Former Trudeau adviser recounts past Trump tariff war

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OTTAWA — “Here we go again.”

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That was the first thought to pop into the head of Simon Beauchemin, a former adviser on Canada-U.S. relations to Prime Minister Justin Trudeau during the first Donald Trump presidency, when the president-elect recently announced plans for 25 per cent tariffs on Canadian exports to the U.S.

Beauchemin was a key adviser to Trudeau during the last tariff war between Canada and the U.S. in 2018. At the time, Trump announced a 10 per cent tariff on Canadian aluminum and a 25 per cent levy on Canadian steel, launching both countries into a rare trade war that lasted roughly one year.

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“I definitely had a sense of déjà vu,” he said about when he saw Trump promise via social media to implement a 25 per cent tariff on all Canadian and Mexican goods on day one of his presidency.

Trump’s announcement this week sent a shiver down his spine as he remembered the frenetic and often erratic pace of dealing with the first Trump administration. It was not rare for Trump to make major policy announcements via social media, something he appears primed to resume when he is inaugurated as president on Jan. 20.

“It’s going to be a lot of the same” as during the first Trump presidency, Beauchemin warned.

But he also noted that Trump had promised much worse six years ago before settling on the aluminum and steel tariffs, and he suspects the president-elect is using the same playbook again.

“We’ve been here before. We’ve dealt with a Donald Trump administration before, and I think I actually view it a lot … more serenely than a lot of people,” noted Beauchemin, now a vice-president at CEO advisory firm Teneo.

“I’m quite optimistic that the two countries will be able to find a way to resolve most of these differences in a fashion that’s less radical than a lot of people believe,” he added.

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When Trump announced the levies in 2018, Beauchemin said the Trudeau government wasn’t caught by surprise because the president had been threatening a trade war for a while. Though still very impactful, he noted the steel and aluminum tariffs were far less bad than the 10 per cent “border adjustment tax” Trump had first threatened on all Canadian products.

The government was also ready to respond “dollar-for-dollar” too, leading to retaliatory tariffs of an equivalent amount ($16.6 billion) on American steel, aluminum and consumer goods that lasted roughly one year.

Beauchemin said that the government ensured the American steel and aluminum products chosen were ones that Canada had the capacity to manufacture or substitute easily.

The retaliatory Canadian tariffs were remarkable in their specificity, hitting products like soy sauce made in Wisconsin, Kentucky bourbon and ketchup from Pennsylvania.

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The first affected Paul Ryan, the former Republican Congressman from Wisconsin, the second hit Republican Senate leader Mitch McConnell and the third promised to hurt Pennsylvania-based Heinz in a key swing state.

Beauchemin says there is no doubt that, once again, Global Affairs Canada’s diplomats in the U.S. are busy building a new list of products that are important to key Republican lawmakers in case a new trade war begins.

“I’m sure a lot of processes will be much improved. They have, not just at GAC but also at (the Department of) Finance, probably have a much better understanding of the kind of pain points that exist in the American and Canadian economies,” he said.

“I do suspect that they are probably looking at ways in which they can further align with the United States and some of their key concerns,” he added, citing immigration and drug trafficking as examples of issues of note for Trump.

“It’s not lost on me that the Prime Minister has already announced dramatic reductions in immigration, even before Trump was re-elected.”

But will Trump go through with the promised 25 per cent tariffs in January? It’s anyone’s guess, says Beauchemin, though he believes it’s most likely Trump stands down or implements far less drastic measures come Jan. 20.

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While everyone in the Canadian government wondered during the first Trump administration if the president would “actually follow through” on some of his threats, now officials have “a much better understanding” of how he operates. That includes knowing Trump is likely to follow through with some threats, even if it hurts the U.S. economy as well.

“Despite the pressure he faced the first time around. I don’t think his view of tariffs ever changed. I think he still views them as a very effective negotiating tool, despite the pain it may cause to his own citizens,” Beauchemin said.

National Post
cnardi@postmedia.com

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