Ross McKitrick: The usual tactics won’t work with Trump

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Canadian federal politicians are reeling in their response to Donald Trump’s tariff and annexation threats. Unfortunately, they are stuck in a 2016 mindset and still believe that Trump is a temporary aberration that should be despised and ignored by the global community. But much has changed. Anyone who wants to understand Trump’s current priorities should spend less time looking at trade statistics and more time understanding the details of the legislative campaigns against him. Canadian officials to look up who Kash Patel is, or who doesn’t know why Nathan Wade’s girlfriend finds herself in legal riskwill find the next four years confusing.

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Three years ago, Trump was on the ropes. His first term had been derailed False accusations of Russian collaboration and a Ukrainian quid pro quo. After 2020, the Biden Justice Department and several Democratic prosecutors devised improbable legal theories to bring more criminal cases against him and people who worked in his administration. In the summer of 2022, the FBI raided Mar-a-Lago and leaked to press rumors of stolen nuclear codes and theft of government secrets. After Trump announced his 2022 candidacy, he was hit with wave after wave of indictments and civil suits, strategically filed in deep blue districts. His legal bills skyrocketed as his former and current lawyers fought well-funded exclusion campaigns aimed at making it impossible for him to get advice. He was assessed hundreds of millions of dollars in civil penalties and faced life in prison if you are convicted.

This would have broken many men. But when he was mug shot in Georgia on August 24, 2023, his scowl signaled that he was not giving in. In the 11 months from that day to his fist pump in Butler, Pennsylvania, Trump succeeded in defeating and discrediting legal attacksassemble and lead a highly effective campaign team, knock Joe Biden off the Democratic ticket, hold a series of near-daily (and sometimes twice-daily) rallies, win over top Silicon Valley business leaders, open a commanding lead in the polls, and not only survive a attempted murder, but make it one image of triumph. On election day, he won referendum and carried the White House and both Houses of Congress.

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It’s Trump’s world now, and Canadians should understand two things about it. First, he feels no loyalty to domestic and multilateral institutions that have governed the world for the past half century. Most of them were against him last time and many were actively armed against him. In his mind and in the thinking of his supporters, he not only defeated the Democrats, he defeated the Republican establishment, most of Washington including the intelligence agencies, the entire corporate media, the courts, woke corporations, the United Nations and its derivatives, universities and academic authorities, and any foreign governments in association with the World Economic Forum. And it’s not paranoia; they all had a role in trying to bring him down. Gaining credibility with the new Trump team will require showing how you’ve also fought against at least some of these groups.

Second, Trump has earned the right to govern in his own style, including saying what he wants. He is a negotiator who likes to talk trash, so get used to it and learn to decode his messages.

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When Trump first threatened tariffs, he linked them to two demands: stop fentanyl entering the US from Canada and meet our NATO spending targets. We should have done both a long time ago. In response, Trudeau should have launched an immediate national action plan on military preparedness, border security and cracking down on fentanyl labs. His failure to do so invited escalation.

Which fortunately consisted only of mockery of annexation. Instead of getting whiny and defensive, the best response (besides dealing with border and defense issues) would have been to troll back by saying that Canada would fight any attempt to bring our people under the jurisdiction of the corrupt US Department of Justice. and we will never form a union with a country that refuses to require each state to authorize photo ID to vote and has so many choice problems as a result.

As for Trump’s complaints about the US trade deficit with Canada, this is a “made-in-Washington problem”. USA currently imports $4 trillion in goods and services from the rest of the world, but only sells back $3 trillion in exports. Trump looks at it and says we’re ripping them off. But the trillion-dollar difference shows up in the U.S. national income and product accounts as the capital balance. The rest of the world buys so much in US financial instruments every year, including the Treasury bills that keep Washington running. The US savings rate is not high enough to cover the federal government deficit and all the other domestic borrowing needs. So Americans look to other countries to make up the difference. Canada’s persistent trade surplus with the United States ($108 billion in 2023) partly funds that need. Money used to buy financial instruments cannot be spent on goods and services.

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So the second response to the annexation taunts should be to remind Trump that all the tariffs in the world won’t shrink the trade deficit as long as Congress has to borrow that much money every year. Eliminate the budget deficit and the trade deficit will also disappear. And then there will be less money in DC to fund law and corruption. Win-win.

National Post

Ross McKitrick is a professor of economics at the University of Guelph and a senior fellow of the Fraser Institute.

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