Canada can’t afford to sit out the trade war on our borders

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It doesn’t seem very long ago that much of the world was embracing the idea that freer trade would raise all boats. There was a sense of optimism and shared opportunity. A willingness to suspend mistrust and leave behind a zero-sum game mentality.

Unfortunately, that is not the world we live in right now. While some rules-based free trade arrangements are thriving, there are persistent and growing threats.

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For Canada, our economy depends heavily on the movement of goods in North America and the Canada-United States-Mexico Agreement (CUSMA) free trade agreement. A vast number of our jobs are hardwired to a trust-based set of undertakings these three countries have made to one another. Allowing it to be undermined would be a massive error that could do grave harm to the interests of millions of Canadian workers.

China has become the world’s second-biggest economy and the biggest disruptive influence in global trading dynamics. It’s an important market for Canadian resources, agriculture and other products and services. It makes good sense to strive for the best possible relationship with China.

But there are lines we should draw to protect our own interests.

There are thousands of well-paying Canadian jobs on the line. And the question of whether Canada will continue to have a strong manufacturing capacity. The choice we make now has huge consequences for the future.

The Chinese government has pumped hundreds of billions of dollars into creating huge overcapacity in steel, aluminum and electric vehicle (EV) production. This is a problem for everyone earning a living in these sectors around the world as China tries to push these artificially cheap products into the market.

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Allowing Chinese government-subsidized products free access to our market could easily wipe out our ability to have healthy steel, aluminum and EV sectors of our own.

Moreover, we would be tacitly accepting labour practices and environmental standards that we would not permit in our own country. And importing vehicles that are made and shipped with higher carbon emissions than vehicles we make here.

Both the U.S. and Mexico have decided to put tariffs on these products to defend their workers against efforts by China to dump subsidized products into North America.

Canada, for the moment, is considering its options.

We mustn’t take too long, and this shouldn’t be a very hard decision to make.

Canada must align our tariff policies on Chinese steel, aluminum and EVs with those of our trading partners, Mexico and the U.S. Not doing so will expose our economy to serious risks.

One is the risk that Chinese government-subsidized products could wipe out Canadian production and, with it, the well-paying jobs that many Canadians depend on.

The second is that our trading partners, the U.S. and Mexico, would be exposed to Chinese metals coming through Canada and eroding our North American steel, aluminum and automotive markets.

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Some may worry that any action we take to protect ourselves will result in Chinese retaliation against Canadian exports. But here’s the problem with that line of thinking: The Chinese government has massive resources that it is willing to use to undermine and unravel important parts of the economy of many countries, including Canada.

Doing nothing to protect ourselves from foreign state efforts that weaken our economic sovereignty would make Canada like the proverbial frog in the pan of water that heats slowly — by the time we notice what has happened and react, it might be too late.

It might not be Canada’s preference to put tariffs on Chinese products — our compass should generally be set in the direction of fair trade, more trade, freer trade — but we can’t afford to be naive or slow-footed when it comes to protecting our national and workers’ interests when another country is putting them at risk.

North American trading partners should stand together to protect our fully integrated economies through our value chains, our workers’ livelihoods and our ability to determine our economic future. Canadian steel and aluminum producers employ many thousands of Canadians in different parts of the country, jobs that pay well and that families and communities depend on. Our companies are leaders in reducing carbon emissions, which offers us strategic advantages for the longer term.

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Canadians believe the priority of the federal government should be to protect our workers from unfair Chinese government subsidies and ensure that Canada maintains a vital and responsible steel and aluminum sector for the long term.

Catherine Cobden is chief executive of the Canadian Steel Producers Association. Jean Simard is chief executive of the Aluminum Association of Canada.

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