Gary Mar, chief executive officer of the Canada West Foundation, did not mince words when he shared his thoughts on freshly inaugurated U.S. president Donald Trump during a recent presentation at the Farming Smarter Conference and Trade Show in Lethbridge.
Mar has attended a few presidential inaugurations, including Barack Obama and Trump, and came away with a blunt assertion when surveying the international trade landscape in light of the president’s latest tariff actions.
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“I’ve come to this conclusion the president doesn’t care about voters. Voters have served their purpose; he is not going to rely on them again,” said Mar.
“He is instead interested in doing things, frankly, that personally enrich him.”
From the time Trump landed in New Orleans for the recent Super Bowl to actually attending the event, Trump announced steel and aluminium tariffs, catching everyone off guard. Such a swift and condensed timeline for such a huge trade announcement certainly could have ripple effects with the stock market.
“If you only had 30 minutes advance notice of what he was going to say, you would of gone long on buying stocks that were steel and aluminum manufacturers in the United States and you might of gone short on Canadian aluminum and steel manufactures. Of all the steel and aluminum used in the United States, we are by far the largest exporters of those two products to the United States,” said Mar, adding one could also look at industries heavily reliant on those raw products when playing the stock market.
“You might have shorted companies like Boeing, which use a lot of aluminum in making aircrafts, or some of the defence manufacturers, fighter jets using a lot of aluminum. I think Mr. Trump, somewhere in the Trump universe of companies, someone probably gets a few minutes head start notice on what he is going to say Day 1 and takes it back Day 2, and you go long or short, depending if it’s the currency markets or steel or whether it’s agricultural products.”
Mar compared the current American political landscape to the days of former U.S. president Ronald Reagan in the 1980s, whose relationship with Canadian prime minister Brian Mulroney was a lot more amicable.
Reagan made numerous speeches talking about the importance of its northern neighbours to the United States.
“Ronald Reagan would not recognize today’s America, I don’t think,” said Mar, adding the differences are two-fold, the first being a culture of achievement that has been replaced by a culture of grievance.
“Trump is not the reason for this, he is a symptom of this. There were all kinds of people left out. The rising tides were only lifting the yachts. As a result of that, they voted for Donald Trump, who they felt was an outsider who was going to change things. He hasn’t, in my view; he has made it worse.”
Another problem in the era of social media is the spectre of people no longer working from common facts. Everyone has their own version of facts and their own brand of messages that they want to hear.
“No one listens to Walter Cronkite in the evening news, for those who are old enough to remember him, or Peter Jennings or any of those guys. Instead, people are in their own silos, listening to what they think is the truth,” said Mar, adding those “truths” are impaired by short attention spans.
“That is sucked up by the tech bros who were sitting in the front row of the inauguration, along with Dana White of UFC.”
All the provincial premiers were in Washington, D.C., for the Council of Federation meeting earlier this month. Mar hopes they saw Trump’s apathy about voters and talked to the legislators who are seeking re-election. He knows a thing or two about that, having served as an MLA in Alberta from 1993 to 2007 and also worked in a Canadian embassy.
He used an ag example when hoping that Canadian politicians approach someone like Republican senator Chuck Grassley of Iowa to try and counteract the proposed tariffs. The president’s strategy in his book Trump: The Art of the Deal was that you can ask for the sun, the moon and the stars and settle only for the moon — the moon metaphor being appointed judges.
As farmers prepare to plant their corn in Iowa, they will be concerned about a 25 per cent tariff on potash, which would increase their input costs. Given Grassley is chair of the judiciary committee who vets all the judges before they are appointed, the Iowa senator could leverage that position for his constituents.
“Senator Grassley and other Republicans who are on that judiciary committee should say, ‘we don’t like this’ and slow walk or stall or even halt some of the appointments you want to put through the judiciary committee unless you take off these tariffs on the important inputs farmers need in the state of Iowa.”
Despite the tariff gauntlet being thrown down by Canada’s largest trade partner, Mar is confident Canada can be an important player in the world, but it must remain resilient in accessing new markets and surviving the potentially handicapped American market in what he termed a VUCA environment (volatile/uncertain/complex/ambiguous).
“I think Canadian agriculture has been resilient in the past because the fundamental thing you have is essential for human beings — food,” said Mar, adding Canada is one of the few nations in the world that is a net food exporter as well as being a leader in the other three big Fs: fuel, forestry and fertilizer.
“The world has demand for all that we produce. We are leaders in these areas.”
Mar advised against taking a tit for tat approach by implementing counter tariffs against the United States. in a war of attrition, the United States has bigger sticks and more of them. Instead, it should opt for diplomacy in industries that share the same interests.
The U.S. is in a position to offer much more in compensation to producers than Canada can if counter tariffs are issued.
Mar said 35 states describe Canada as their No. 1 export destination, 22 of those being Republican red states. Today, one out of every five barrels of oil used in the U.S. is from Alberta, he added.
“Governors run economies. People who are in the House of Representatives and the Senate in the United States don’t actually run economies, but governors do,” said Mar, who hoped this is where the diplomacy is voiced on a more grassroots level and then passed onto the president.
Trump’s economic protectionist offensive has swelled Canadian pride, with many coming together in a unified message to the U.S. from a variety of different political views.
“If there is anything that is a silver lining from what Donald Trump is doing, maybe 20 years from now we will be thanking him for he nationalism he has created in Canada,” Mar said.
“I have heard more about dealing with interprovincial trade barriers, the military, domestic industrial capacity, lowering taxes and energy exports. I’ve heard more about that in the last four weeks than I have heard in the previous 10 years,” said Mar.
They say those who do not learn history are doomed to repeat it, and broad tariffs have had a history of not ending well in recent U.S. history, including Trump’s first presidency term from 2017-2011.
Canada is responsible for approximately one-fifth of all U.S. steel imports — approximately $8 to $9 billion last year — and imports more aluminum into the U.S. than every other country combined.
Trump slapped a 25 per cent tax on steel imports and 10 per cent on aluminum in March 2018, which was extended to Canada that June, driving up the cost of automobiles, soft drinks, beer and appliances.
High costs of American steel production and a lack of overall domestic production capacity to fulfil demand eventually prompted Trump to remove the tariff on Canadian steel, it’s No. 1 supplier, in May 2019
“I think self-interest will lead to self correction,” he said.
“When (when former U.S. president Richard) Nixon put tariffs in in 1971, they didn’t last long because of the immediate impact on the cost to Americans and he got a lot of pressure. I think it was about six months. The U.S. has some tolerance for what the president is doing, but it is not sustainable in the long run. I think there will be a self correction.”
A case could also be made that Trump is overplaying his hand in internal capacities for markets.
‘“Currently, I think about 25 per cent of the lumber used in the United States is from Canada. Donald Trump says we don’t need your lumber, we have beautiful forests in Georgia, which are planted trees. It’s a kind of tree called a southern yellow pine. The problem with SYP is that it has a lot of rosin in it and it’s soft. Mills don’t like using it because the sap gums up their sawing operations,” said Mar.
“It’s not grown in a cold environment, where you get longer fibres. So, the Douglas fir that comes from British Columbia or Alberta would be a much superior product to deal with.”
Lumber is a big input cost in home building, and with the fires that occurred in California, a lot of rebuilding will have to be done.
“The president himself has said he has the ambition to build 1.5 million homes. I don’t think you can do that without Canadian lumber because your transportation costs will make it prohibitive and you don’t have the fantastic forest you think you have,” said Mar.
“By the way, you chase out all the undocumented Americans, nobody is going to be there to swing a hammer anyway. I’ve talked to people in California who have said there is no one picking our fruit because they are undocumented Americans and they are scared to show up. “
Mar said his organization can help producer groups with communication and be a messenger on trade policy.
