Not for Sale Ever!

 

Not for Sale Ever!

"There are some places that are never for sale ... having met with the owners of Canada over the course of the campaign, it's not for sale. It won't be for sale ever." 

Newly-elected Canadian PM, Marc Carney, to Donald Trump

“Kalaallit Nunaat [the Greenlandic name] is ours… We don’t want to be Americans, nor Danes; We are Kalaallit. The Americans and their leader must understand that. We are not for sale and cannot simply be taken. Our future will be decided by us in Greenland.” Greenland’s Prime Minister, Múte Bourup Egede

I admit that I am a major hockey fan. I have season seats at the Crypto Arena (yes, I hate that name) to watch the Los Angeles NHL franchise (the Kings) with American, Swiss, Swedish, Russian, Slovenian and a lot of Canadian players, working together. With the tensions with Russia and Trump’s outlandish claim that Canada should be the 51st state and that the border separating us is artificial (aren’t most borders artificial?), I wonder how those players living and playing in the United States feel about effectively playing for an “enemy” nation. I know how I feel: embarrassed and angry, over Canada, an ally, a friendly, welcoming nation and a great trading partner. Trump wants their natural resources, sounding a familiar refrain over his desire to buy/annex Greenland, a Danish territory.

Greenland’s Prime Minister, Múte Bourup Egede, presides over a vast land, a Danish territory, with under 60,000 people. But Donald Trump, apparently using spies to undermine local opposition, is enjoying his aspirational role as a neo-colonialist and sees that frozen land as essential for our national security. Could it be to perfect control over the opening of the Northwest Passage – a shortcut for shipping as the Arctic melts? Or is it the trillions of gallons of oil, a comparable stash of natural gas (drill-baby-drill?) and a massive repository of much-cherished rare earths (did-baby-dig?). Short of invasion, which I doubt Congress would ever permit assuming the United States remains a representative democracy, both Greenland and Canada are likely to remain very much independent of the United States.

But since Canada is on the front burner in the heated tariff war, and because Canadian PM, an elected liberal who owes his victory to the fierce opposition of his entire constituency to Trump’s threats and entreaties, met with Trump in the oval office on May 6th, today’s blog will focus on that embroglio. It is clear that both Canada and the United States need to reach a modus vivendi, but it is difficult to understand how Canada’s supplying American consumers (business and otherwise) products and natural resources that we wanted at affordable prices constitutes our being “ripping off for decades,” a completely unsupportable Trump claim.

Looking our aggregate purchase price (the “trade deficit”), without looking at the value of the goods, received seems unbalanced and meaningless. Further, focusing on goods versus goods and services also seems fairly lopsided, when the United States is primarily a service economy with only strong agricultural and industrial/military manufactures as hard good exports. The proper analysis is “trade balance” in which the money expended in buying foreign goods is balanced by the value of those goods purchased. And regardless of what Trump claims, there is no evidence of a trade imbalance under that metric. Further, the manufactures Trump seeks to reshore are incapable of being produced at remotely a competitive price. We would be wasting money building factories, which take years to build and put online anyway, to make the TV screens, plastic toys and smart phones that will NEVER be competitively priced.

But what was fascinating about the Trump/Carney meeting is: 1. Carney so outclassed Trump in a mild and subtle way that it was a profound embarrassment to look at the stumbling Trump searching for a response and 2. they did not even try to lay the groundwork for a revised trade agreement. I must say it is hard to balance Carney’s expertise, a Harvard undergrad in economics (summa cum laude), a Doctor of Philosophy from Oxford (economics), 13 years at Goldman Sachs, Governor of the Bank of Canada, Governor of the Bank of England, etc., etc. before becoming Prime Minister of… against Trump, a Wharton undergraduate, who never revealed his grades there. My guess he did not fare well in economics.

To this day, despite an almost uniform understanding by most credible economists, Trump has refused to acknowledge to anyone that tariffs are effective a tax paid by importers and shared by consumers. Even Treasury Secretary Scott Bessent would not provide a clear answer to a congressman who asked in a committee hearing, “Who pays the tariff?” To the rest of the world, it is obvious. As the container traffic at all the Los Angeles harbors (the main ports for Chinese imports) is dropping like a stone, as consumer prices are already rising in anticipation of an ultimate tariff resolution, it is obvious to most people.

To make matter more complex, there is this trade agreement negotiated by Trump 1.0, that Trump touted as the greatest trade agreement ever, that already exists. “The Agreement between the United States of America, the United Mexican States, and Canada (USMCA) is a free trade agreement among the United States, Mexico, and Canada, in effect from July 1, 2020. It replaced the North American Free Trade Agreement (NAFTA) implemented in 1994, and is sometimes characterized as ‘NAFTA 2.0’, or ‘New NAFTA’, since it largely maintains or updates the provisions of its predecessor.” Wikipedia. So, to abrogate that treaty to create a new installment with Canada probably requires Mexico’s assent. That Trump has unilaterally abrogated this and many more treaties, many of which have been ratified by Congress, is another metric of Trump’s ignoring the other “co-equal” branches of constitutional governance.

And there’s this other detail: Trump only has a right to use unilateral power to set tariffs only in an “emergency.” But since Trump is setting tariffs for the entire world, what kind of suddenly new global emergency is there? After all, the tariffs are now global. California has challenged Trump in recent litigation: “The lawsuit argues that President Trump lacks the authority to unilaterally impose tariffs against Mexico, China, and Canada or create an across-the-board 10% tariff. The President’s use of the International Economic Emergency Powers Act (IEEPA) to enact tariffs is unlawful and unprecedented.

“The IEEPA gives the President authority to take certain actions if he declares a national emergency in response to a foreign national security, foreign policy, or economic threat. The law, which was enacted by Congress in 1977, specifies many different actions the President can take, but tariffs aren’t one of them. In fact, this is the first time a president has attempted to rely on this law to impose tariffs.” Gov. Gavin Newsom Newsletter, April 16th.

I think Trump just might like to lose that suit. It would give two him immediate benefits: 1. A way out of his disastrous tariff policy decision that is already a failure. And 2. It would give him another reason to rail against California and liberals in general. Whatever is said and done, Canada looks noble, and its representation is exceptional. By contrast, the US position is absurd, and Trump plays the fool.

I’m Peter Dekom, and while many believe we should just let Trump and his band of merry MAGA congresspeople continue to destroy their own credibility with voters, I would prefer that we stop that effort and save the nation from economic harm that may well be irreversible.