The first shots of the trade war between the United States and Canada have been fired.
Whether it escalates beyond the planned 25 per cent tariff into a wider economic war depends upon how genuinely serious President Donald Trump is about annexation, experts say.
Tariffs are one thing. While painful and destructive, experts agree duties alone would not crush the Canadian economy, nor the political establishment, into submission.
Prior to his inauguration, Trump threatened to use “economic force” to compel Canada to become the 51st state in the union.
That would require a whole different level of coercion than what was unleashed Saturday — the kind usually reserved for America’s enemies, as opposed to allies.
What does a full-blown economic war look like? Think sanctions, import and export restrictions, trade embargoes, theft of intellectual property.
While dismissing the impact of tariffs on American consumers, Trump made clear recently that he believes the U.S. can do without Canadian goods, including cars and milk.
He said if “you get rid of that artificially drawn line,” referring to the border, it would “also be much better for [U.S.] national security.”
It is the kind of shocking rhetoric that chills national security experts and historians to the bone, especially the ones steeped in the long-held American belief of that nation’s exceptionalism — a concept known as Manifest Destiny.
On Jan. 27, the Centre for International Governance Innovation (CIGI) at the University of Waterloo launched the Canada at Economic War project, which aims to identify and assess the kinds of threats the country faces short of a shooting war.
Raquel Garbers, a visiting fellow at CIGI from the Department of National Defence, said in general, economic attacks are the essential first phase of full-scale war between nations and Canada is a high-value target because of its mineral wealth, technological know-how and advanced economy.
Most of the project’s research has thus far focused on the often under-the-radar economic coercion China has directed toward Canada.
But its findings could also serve as a warning bell for the kind of screws the Trump administration could tighten if it was going to try to absorb Canada.
Garbers said we need to pay attention and watch for signs of escalation.
“There is no question that we’re being bullied” by the United States, she said. “Is it economic warfare? My answer to that is: not yet. But that’s not to say it can’t get there.”
In contrast, Garbers said China’s ability to carry out economic warfare is made possible in part by laws that force the entire society to effectively act as an arm of the Chinese military and intelligence services.
“I can’t imagine that we would see that happening in the United States,” she said.
The Trump administration, by its admission, sees tariffs and a trade war as enriching the U.S. treasury and a possible way to fully restructure the tax system in that country. But Garbers said Canada finds itself in the crosshairs because of its current, relative economic, political and social weaknesses.
High taxation, lacklustre productivity, decline in affordability, the current transition in federal leadership and challenges integrating the flood of new immigrants have not gone unnoticed in Washington.
“Trump, like all bullies, can smell weakness. And the sad story is that we are weak, right?” Garbers said.
But is there something deeper at work than the straightforward corporate-raider-on-steroids mentality that Trump embodies?
On Friday, he told reporters that America’s golden economic age encompassed the latter half of the 19th and the early 20th centuries, up to the First World War — a time when corporate monopolies held sway and the income inequality gap was wide.
