By Michael O’Neill
Former President Trump is now President-elect Trump, and he has big plans for America. Mr Trump knows that a new broom sweeps clean, so he bought a high-tech Elon-Vivek model.
Elon Musk and Vivek Ramaswamy are the co-heads of the new Department of Government Efficiency, which sounds like something out of Harry Potter. They are tasked with identifying and recommending drastic reforms to streamline federal operations. The new departments acronym, DOGE, (as in dodgy) is Musk’s way of mocking traditional bureaucrats.
America First
Trump’s new broom also includes sweeping changes for the rest of the world as well. It’s America first and to hell with the rest of the world.
That has Ukraine President Volodymyr Zelenskyy shaking in his boots. Trump bragged he could end the war that Russia instigated within 24 hours of trying, and also claims to be in regular contact with Vladimir Putin. Mr Zelenskyy fears that the price for peace will be Ukraine ceding the land that is currently occupied by Russian troops.
Taiwanese residents are not super-pleased over the prospect of paying protection money to the US. Don Corleone, a famed but fictional mafia don was a New Yorker who built substantial wealth by making New York shop keepers and restaurants pay a fee to protect themselves from, well him. Trump is also a Don, and a New Yorker. What’s a few shopkeepers compared to an entire country? To be fair, it is not unreasonable to ask Taiwan for money as the military might of Uncle Sam is the only thing keeping Xi Jinping from annexing them.
The Iran theocracy is as nervous as a Chicken Little visiting Colonel Sanders on Super Bowl Sunday. The ruling Shia clergy have destabilized the middle east as it actively (and through proxies) waged war against Israel in a stated desire to rid the planet of the State of Israel. Donald Trump bears similar animosity towards the Iran clergy and he carries a much bigger stick.
Made In America
Donald Trump believes globalization is harmful to America. He is conveniently forgetting (or is he becoming Biden?) that it was the USA that championed globalization and turned China into the world’s factory. But that was then, and this is now. China boasted an $81.71 billion trade surplus in October compared to the US which posted a deficit of $64.3 billion. That suggests China is prospering on the backs of Americans which is why Trump wants to slap China imports with a 100% tariff. But why stop there?
Trump said he would impose a flat 10% tariff across the board on all imports into the US. Trade Agreements be damned. He wants to charge a 25% tariff on all goods imported from Mexico despite the existence of the US Mexico Canada (USMC) agreement on trade. But not if Trudeau can help it.
“But we’re friends, right?”
Prime Minister Justin Trudeau was at his smarmy best when he took to Twitter in an attempt to be one of the first world leaders to congratulate Trump on winning the US election. He tweeted “The friendship between Canada and the U.S. is the envy of the world. I know President Trump and I will work together to create more opportunity, prosperity, and security for both of our nations.”
However, Donald Trump friendships are rather fluid. Ask his two ex-wives, three former girlfriends, and at least one extremely well-compensated escort, Stormy Daniels. And if that’s not enough, ask any one of the twenty-four former Trump allies that went from being “the best, the greatest” to incompetents. That list includes former Vice President Mike Pence, two Secretary’s of Defence, his first Secretary of State and the list goes on, and on.
Canada is already on shaky ground with Trump, considering the former president tweeted that Trudeau was a “far left lunatic.”
The Tarriff Effect
Trump’s policies, focused on American self-interest, creates multiple risks for the global economy and next-door neighbor Canada, is not insulated from the fall-out. We may be America’s second-largest trading partner (Mexico usurped our first ranking in 2019) and sure, there is the USMC agreement on trade, but that will not offer any protection from the new administration.
Canadian industries are heavily reliant on cross-border trade. Canada exports about $20 billion of aluminum, iron and steel products each year. Autos and auto parts count for another $51.0 billion. Those are the good paying jobs that Trump wants to bring back home. The most significant Canadian export to the US is energy. Crude oil exports account for $124 billion of the $172 billion in energy exports.
The US reliance on Canadian energy exports should give Canadian officials some bargaining power and many analysts believe that will insulate the Great White North from Trump tariffs. That is even more true because many US refineries are configured for the heavy Canadian crude, making it difficult to find an alternative supply. At least, that is the conventional wisdom. Unfortunately, Trump is not conventional. He plans to substantially boost American oil and gas production saying “Drill, baby, drill.” Trump plans to scrap the Biden administration’s climate policy while abolishing policies and regulations that do not benefit the fossil fuel industry. He promised “If you make doughnuts, if you make cars — whatever you make, energy is a big deal, and we’re going to get that — it’s my ambition to get your energy bill within 12 months down 50 percent.”
Meanwhile, Canada’s environmental zealot, Steven Guilbeault, plans to pursue his personal agenda to fight climate change without regard to how his plan reduces Canadian competitiveness world-wide and its detrimental impact on the domestic economy. That plan includes new regulations on an emissions cap plan which the industry says will deter investment and lead to widespread job losses.
In the end, President-elect Trump, equipped with a high-tech Elon-Vivek broom, and Canada’s anti-energy polices are threatening to sweep the Canadian dollar into the dustbin of history.
