“Buy America” means “build export capacity” for Canadians

In his inauguration speech Friday, Donald Trump didn’t tone down the anti-trade rhetoric.

“From this day forward, it’s going to be only America first, America first,” he said.

“Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families . . . Protection will lead to great prosperity and wealth . . . We will follow two simple rules: buy American and hire American.”

Those lines should send shivers down the spines of every Canadian farmer, because they seem to signal an utter abandonment of the notion of free trade and openness to trade that has underlain decades of Canada-U.S. trade. We have built 95 percent of our Western Canadian industry around the idea that Canada-U.S. trade would occur without harassment or manipulation. Enormous amounts of money have been invested on U.S.-focused production and transportation.

Trump’s sentiments are nothing new for him. It’s the same stuff he’s been saying for a couple of years. But to restate them as forcefully as he did in his inauguration speech shows he’s not backing away from an anti-trade agenda that many hoped he would leave behind as so much campaign hot air once he had both the nuclear codes and ability to break U.S. treaties and agreements.

Trump has said nothing specific about Canada-U.S. trade. His ire is mostly directed towards Mexico and China. But we are fools if we think cynical U.S. congressmen and interest groups won’t exploit his sentiments to harass or block Canadian exports of crops, livestock, meat and foods. There is new life for the disgraced concept of Country of Origin Labelling. The unthinkable concept of a border tax is now a real possibility. The Canadian limb of the integrated North American farm and food system might be on the verge of being amputated.

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Canadian farmers and agriculture are far too dependant on the U.S. market. For some, like southern Manitoba’s weanling hog producers, feeder barns in the U.S. are just part of an integrated industry. For others, such as oat growers, the U.S. is the buyer for their finished product. For food producers, the U.S. wants and pays well for premium products.

Canada is one of the world’s highest quality and most successful offshore exporters, but because the U.S. is right next door  and its consumers are willing to pay for quality, our exports are skewed to our southern neighbour. Why look farther?

That’s got to stop, somehow. The British are able to consider Brexit because less than half their exports go to the European Union. We have no such luxury. We also, probably, have no choice over whether to remain reliant on the U.S. or  instead focus on the global market. Trump might force us to look outwards rather more abruptly than we would like, and as a defensive measure rather than as a positive development.

Canada’s agriculture and food industries have done this for years already. Canada Pork International and the Canadian Beef Export Federation were both formed to reduce Canada’s reliance on the U.S. market and hedge our exposure to that market’s gyrations and politics. The Canadian Wheat Board did that for generations, its work now taken over by Canada’s global grain companies. The canola industry has been Asia-oriented from almost the birth of the crop.

But our offshore export capacities are still woefully inadequate when dealing with the possibility of a completely shut U.S. border. Even in our crops, livestock and meat that aren’t reliant on U.S. sales, suddenly losing that market could glut domestic supplies and cause logistical logjams on the West Coast. Just three days ago at Manitoba Ag Days in Brandon, German analyst Thomas Mielke was chiding Canada’s farm and food industry for allowing the country to have a lack of canola oil and meal exporting facilities on the West Coast.

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Prime Minister Justin Trudeau has been wise to describe pipelines as being infrastructure of national and nation-building importance and it looks like he’s willing to incur the wrath of some environmentalists and indigenous activists in order to get at least one major pipeline built.

Our country needs to treat export grain and meat infrastructure the same way. If Trump or some tricksy U.S. congressman finds a way to slam the door shut on some element of our farm exports, we need to be able to rail or fly out the disrupted exports to other markets.

So to Mr. Trump on his Inauguration Day: Best wishes and good luck!

And to those of us in Canada, hunker down and get ready for war.

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About the author

Ed White — Ed White has specialized in markets coverage since 2001 and has achieved the Derivatives Market Specialist (DMS) designation with the Canadian Securities Institute.

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  • Harold

    It makes you want to move to the United States doesn’t it Ed? Then again, if Prime Minister Justin Trudeau spoke in the same manor, you’d likely want to come back. Do you have any facts as to why Canada seems to always be caught with the “pants down?” It’s not like we have never had a Government, or have we? It is of interest to me to learn how one man can crumble Canada, the glorious strong and free. Are we intoxicated on Canada Day and remain that way? How long should we blame Trump for our own fragile government? We own our problems.

  • Concerned

    Well then its up to our government to continue with good negotiations with the USA. Trump NEVER said he would stop trading. We are a huge natural resource to the US and my friend I would rather trade with a strong US than with the asians. Personally speaking I wish our feds and provincial governments had the similar patriotism and dedication to its citizens. We need to allow President Trump a honeymoon period. We gave it to Trudeau and now we reap his ill decisions.

    • Harold

      This is a direct quote form President Trump.

      “We will seek friendship and good will with the nations of the world, but we do so with the understanding that it is the RIGHT of all Nations to put their own interests first. We do not seek to impose our way of life on anyone, but rather to let it shine as an example; we will shine for everyone to follow.”
      “NAFTA is over, and it WILL BE renegotiated in favor of REAL Free Trade”.

      ………..,,,,,And Trudeau has said what to the Canadian people? “Sunny way’s, my friends, Sunny ways”, and went on to describe it.

      The Tariffs imposed by the USA may force Canadians to create jobs to compete, provided that the multi-nationalists don’t sue the Canadian Government for doing so.(NAFTA) (TPP)
      Some Major corporations and the corresponding jobs are already returning to the United States. The Fake News (main stream) have not reported this in favor of maintaining public and global un-rest. The US Press Secretary has confirmed this, and has since put the mainstream media on Notice.

  • America’s trade deficit with Canada is a paltry $15B. Mexico? $60B. China? Closing in on $400B. Canada is going to be okay.