Update: March 6
Trump is treating the economies of Canada, Mexico and the US the way a cat “teases” a captured mouse. He is playing with the future and livelihoods of 500 million people.
On March 4, tariffs on all imports from Mexico and Canada were hit with 25 percent tariffs, apart from energy and critical minerals that had a 10 percent levy. On March 5, a one-month reprieve was granted to the auto manufacturing sector. On March 6, tariffs were paused for a month on imports from Mexico and Canada that are covered by the North American trade agreement, re-negotiated when Trump was last president. This results in around 50 percent of imports from Mexico not having tariffs and 38 percent from Canada.
At this stage, the 25 percent tariffs on all steel and aluminum imports are still coming on March 12. All the paused tariffs on auto and goods covered by the North American trade agreement are set to come back in early April. Trump is now threatening 250 percent tariffs on dairy products. However, Canada has decided not to lift its retaliatory tariffs on $30 billion worth of goods, but will delay its second round of retaliatory tariffs worth $125 billion until April 2, the date when the next round of Trump’s so-called “reciprocal” tariffs are to be imposed on countries around the world.
Workers in the three countries can breathe a sigh of relief, but it is only a short stay of execution. The main mood among Canada’s workers is anger at the attack and anxiety about what looms ahead: this cat and mouse trade game is exhausting. The month of time gained must be used to develop policies that support workers in this trade war, and start campaigns to win a workers’ program to deal with tariffs.
Trump has declared economic war on Canada and Mexico with the imposition of 25 percent tariffs. These will drive the Canadian and Mexican economies into recession, hitting jobs and living standards. The tariffs on Canada are not about fentanyl – they never were – they are about weakening the economy and turning Canada into either a US vassal or the 51st state.
The broad tariffs of 25 percent on all goods — except energy that has a 10 percent tariff — is only the start. On March 12 all US imports of steel and aluminum will face an additional 25 percent tariff. A report reviewing all of US trade is due on April 1, with further tariffs likely to follow. The levy on softwood lumber imported from Canada is scheduled to soar in August to 27 percent on top of the across-the-board 25 percent tariff.
Trump has increased tariffs on Chinese goods and has threatened the European Union and others. The Canadian government has announced it will retaliate dollar for dollar to the tariffs, with provinces planning further actions. China and Mexico will also retaliate. All these tariffs will hit US workers with rising prices and fewer jobs. A global trade war could push the world economy over a cliff into a recession or even a world depression and a major crisis of the financial system.
Seize the Opportunity of this Crisis
Machiavelli wrote “never waste the opportunity offered by a good crisis.” Canada’s corporations are following that advice in response to the crisis of Trump’s tariffs. They have dusted off many long-held goals and are now presenting them as in the interest of all Canadians to help survive the damage of a trade war.
There is widespread agreement from big business and politicians about a raft of policies including reducing obstacles to trade between provinces and improving east-west connections with oil pipelines and a connected electricity grid. Business wants it easier to build major resource projects such as mines and pipelines and also wants a major expansion of nuclear power. They want double handouts to big business with tax cuts for corporations along with subsidies. There is broad business support for boosting military spending, while cutting federal services.
Big business has made exaggerated claims about the benefits of removing internal trade barriers, with the Canadian Federation of Independent Business saying this would boost the Canadian economy by as much as $200 billion annually — an increase of 6.4 percent! CCPA has pointed out that the figures of savings of $200 to $240 billion by removing barriers are a wild exaggeration.
Myth Busting
What are the barriers to interprovincial trade? Often stated examples are limits on sales of alcohol, regulations on trucking, controls on food production and rules about qualifications. There is no evidence that more trade in beer, wine or spirits would lower prices.
Most of the rules for trucking are about safety — it is one thing driving a truck through the Rockies in the winter and another, across the flat prairies. For example, trucks must carry chains in BC from the beginning of October to the end of April. In extremely wet weather, BC restricts weight loads to stop roads from collapsing.
Steps to standardize qualifications for skilled trades, health workers and teachers would make sense, but unless the number of people trained in all these occupations is significantly increased, there will be poaching wars between provinces.
Food production controls on dairy, eggs and poultry protects farmers. It also shields consumers both from unhealthy foods and wild price changes. For example, the lack of regulations in the US has resulted in Avian flu devastating egg production so that prices have soared to around $12-$13 a dozen compared to around $5 in Canada.
What the bosses really want is a race to the bottom with the lowest standards for health and safety applied to all provinces.
Freeland claimed she would use AI to cut federal spending. There is a sorry history of using technology in search of savings. Harper introduced the Phoenix payroll system to save money. After 15 years of disasters and costs of around $4 billion, the system is being replaced. Behind the fancy words of efficiency lies a reality of cutting services.
It is claimed that tax cuts to big business will boost investment, despite the lack of any evidence. Harper cut the corporate tax rate from about 22 percent in 2007 to 15 percent in 2013, on top of earlier cuts by the Liberals. This cut cost the Canadian government some $60 billion in revenue (which resulted in public services not delivered). Despite these tax cuts to business, investment in manufacturing declined over this same period. To quote a report by Statistics Canada “The ratio of investment to net capital stock and investment per worker declined after 2006, especially after 2014. As a result of this investment slowdown, the growth in labour productivity declined after 2006.”
Tax cuts to corporations will not boost investment or productivity in manufacturing. The money will continue to go into property and other speculative bubbles, along with dividends to shareholders.
Subsidies to business usually either save companies money they would have spent anyways, or they pocket it. During COVID, companies took the Canada emergency wage subsidy program, and still laid off workers, and often used it to pay out dividends to shareholders. How much of the over $50 billion in subsidies to build electric car batteries will produce a return for Canadians?
Increasing military spending, along with tax cuts for big business, will mean sharp cuts in public services.
Easing restrictions on major resource projects will mean less protection for the environment and even more ecological disasters. Nuclear power is not cheap. No one has solved what to do with the waste that is radioactive for 10,000 to one million years! And if something goes wrong it can be a terrible disaster such as at Fukushima or Chernobyl.
While improving east-west connections makes sense, focusing on more pipelines is short sighted. It locks in the use of fossil fuels for decades. Building a pipeline through thousands of kilometres of the Canadian shield will be expensive. There would be significant risks of leaks contaminating water as it would cross thousands of streams and rivers, including the Nelson-Saskatchewan and the Saint Lawrence.
Behind all the talk of Team Canada is the bosses’ determination to protect, if not increase, their profits.
A Workers’ Response
A workers’ program in response to a Trump-led trade war would focus on providing good jobs and meeting society’s needs. It should also seek solidarity with workers in the US and Mexico: these fellow workers are not the cause of tariffs and workers in all three countries will suffer. These priorities are very different than those of the capitalist class.
Immediate actions would involve protecting jobs and incomes — no cuts or layoffs — and protecting workers’ homes. If workplaces are closed, they should be brought into public ownership. There would be no free handouts to big business — only loans or part public ownership. Real protection for workers who lose their jobs (directly or indirectly) is urgently needed: Canada’s employment insurance (EI) system does not provide sufficient income for workers experiencing job losses. In addition, the system needs to include workers not presently covered by EI, including part-time and gig workers.
A program to survive a trade war needs to go much further. Workers cannot rely on corporations to deliver. A successful response will need government action, combined with public ownership and workers’ control. Workers are the experts on the best ways to make things and deliver services.
A workers’ program should include major public investments in infrastructure including roads, bridges, potable water, wastewater, solid waste, public transit, recreation and culture facilities and public affordable housing. This means employing Canada’s skilled workers and new training for skilled workers.
The tariffs on lumber are an opportunity to solve the housing crisis caused by government cuts and reliance on profit-seeking developers. Now is the time the much needed, mass building program of publicly owned, high quality, low-rent homes. Alongside this, existing buildings should be upgraded to be energy efficient.
Canada has plenty of steel, aluminum and other minerals as well as skilled workers. Canada should seize this time to redouble the push for renewable energy to harness wind, water, sun and geo-thermal energy. That — along with an interconnected electricity grid — will provide lots of good union jobs without building new pipelines.
The most vital east-west connection is the railways, yet they are neglected. The two private companies — Canadian National and Canadian Pacific — have underinvested in maintaining and improving the tracks for years. The average speed of a Canadian freight train in 2022 was 33 kilometres an hour. None of the long-distance routes are electrified. Swiss freight, even with all its mountains, has an average speed of 120 km/h.
A major new rail era would be a huge boost to trans-Canada trade and travel. Taking the rail companies into public ownership would allow a program of upgrading the rail beds and tracks, doubling tracks whenever possible so trains don’t get delayed, and electrifying the main sections. This would be a huge jobs program with real benefits and use a lot of steel, aluminum and other materials.
With good rail lines with double tracks, passenger transport could be reintroduced to much of Canada. The other part of a new transport policy is to accelerate the construction of urban rail in all the major cities.
Which Future
While these policies are much more sensible and beneficial to society then the bosses’ program, neither the Liberals nor Conservatives will deliver it. The NDP is unlikely to embrace such bold, but practical, ideas that would benefit its voters.
The bosses have their program and will shape Team Canada unless the workers have their clear program, which Socialist Alternative has made suggestions for, and mobilize for that program.
Now, five years since COVID began, the working class must ensure the arc of this crisis is different from that one. At the start of COVID there was widespread uncertainty and fear. Then a sense of solidarity emerged. People wore masks and physically distanced while maintaining social connections. A perception grew of who were essential workers and the value of the public sector and services, especially of the public health system and health workers. Clapping and banging pots in solidarity with health workers spread around the world. People also saw the weakness and failures of the for-profit companies — remember the death rates in the for-profit seniors’ homes. There was hope that out of the COVID crisis a better world would emerge.
But that was not to be. The multiple failures of governments, the drawn-out emergency, the cheating of the elites and the bosses’ abuses of workers all eroded the sense of solidarity. It was very clear we were not all in this together.
As frustrations grew, anger and divisions mounted. In this “opportunity” the right wing with their pre-existing agenda pounced. The union and NDP leaders allowed a vacuum to open up as they did not have a bold alternative to either the government or the right populists.
Now the working class faces another crisis. The bosses and their politicians have their clear program, which will boost profits and hit workers. The working class needs its distinct program. Workers will need to fight for this program, building a socialist movement to end the madness of capitalism, which is now in deep crisis.
