagues around the common objective of fighting this ill-inspired trade policy that threatens not only one but the three countries that constitute North America.
While there are differences between Mexico and Canada on issues related to migrants and fentanyl traffic, we should work to keep this country in the discussions rather than on the sidelines. A united Mexico-Canada duo is an important counterweight to the American giant. Weakening this duo will not do us any good.
In 2016-2017, I had cordial conversations with US federal and state officials. I felt that most of my interlocutors understood the risks of widespread tariffs for their own country. However, there was more tension when it came to supply management. Our dairy farmers had to adapt to increased imports from the US, but the system remained largely intact.
Canada’s size, economic diversity and constitutional distribution of powers naturally lead our provinces and regions to concentrate on issues that affect them more. During the first Trump presidency, this concretely meant that Quebec put a lot of time and efforts on softwood lumber, metals, hydroelectricity and supply management while Ontario insisted on the auto industry and other manufacturing sectors. Leveraging its established relationships with US states, Western Canada was a strong advocate for its highly strategic energy sector.
There was an almost continuous flow of visits to Washington and various states from ministers and Premiers, including myself, during the CUSMA negotiations. This was done in coordination with the federal government, the Canadian embassy and our vast network of delegations within the United States. Intense diplomatic activity at all levels certainly helped. However, what ultimately proved to be decisive was the internal political pressure applied by American states and stakeholders as it highlighted the consequences of protectionism on US businesses and citizens. This type of argument is more likely to succeed than rhyming off a list of impacts of US protectionism for Canada. These allies need to be mobilized again.
Positioning Canada for Success
The best way for our country to respond strategically to this renewed Trump challenge is to combine many of the same ingredients we used last time:
- A continental perspective that could also be useful in other matters such as eventual adjustments for carbon content at the border.
- A well-planned and coordinated action by the federal government, provinces, regions and industry leaders.
- A focus on defense and security.
- A clear willingness to engage in targeted retaliatory actions specifically directed at sectors important for some influential American states.
- Forging an alliance with our many friends and allies within the US whose interests align with ours.
Striking the right tone is also very important. Rather than caving in to intimidation, we must give a strong and unapologetic answer to “Make America Great Again”: “Canada First!”.