Buying Canadian – As Canada finds itself dragged into a trade war with its largest trading partner, the USA, both countries are slapping tariffs on billions of dollars goods crossing the border. At the same time, US President Donald Trump is busy insulting our country and our Prime Minister. The cry has gone out on social media for economic nationalism, that is “buying Canadian” products and services. But how easy is this to do?
The dynamic of Canada-US relations can be compared to a mouse sharing a rowboat with an elephant; the US economy is more than 10 times the size of Canada’s. So the elephant usually gets its way unless the mouse plays very smart…
Trump has Tweeted about Canada’s “large” trade surplus with the USA to justify initiating the trade war with tariffs on $16 billion worth of Canadian steel and aluminum. But like many of Trump’s bombastic claims, it is hard to find much evidence to corroborate this. According to Time, citing the Office of the United States Trade Representative, the USA had a $12.5 billion (USD) trade surplus for goods and services in 2016, exporting $320.1 billion to Canada and importing $307.6 billion.
After being hit with steel and aluminum tariffs, the Canadian government reciprocated with $16.6 billion worth of tariffs on a wide range of US imports. By coincidence, most of these imports come from “red states” that voted Republican in 2016 to elect Trump. Another coincidence is that the symbol of the Republican party is an elephant, so did the mouse win round 1?
Trade wars do not usually have winners and consumers on both sides of the border will soon feel the pain in terms of increased costs. Canadians should expect to start paying more for pickles, chocolate, greeting cards, mayonnaise, lawnmowers, motorboats, and a plethora of other US-made goods. Car prices are likely to increase in both countries.
For patriotic consumers, it is easy to choose Canadian products–which are clearly marked–in the grocery section of your food store. Ditto for choosing vacation destinations in Canada rather than in the USA; it is also easy to choose Canadian products in real estate, and perhaps in financial investments. Elsewhere in the economy, it can get messy in deciding if something is Canadian or American made.
Is French’s ketchup–which uses Canadian tomatoes–more Canadian than Heinz, which uses US tomatoes? Both companies are US-owned but French’s is manufactured in Ontario and Heinz closed their Ontario plant down. Or should we instead buy President’s Choice ketchup made by a Canadian company using Canadian tomatoes? Most Canadian-made processed food contains at least some ingredients from the USA, so it is difficult to go “Trump-free” there.
Canada and the US have interlinked economies with some 30,000 tractor trailers crossing the border each day. Much of this truck traffic is generated by the automobile industry where parts might cross and recross the border many times before being incorporated into a finished car rolling off the assembly line. This is because, today’s supply chains look like spiderwebs.
Buying Canadian is about making a statement, and It will come at a cost, but still needs to be done. Canada is not alone; Mexico, China, and Europe also have their own trade disputes now with the USA.
It is also strange that the elephant party, the Republicans, are now opposed to freer trade. When Trump became president, the party reversed its longstanding position in favour of freer trade. But with luck, Washington DC might be singing a different song on trade after the November midterm Congressional elections.