‘The U.S. can afford to have a long trade war with Canada, and Canada less so,’ says Argitis
Managing Director Theo Argitis spoke to the BBC about a potential tariff war between Canada and the United States.
The tariff threat has been met with deep unease by trade-dependent Canada. Roughly 75 per cent of its exports head south. In contrast, Canada accounts for a much smaller 17 per cent of U.S. exports.
"The U.S. can afford to have a long trade war with Canada, and Canada less so," Theo Argitis, managing director of the Ottawa-based public affairs firm Compass Rose Group, told the BBC.
"You have this asymmetry there that puts Canada in a very difficult negotiating position."
Trump had initially tied the tariffs to border security, saying they will be implemented until Canada and Mexico make moves to limit the flow of fentanyl and unlawful migrants into the U.S. …
At a call with reporters before the president's inauguration, Canada's energy minister Jonathan Wilkinson said there is uncertainty about Trump's ultimate objectives.
This "uncertainty and chaos" is often used by Trump as a negotiating strategy, Mr. Argitis noted.
"If he scares the hell out of us, he probably thinks that we're going to be ready to concede things. He may or may not be right there," he said.
Tariffs seem to be part of a larger policy position by Trump, a self-described "Tariff Man" who has also threatened levies on Chinese, European and Russian exports. …
Economists have warned that Canada's GDP could take a hit of up to 5.6 per cent if 25 per cent blanket U.S. tariffs are imposed on Canadian goods, depending on how, and whether, Canada retaliates.
Given this, Mr. Argitis said that Canada is focused primarily on avoiding the tariffs altogether, by pitching a stronger alliance with the U.S. on energy and national security.
Canada is also talking about diversifying trade to reduce its heavy reliance on the U.S. as a partner, but Mr. Argitis noted the country has struggled to do so in the past, primarily due to its close geographic and cultural proximity to the U.S.
"There's been no evidence that Canada is able to diversify at all, and so we're kind of stuck with option number one, which is to avoid a trade war at all costs," he said.
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