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Trump and trade

Jan 30,2017 - Last updated at Jan 30,2017

Like Mexico, Canada is in the North American Free Trade Agreement, which Donald Trump has described as “the worst trade deal... ever signed in this country”.

Unlike Mexico, Canada thinks that Trump is not planning to hurt it. But no good deed goes unpunished, so Canada’s Prime Minister Justin Trudeau should be very careful.

Canadians felt good when Trudeau responded to Trump’s ban on Syrian refugees by tweeting: “To those fleeing persecution, terror and war, Canadians will welcome you, regardless of your faith. Diversity is our strength. Welcome to Canada.”

Feeling morally superior to Americans is one of Canadians’ favourite pastimes, and in this case it is self-evidently true.

The US took in 12,587 Syrian refugees last year; Canada, with one-ninth of America’s population, accepted almost 40,000. 

Yet there have been only two “lone wolf” Islamist attacks in Canada in this century, each killing one person and neither carried out by an immigrant.

Terrorists have just murdered six Canadian Muslims in Quebec City, but Muslim immigrants pose no appreciable danger to non-Muslim Canadians.

In reality, there is no significant danger from Muslim immigrants to America either.

Most of the 28 major massacres in the US since September 11 were carried out by white right-wing extremists, and those that did involve Muslims were almost all committed by native-born Americans. But Trump’s “executive orders” are not just driven by ignorance and panic.

He is consciously manipulating public opinion, and Canada’s response to his ban on Muslim immigrants undermines the script he is working from.

If Trump’s domestic opponents use the Canadian example to discredit Trump’s story about the mortal danger posed by Muslim immigrants, the man might claim that lax Canadian immigration policy is a threat to the US and apply “extreme vetting” measures to Muslim Canadians who want to cross the border.

He might even ban Muslim Canadians from the US entirely, or require visas for all Canadians.

That would impose huge inconvenience and cost on Canadians, but Donald Trump can basically do whatever he wants to his next-door neighbours.

So Trudeau would be wiser to do good by stealth and not attract too much attention in the US.

Mexico’s President Enrique Peña Nieto has a much bigger problem. 

He was well aware of Trump’s campaign promise to build an “impenetrable, physical, tall, powerful, beautiful, southern border wall” to keep out illegal Mexican immigrants, and to make Mexico pay for it. 

But like most people, he could not believe that Trump meant it literally.

After all, who in his right mind would want to build a 10-metre high concrete wall, also extending a couple of metres underground, along more than half of the 3,100-km US-Mexican border? (The rest is mountains and rivers.)

It would cost between $10 billion (Trump’s estimate) and $30 billion plus (construction consultants Gleeds Worldwide).

Building the wall is not going to stop the estimated 45 per cent of illegal Mexican immigrants who arrive quite legally by car, bus or plane, but overstay their visas.

It is not exactly urgent either, given that the net flow is now southward: since 2014 more Mexicans have been going home each year than arriving in the US.

The wall is really just symbolic, a demonstration of political will, but Trump has promised to build it and he will.

Can he also make Mexico pay for it? Actually, he probably can.

Last Thursday, Mexican officials were in Washington preparing for Peña Nieto’s visit when Trump suddenly tweeted: “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.”

Peña Nieto, deeply humiliated, did cancel the meeting. He had no choice.

But on Friday, the two presidents had an hour-long phone call that the joint statement described as “productive and constructive”.

There were no details, but they did discuss “the current trade deficit the United States has with Mexico”, among other things.

“Fixing” that trade deficit is probably how the circle will ultimately be squared.

Mexico’s exports to the US were $271 billion last year; its imports were only $213 billion. Trump wants to change that, and Peña Nieto has no option but to submit. 

And somewhere in the deal that there will probably be a clause that lets Trump claim Mexico is paying for the wall while Mexico can still deny it.

Canada-US trade is roughly in balance, so Canadians will probably not suffer severe pressure unless Trudeau really irritates The Man.

The total volume of US-China trade is about the same, but China sells the US four times more than it buys from it.

That cannot be “fixed”, and Trump cannot be persuaded to let it ride. There will be tears before bedtime.

 

 

The writer is an independent journalist whose articles are published in 45 countries.

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