Trump’s ‘trade war’ is actually a wake-up call, Canada

Article content

The 30-day pause of a potential 25-per-cent American tariff on Canadian goods has just detonated in our national consciousness, shaking up our political class, industries, farmers and consumers alike. All quarters are calling this a “trade war” and crying foul over U.S. President Donald Trump’s clear intent to violate the U.S.-Mexica-Canada trade deal.

Article content

But here’s the uncomfortable truth: If this is a war, we’ve been losing it for decades — long before the first tariff shot was threatened, then holstered, by Trump. Rather than lose ourselves in anger at Washington, we should direct our frustration inward for the next 30 days. This so-called trade war is actually a jarring wake-up call to confront our longstanding economic atrophy.

Look back over the past four decades, and you’ll see a Canadian economy that has largely coasted. For a time, our fortunes rose along with those of the Americans’: their spending, their growth, their demand. We eagerly filled our trucks and pipelines, waved them south, and patted ourselves on the back for our “strong” exports.

But beneath the surface, our productivity growth has stagnated at an alarming rate. We hover at a meagre 0.8 per cent annual productivity increase over the past 20 years, while our dollar, which stood shoulder-to-shoulder with the greenback just 12 years ago, now limps along at 69 cents. Our GDP per capita has fallen off a cliff relative to the United States since 2013. That’s not a momentary dip; it’s a clear sign we’ve grown less competitive over the years.

Article content

Blaming the White House for this crisis misses the larger point: We’re in this predicament because our complacency has allowed our own economy to atrophy. When was the last time we took a hard look at the choke points hampering interprovincial trade? When have we truly streamlined energy infrastructure approvals without descending into partisan political skirmishes that stall everything for years? And how often do we shy away from frank discussions about rebuilding our military, which also happens to be a driver of innovation and manufacturing? We prefer to bet on the comfortable status quo. Well, that bet has just come due.

Make no mistake: If these tariffs materialize, they will hurt Canadian industries, and in the short term, the effects on all of us will be brutal. Everything from our lumber to our auto parts will suddenly face barriers that threaten layoffs and rising costs. Families and small businesses alike will feel the squeeze.

Better from an ally than an enemy

But if we needed a shove off the couch and out of our complacent economic slumber, and the acute motivation to fix the structural issues that plague our economy, it’s infinitely better that it comes from an ally than an enemy. The United States, for all its flaws, fundamentally requires our economic success. We’re their largest trading partner and share the most peaceful border on Earth, after all. Imagine instead if the wake-up call came from a genuine adversary — China or Russia — who might relish our economic downfall. This is not that.

Article content

Now we have an opportunity to fix what’s broken, and the catalyst to actually do it. We can start by breaking down the ludicrous interprovincial trade barriers that make it easier to ship goods from Ottawa to Buffalo than to British Columbia. We can streamline our environmental reviews so crucial energy projects don’t expire in regulatory purgatory. We can finally meet our defence spending commitments and stimulate an ecosystem of research and innovation with real commercial spin-offs.

Now we have an opportunity to fix what’s broken, and the catalyst to actually do it.

Our battered dollar should be a wake-up call that we need to invest in upskilling our workforce, modernizing our infrastructure and fostering homegrown entrepreneurship. And we need to diversify our trading partners beyond just the U.S., building stronger ties with Asia, Europe and emerging markets — because no single market should hold us over a barrel ever again.

So, no, this isn’t really a “trade war.” This is a long-overdue moment of clarity. We can keep calling it a trade war if that helps us vent our frustration, but that would be a useless way to spend the next 30 days.

Let’s seize the chance to refocus on what truly matters: an economy that stands on its own two feet, driven by innovation, productivity and courage. If that’s the direction these potential tariffs push us, then maybe — unpopular though it may be to say so — we should be grateful. Canadians have long prided themselves on resilience. Now is the time to prove it.

Matthew Lombardi is an instructor in the MBA program at York University’s Schulich School of Business.

Article content