U.S. trade mess is Canada’s chance to gain advantage

So, what now?

With the U.S. midterm elections done, we have more certainty about who has the power and influence in Washington for the next two years.

Unfortunately, that doesn’t provide a lot of certainty for trade.

Will the U.S. approve NAFTA2?

Will the U.S. attempt to get back into the new Trans-Pacific Partnership?

Most important of all, will the United States escalate or resolve its trade war with China?

All the answers to these questions have major impacts for Canadian agricultural trade, but no answers can be known for months or years.

That, however, is its own form of certainty.

We know one thing clearly: Canada has gained a major advantage over the U.S. in some markets and that will last for months or years, until those questions are answered.

Canada’s exporters should be, and already are, banging down buyers’ doors in Japan, China, Mexico and Europe. Anywhere we go head to head with exports against our American neighbours, we should be locking down our possibly temporary advantages to maximum gain.

Canadian farm organizations, industries and politicians of all stripes worked hard to get trade agreements with the European Union and the Asia-Pacific region, have stayed friends with Mexico and have rekindled stalled relations with China.

The U.S. worked hard, made similar deals, saw them stall, fail or be thrown out, alienated Mexico and has begun a trade war with China. It’s a pretty different situation.

This is Canadian agriculture’s opportunity. That’s why I think everybody at an ag export promotion event I covered last week seemed so cheery and optimistic.

Canada has a years-long lead on the U.S. with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Even if the Democrats agree to provide President Donald Trump with Trade Promotion Authority, nothing’s going to happen fast. For years Canada will be able to sell pork, beef and grains to countries such as Japan with lower and falling tariffs. Even if the U.S. makes a deal, it will take many years to catch up with Canada’s preferential treatment, and then it will have to try to regain market share it will no doubt be losing.

The U.S.-China trade war could resolve tomorrow, but almost nobody thinks it will. These are two prideful nations and leaders who aren’t going to want to be seen backing down. There is tremendous damage being done to U.S. agricultural exports and market access. That’s good for Canadian ag exporters, as uncomfortable as that is to say out loud.

More than just lost markets for now, the Trumpian belligerency toward China has made China come off its lukewarm and standoffish approach to Canada and suddenly express a much greater willingness to talk about boosting two-way trade. China is unsettled by its reliance on the U.S., and so is Canada. That’s a match made in trade heaven.

The NAFTA mess is resolving, but Canada made new sales to China during the operatic renegotiations and some of those will continue as long as the U.S. steel and aluminum tariffs linger and as new relationships, hopefully, blossom.

And even though Canada’s free trade deal with the European Union is a bit of a disappointment at this point, it’s much better than anything the U.S. has. Getting value out of it is a puzzle to solve, but it’s certainly better than anything the Americans are likely to have for many, many years.

U.S. trade policy is a mess. Its government is divided. Its president isn’t the deal-maker he claims to be.

This is Canadian agriculture’s chance and it needs to take it.

About the author

Comments

Markets at a glance

Copyright © 2018. All market data is provided by Barchart Market Data Solutions. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

explore

Stories from our other publications