More examples of business inefficiencies come to light as tariff threats take hold

As Canadian businesses "pivot" (as they say) away from their excessive reliance on the USA to a more lateral inter-provincial trade, some pretty crazy stuff is coming out.

One example is that, already discussed, of vehicle manufacture, which apparently requires a crazy dance back and forth several times across the border.

Another example is described in today's Globe and Mail, concerning paper and box manufacture. A corrugated packing paper manufacturer in British Columbia has been used to importing paper stock from just across the border in Washington state, but is trying to do the right thing by switching to paper from Eastern Canada (Ontario? Quebec? New Brunswick? We are not told.)

But, the business owner complains, instead of taking less than a day from Washington, shipments take 10 days from Eastern Canada, and he is losing money hand over fist. Well, two things occur to me straight away. One is that it can't possibly take 10 days to transport paper from Eastern Canada to BC. The second is that, after the first shipment from its new source, whether that takes 10 days or less, subsequent shipments will be arriving daily with no delay (they will not have to wait another ten days for the second shipment). Yes, I understand that the distances are longer and the transportation costs are therefore almost certainly higher. But the delay is surely not an issue.

The third thing that occurs to me is that BC has many trees and paper mills. Why is the company bringing paper in from Eastern Canada anyway? "Or even longer from Europe", the article says. Why would they be even considering importing paper all the way from Europe?!

So much of this makes no sense to me. Apparently common business practices seem to defy logic. 

Another example in the same article underlines the issue. There is a recycled packaging and box company in Ontario that imports about 50% of its cardboard stock from the US (first question: why? Don't we produce enough "old corrugated container" right here in Ontario?) There is another similar recycled paper company in Ontario that gets almost all of its used cardboard locally, but then sends it to the US to be processed in its mills in New York. I kid you not.

These two companies are now in talks to swap their supply bases and avoid completely having to have their materials cross the border unnecessarily. This DOES make sense, and I applaud it. But the question remains: why has it taken Trump tariffs to bring these two companies together in this way? I thought capitalism and the free market was supposed to be really efficient and productive!

I'm sure there are hundreds of other examples of this kind of inefficiency and logistical absurdity, many of which may come to light as part of the current forced restructuring.

Most people will be worse off when we abandon the carbon tax

Gas prices are expected to decrease by as much as l8c a litre in Canada when the consumer carbon tax is repealed by Mark Carney on 1st April. Some people are all excited about that.

Unfortunately, they will also be missing out on $210 every quarter (that's what we receive for our carbon tax rebate, the actual amount varies depending on where you live). So, most people will be worse off in net terms: be careful what you wish for. We have an electric car and so don't use gasoline, so we will be precisely $210 a quarter worse off.

But gas prices have just gone up anyway, completely regardless of any carbon tax effects, in some cases by substantial amounts. In Brandon, Manitoba, prices have increased by 14.9c a litre; Calgary, Alberta 13.7c a litre; Kelowna, BC 11.8c a litre. It's not entirely clear why this increase is happening, but it seems to be an attempt by oil companies to take advantage of the situation. Alberta Premier Danielle Smith, long a vocal opponent of the federal carbon tax, is asking oil companies not to "rip off consumers". Good luck with that, Danielle. (This is the Danielle Smith who has been speaking to the Trump administration asking for a temporary halt to the tariffs because it's hurting Poerre Poilievre's chances of getting elected as Prime Minister. Her political instincts are less than trustworthy.)

This is the magic of the free market. These people will therefore see next to no net benefit when the carbon tax is lifted. They will not, however, be receiving their quarterly rebate payments. So, overall, they will be substantially worse off. Like I say, be careful what you wish for.

Most of Canada seems to be happy that the carbon tax is being repealed. Almost all the political parties are either resigned to abandoning one of the easiest, cheapest and most effective climate change policies, or positively gung ho in favour of it. It is the will of the people, they say. However, many people have apparently not really thought it through.

Should we be arming ourselves against the USA?

It's crazy to think that Canadians are seriously talking about beefing up out national security as defence against, not China or Russia, but our erstwhile ally, the USA. But that is where we find ourselves. 

Here's the scenario: the USA gradually frames Canada as an enemy by tying it to various political and territorial grievances, and questioning its legitimacy as a sovereign nation (that part is already happening, albeit largely based on lies); the USA gradually expands its rhetoric, painting Canada as an outright security threat, if only because we could at any moment restrict access to critical resources that the USA needs, like energy, potash, water, etc; with this pretext, the US would then end intelligence and miltary cooperation (e.g. NORAD, Five Eyes, etc); demands for territorial concessions, maybe starting with an adjustment to the border of the Great Lakes, would be backed by the explicit threat of military force; at which point a full-scale military invasion is not beyond the realms of possibility.

This scenario is perhaps not a likely one - 10% probability? 5%? 1%? - but as the article points out, its probability is not zero. We would then be very much in a Ukraine situation, and we know how that turned out. It therefore behooves us to prepare ourselves militarily for such an eventuality, so the argument goes. There are even those, in all seriousness, calling for a Canadian nuclear weapons program as a deterrent.

It's easy to pretend that such an eventuality is beyond all sober prospect. It's easy to assume that cooler, less unhinged heads will prevail, that the US courts or military will quash such a scenario before it comes close to reality, or that the American people themelves will rise up in the face of such an enormity. 

But, if that non-zero probability exists, can we afford to ignore it?

Quebec/Vermont library ruling just a sign of the times

It's extraordinary how knit-picking and petty the USA is being over its new-found zealousness on the border and immigration. A good example is the changes it's making to Canadian access to the storied Haskell Free Library and Opera House in Stanstead, Quebec.

Straddling the border line between Quebec and Vermont, the library and opera house were deliberately built right across the border line back in 1904, as a symbol of harmony and cross-border collaboration between the two countries. For over a century, Canadians and Americans have come and gone through the buildings without having to go through any border control or showing any paperwork. A black line through the middle of the library marks the actual border, but people have wandered back and forth across it for decades.

The official entrance to the library, though, is in the village of Derby Line, Vermont, USA, and Canadians have been used to just wwalking around the side of the building to enter it. But now, for the first time, US Border Control officers are insisting that direct access from Canada be closed, so that Canadians would have to travel to the next nearest official border crossing and submit to the usual American security grilling to gain access, even to the Canadian part of the library.

Locals, both Canadians and Americans, are incensed at the decision. There are plans to renovate an old Canadian entrance to the building, although money for such projects is in short supply. They have until October to make such adaptations as they can.

It's just another sign of the mean-spirited times we live in. If this is someone's idea of making America great (again), then it's hard to believe they can be so myopic and insensitive.

Relocating to the USA may not be a good optionnfor Canadian companies

Some Canadian companies are considering moving ("fleeing") to the USA to avoid the worst effects of Donald Trump's punitive tariff increases. Indeed, some have already done so. 

My first reaction is: this is exactly what Trump wants, so why would you have him the satisfaction? But, of course, the companies say, they are beholden to their shareholders, and they must do whatever is necessary to maximize profits and the dividends of their shareholders. 

Well, no, not everything. There are other considerations than profit at play here. Capitalism is not strong on ethics, but it behooves us all to to think about whether products are manufactured using forced labour, equitable and safe employment practices, reducing the environmental footprint, etc, etc. Modern and progressive shareholders demand that kind of thing too, right? Arguably, pandering to the whims and foibles of a crazy guy like Donald Trump is just such a moral imperative.

As we have seen recently, though, when push comes to shove, profits usually seem to "trump" ethics, and we have seen many major companies pulling back from their DEI commitments, their climate commitments, etc (and some never went there in the first place).

The other thing, though, is that it can be complicated and often costly to relocate from Canada to the USA, and it may not even be in the shareholders' best interesNasdaq.

One big impetus for relocation is the potential to get listed on US stock exchanges like the S&P 500 and Nasdaq. But there are already many American companies queuing up to get onto those listings, and it is by no means certain that a newly-located Canadian company will succeed. Plus, there are moves afoot that may soon allow Canadian and other foreign companies to be listed on the S&P index anyway.

There are substantial logistical, legal and other costs involved in redomiciling and establishing a company in a new jurisdiction. It may not even avoid tariff costs, even in the short term: remember, US tariffs hurt American companies even more than the foreign country they are aimed at (which is why everyone else is so confused at Trump's insistence on using such a heavy-handed and inefficient policy to further his aims), and the effects of potential relatiatory Canadian tariffs must also be taken into account. We don't actually know how long these tariffs will be in effect - the landcape changes daily - and relocating is a long and involved process. In addition, there may be significant (political and economic) backlash from the old country at such a move (as at least one Quebec company found to their cost).

Finally, companies should know that there is a 25% departure tax on the relocating company's assets, which for most businesses could prove the ultimate deal-breaker.

So, definitely not a slam dunk. And, in most cases, not a viable option at all.

Does Mark Carney risk conflicts of interest?

The Conservative Party of Canada, rattled by their precipitate slide in the polls, and with a federal election pending (widely expected on April 28th), are taking wild swings at new Liberal leader Mark Carney. In particular, they are trying to make something - anything! - out of Carney's enviable financial position.

Pierre Poilievre, and his attack dog Michael Barrett - yes, the attack dog of an attack dog! - have been casting aspersions that Mr. Carney is playing fast and loose with the ethics and conflict-of-interest rules that Canadian politicians are subject to.

Spoiler alert: he's not. Well, you might have guessed that. The whole raison d'etre of the Tories is to find fault, in any way possible, and even in some ways impossible, of their political nemesis. Deprived of Justin Trudeau as a convenient target, they have been trying to portray Carney as "sneaky", "European,", etc, and also as rich, which carries its own set of political value judgements.

Yes, Carney has done very well for himself - he has not been a lifetime career politician like Mr. Poilievre - and he is clearly a very rich guy. Do we need to know exactly HOW rich, and exactly where his riches lie? Probably not.

Suffice it that he is following the stipulated conflict-of-interest rules - enshrined in Canadian law by Conservative PM Stephen Harper, let it be noted - to the letter, even in advance of the required deadlines. So, he is divesting himself of his personal investment holdings by placing them in a blind trust, so that he has no control over sales and purchases. He will also recuse himself from any deliberations that might directly influence investment that he holds in trust (although those holdings could change without him knowing - that is the whole point of a blind trust in these circumstances). And he is pre-clearing everything with the independent parliamentary Ethics Commissioner. 

It's hard to know what else the Tories can ask for. There is no requirement to name and value his investments at this point, nor should there be. The Ethics Commissioner will be keeping a wary eye on him; that is his job. Yes, there are those who argue that a blind trust is not sufficient to guard against conflicts of interest. But most reasonable people - and all political parties - believe that that the system as it stands is indeed adequate.

Trumpism as a cult

What are we to make of the way in which Donald Trump's supporters support him? 

I don't mean that I am surprised that they support him, even in some of the more legally and morally gray areas that he tends to frequent, even in some of the completely random, unhinged, off-the-cuff decisions that he makes.

I get it that he is their Glorious Leader, and that many of them owe their overpaid positions to him directly. But there is something about the WAY they express their adoration that seems, well, unhealthy. Trump's excesses have given his supporters license to exceed in their own ways.

Because they don't just support him, they bow down to him. 27-year old Press Sectetary Karoline Leavitt is a good example. She will not brook even the suspicion of a criticism of Trump without responding in a completely aggressive and over-the-top (Trump-esque, you could say) manner. Take for example, when a French journalist suggested that today's United States is not worthy of the Statue of Liberty France gave them, Leavitt turns around and snaps that France should be grateful to the US that they are not now speaking German. There are many ways she could have responded, but she chose that way (exactly the way Trump himself would have responded). 

Another example? Stephen Miller, White House Deputy Chief of Staff and Trump "advisor" (whatever that actually means), when responding to criticism of the distinctly semi-legal manner in which the Trump administration used an 18th Century wartime law to deport over 250 Venezuelan immigrants, didn't just tear into the hapless reporter (a former prosecutor with much more legal expertise than Miller) but ranted in an all-but-uncontrolled manner "He is a moron, and he's a fool, and he's a degenerate ... now he's up there shilling for people who rape and murder Americans". See also Miller's unhinged response to a Saturday Night Live joke. (Incidentally, Trump has called for the judge who tried to enforce an injunction against the deportations to be impeached.)

These people seem to feel that Trump's regular enormities (which no-one outside the Republican Party consider acceptable) give them license to exhibit similarly outrageous and overblown behaviour.

The way they refer to Trump's policies and decisions, and the man himself, in tones of awe and reverence is nothing short of creepy. Secretary of State Marco Rubio says that Trump is the "only person on earth" who can negotiate with Vladimir Putin. Defence Secretary Peter Hegseth uses similar language, claiming that Trump is "the only man in the world" who can solve the Ukraine problem. And so it goes.

UPDATE: Here's another example. After Trump officials included an Atlantic journalist on a Signal texting group discussing secretive plans for US airstrikes on Yemen, rather than admitting to mistakes and apologizing (MAGA World, from Trump down, don't do admitting and apologizing), national security advisor Mike Waltz's response was to whine, "this journalist, Mr. President, wants the world talking about more hoaxes and this kind of nonsense, rather than the freedom that you're enabling". You could almost see him cowering and cringing as he spoke. Trump's response? "Michael Waltz has learned a lesson, and he's a good man". Moving on. If you think Waltz would have got away that without publicly prostrating himself and grovelling, then I think you are being naive.

This goes beyond deference; this is the stuff of personality cult. It is not party politics as we have always known it. You can imagine it happening in North Korea or Russia, where a false step can lead to a disappearance or secretive execution. But is that where the USA is now?

Trump has successfully purged the Republican Party of any elements even vaguely disloyal. He himself has said publicly, "We have to Purge the Party of people that go against our Candidates and make it harder for a popular Republican President to beat the Radical Left". It has all the hallmarks of authoritarianism en route to totalitarianism, where dissent is not just discouraged but forbidden.

Poilievre is running out of ideas

Pierre Poilievre is rattled. After months - nay, years! - of Conservative poll leads, the rejuvenated Liberals under new leader Mark Carney are now (at least) neck and neck, with a federal election expected to be announced any day now.

People really don't like Poilievre, and with good reason. The only reason he was doing well in the polls is that they disliked Trudeau even more. But now the Liberals have a new leader and he seems to be more palatable.

And since Carney announced that the unpopular consumer carbon tax is now toast - whatever you might think of that - "Axe the Tax" Poilievre is left without a major plank of his platform. So, what's a populist to do but up the ante?

Yesterday, Poilievre announced that, not only would he axe the consumer carbon tax, but also the industrial carbon tax, if he were ever to be let loose on the Canadian economy This tax, technically known as the Output Based Pricing System, has always done much more of the heavy lifting in the country's climate change strategy, representing about a third of our potential greenhouse gas reductions in the run-up to the 2030 Paris Accord deadline.

Instead, Poilievre says he will "boost incentives" and "expand eligibility for the clean technology and clean manufacturing investment tax credits", although it's hard to see how that would take up the slack from the current industrial carbon tax. We will need those as well, of course, but not instead of.

The industrial carbon tax is actually administered by the provinces in all cases except for Manitoba, PEI, Nunavut and Yukon, which don't have their own system in place, so it's also hard to know whether such a drastic-sounding policy would actually have any effect at all, although you can expect that Alberta will gleefully take advantage of any loophole Poilievre presents. Danielle Smith will do whatever she can to suck up to Poilivre; she does NOT want another Liberal federal government.

Poilievre has not come clean with any revised carbon targets, and quickly changes the subject when this is mentioned. Mr. Carney, currently on his European charm offensive, also points out that, if we are trying to diversify trade away from the USA, trade with the EU, with the UK, with emerging Asia, all require some kind of a carbon price as a prime requirement (this does seem to be true - it's called the Carbon Border Adjustment Mechanism CBAM), and it's pretty new - despite what you might read in the more conservative corners of the internet). So, what is Mr. Poilievre's workaround for that?

Clearly, the Conservatives had to come up with something to try to arrest their precipitate slide in the polls. But this is not what the country needs. Let's hope the voters can se through Poilievre's electoral machinations.

Doug Ford burns his fingers playing with the big boys

Ontario Premier Doug Ford has tried his level best to insert himself forcibly into the conversation around US tariffs ever since Trump was elected (and even before). Although he is merely a lowly provincial premier, he clearly has national pretentions, and likes to be thought of as "Captain Canada".

A good part of the shtick he used to get himself re-elected last month revolved around his claim that he was the best Ontario leader to deal with the existential threat that Trump represents. He has travelled to the US many times to speak to US representatives, industry leaders and media outlets, although he has rarely been invited to speak to the higher-ups, the actual movers and shakers in this particularly sordid phase of American politics.

However, Ford's hankering to be seen as Captain Canada took a bit of a blow yesterday, when he went toe to toe with Donald Trump and came off with egg on his face. In the face of Trump's announcement of a 25% tariff on Canadian steel and aluminum, Ford gave it his best shot and announced a 25% surchage on electricity exports from Ontario to three US states, Minnesota, Michigan and New York.

Clearly expecting Trump to back off and walk back his tariff announcement after this masterful play, Trump, almost predictably, immediately doubled his tariffs to 50%. Ford then announced that he was abandoning his electricity surcharge, and the Americans, in their turn, reduced the steel and aluminum tariffs back to the original 25%. "Ontario won't back down", said Ford, hours before doing just that.

Good game. Trump 1 - Ford 0. Net result: the 25% tariffs remain. But Trump can do this stuff all day, he positively lives for it, and Ford came off looking rather foolish, with his tail firmly between his legs.

Ford is off to Washington again today to speak to the underlings (Commerce Secretary Howard Lutnick this time), chaperoned by federal Finance Minister Dominic LeBlanc. But I have a suspicion that Mark Carney and the federal government would much rather Ford butt out of matters beyond his pay grade, and maybe just leave it to the grown-ups. 

The federal government has already announced proportionate retaliatory tariffs on $29.8 billion of American goods. Does Ford really need to be poking his nose in and complicating things, even if Trump does think of him as a "strong man"?

A day later, Trump mused out loud that maybe the USA shouldn't be buying ANY electricity from Canada, the exact opposite of what Ford has been pitching for months. So, careful what you do and say, Dougie, it might come back and bite you (and us, the hapless residents of Ontario, that you're supposed to be protecting).

Don't like Musk? Disguise your Tesla

This is hilarious. You may have been reading about stickers on Tesla cars saying "I bought this before we knew Elon was crazy" and variations thereof. But now there are whole sections of the internet devoted to advice on the best way to remove the Tesla badge and logo from your car.

Even better, there is now a fully-fledged movement to replace the Tesla badges with the badges of other - less controversial and usually non-US-owned - car companies, like Toyota, Honda, BMW.

That's one unpopular guy!

A timeline of US tariffs (and their reversals

If you are losing track of all the various announcements of US tariffs on Canada and their subsequent reversals, you're not alone.

But Axios has created a handy little timeline, up until  March 11th at least, so you can see just how wild a ride this has been.

And we know that there are many more tariffs still to come, and almost certainly more reversals. In the meantime, both the Canadian and American economies are suffering and the stock exchange is nosedivng in the chaos. How long until the American people get properly pissed off with Trump? The rest of the world is already there.

Why Trump is so wrong on Canadian dairy tariffs

I'm already a bit bored with explaining just how wrong Donald Trump's proposed tariffs on Canada are, but here's just one more way they are wrong.

It varies depending on the day, and the time of day, but one of the things that send Trump apologetic, and has him blustering about how UNFAIR Canada is being to the US, concerns Canada's dairy imports, and he says he intends to charge Canada 250% tariffs back.

Now, you might have some legitimate concerns about Canada's internal dairy industry supply management system (I looked into it a few years ago), but vis-à-vis dairy imports from the United States in particular, the rules are set according to the United States-Mexico-Canada Agreement (USMCA, or CUSMA, or whatever awkward acronym you prefer). Yes, that's the successor to NAFTA that Trump insisted on renegotiating during his first term back in 2018.

Trump and his cabinet minions repeatedly rant about how Canada is charging the US "250% tariffs" on its dairy imports, and how we are treating American "VERY BADLY" and how it is all "UNFAIR". Often he embellishes it even further for maximum effect: "They have a couple of tariffs at 400%. Nobody knows that. Nobody talks about that." Well, that's because he just made it up on the spot.

The truth is, though, that those high tariffs (on a sliding scale, with a theoretical maximum of 241%) only apply only after imports reach designated maximum annual levels. These are "over-quota" penalty tariffs. Up until these levels are reached, the tariff on dairy imports from the US is ... zero. 

Furthermore, as both Canadian and US dairy industry figures agree, the zero-tariff maximum has never been reached in any category of dairy imports. So, Canada is charging the US precisely ZERO in dairy tariffs, not 250% or any other figure.

For what it's worth, the US also has penalty tariffs aimed against Canada, some of them even higher than what Trump is so loudly criticizing, such as the 350% tariffs on US tobacco (which is also never triggered).

And, remember, all this is enshrined in the USMCA that Trump himself signed into effect in 2018, an agreement that he has called "the best trade deal ever made". Trump has also claimed that Canadian dairy tariffs were "well taken care of" during his first presidential term, but that "under Biden, they just kept it raising it". Nope. The dairy tariffs remain exactly the same as when Trump agreed and signed the USMCA; they can't be changed without renegotiating the agreement itself.

Of course, these are just facts, and no doubt Trump will have "alternative facts" to suit his case. Someone may explain all of the above to him and his trade team, but it is very unlikely to make a blind bit of difference. Legally, however, he doesn't have a leg to stand on. 

Who cares any more whem Spacex rockets blow up?

A second consecutive SpaceX rocket has blown up soon after launch (technically a "rapid uncheduled disassembly"!), with debris causing commercial flight delays as far away as Miami and Philadelphia.

That'll cost him a bob or two. Given how much people hate Elon Musk these days, few people are particularly upset.

The US government gets into gambling

With all the ridiculous antics going on south of the border, it's easy for things to slip through below the radar. One such thing may have immense repercussions, but has received relatively little attention, and that is Trump's announcement of a "Crypto Strategic Reserve".

The reserve, which is slated to consist of five different cryptocurrencies ' Bitcoin, Ether, XRP, Solana and Cardano - will likely put the United States inexorably in the perilous business of buying and selling cryptocurrencies, in line with Trump's stated desire to establish the United States as the crypto capital of the world. It was mentioned only tangentially in an executive order on digital assets issued in January, but is still largely unexplained and unclassified.

Trump, of course, hopes to make vast profits from such a stockpile of the notoriously volatile and speculative investment. But, as we have already seen with Bitcoin and other cryptocurrencies, they can just as easily result in huge losses. Given that cryptocurrencies are purely speculative, and not backed up by actual assets in the way that a gold reserve is, for example, many people are questioning whether the US government should be involved in such a risky venture.

The US is already known to hold about $17 billion in bitcoin from criminal seizures - digital currencies are notoriously prone to hacking and other criminal uses (just last month, North Korea hacked $1.4 billion worth of Ethereum, the largest single digital robbery ever carried out) - and it is assumed that they will now be in the market for much more, as well as in the other digital currencies mentioned, and all five currencies have seen significant spikes in value in anticipation, although followed by a sharp drop and sell-off. 

There are rumours that the government is looking to obtain abound a million bitcoins alone, worth around $86 billion, which would put it in a position to substantially influence the market. If it uses these bitcoins to, for example, pay off some of its (real) debts, that could cause the value of bitcoins to drop precipititately. 

The only other country that has tried this is El Salvador, whose foray into crypto as legal tender and as a national strategic reserve ended in ignominious failure, as it has had to abandon most of its crypto plans as a condition of a much-needed IMF loan.

Trump already has personal ties to various digital currencies, and even issued his own $TRUMP cryptocurrency, which promptly tanked, down over 80% since its launch (a parallel $MELANIA coin is down over 90%). 

Trump, ably abetted by Elon Musk, is also doing away with many of rhe regulatory safeguards that has kept the crypto business in check for years. But, even so, there are many, even in the crypto business itself, that question whether this is something that governments should be involving themselves with. For example, is it right that a government uses taxpayers finds to backstop the price of cryptocurrencies, and worry about the lack of clarity and transparency in the reserve. 

XRP, Solana and Cardano are relatively obscure digital currencies - why were they chosen? (David Sacks, Trump's crypto "czar" is known have some conflicts of interest with a couple of them.) Should one institution (the federal government) have so much power over a currency that is supposed to be decentralized. People also worry that a crypto reserve could be funded by taxpayer dollars, representing a transfer of money from everyday Americans to wealthy crypto bros and billionaires.

Some question whether the Trump administration actually understands what it is getting into. It's not even totally clear whether Trump has the legal authority to create such a reserve. The US has a strategic petroleum reserve, a strategic medical equipment stockpile, even a helium reserve, but crypto has essentially nothing backing it and no intrinsic value, so it represents a very different prospect.

The whole thing just smacks of the kind of sleaziness and amateurishness that the MAGA crowd excels in. But this particular example of Trump ineptitude could have extremely large repercussions. It could even have implications for the US dollar's role.as the world's primary reserve currency, although personally I think that particular claim may be overstated, and I have read nothing to back it up.

Republicans need to snap out of it, and soon

As Donald Trump pauses his tariffs on Mecico and Canada's auto sectors, just one day after bringing them in, and then delays most other tariffs just a day later (insofar as they are covered by the CUSMA free trade agreement), even his MAGA followers must be realizing that the man has no idea what he is doing. 

Trump is making random spur-of-the-moment decisions of huge import to both the US and other countries without any real plan or justification. He just does whatever he feels like when he gets up in the morning, in what has been labelled "government by chaos". Every day is "unprecedented" in some way or other, and it doesn't feel exhilerating or inspiring, it just feels exhausting and depressing. 

If his goal is to keep Canada and Mexico off-balance (and that's a big "if"), then I suppose he has achieved that, although how that helps him or America, no-one is quite sure. But he is also keeping American industry off-balance too. Trump says, "There will be a little disturbance, but we are OK with that". Most CEOs are too scared to comment publicly, but those that have are most definitely NOT OK with all the uncertainty and chaos.

As Democratic Representative Melanie Stansbury indicated with her handwritten sign that went viral after Trump's State of the Union speech, "This is NOT normal". Even Commerce Secretary Howard Lutnick is starting to look like a deer in the headlights as he tries to explain Trump's random decisions and equally random reversals.

Trump's Republican cronies must know all this. They must know that the talk about "fentanyl pouring over the border" from Canada is spurious, and not the actual reason for his tariffs (and is not even real). They must know that supposedly democratic countries can't just go around talking about annexing other countries and destroying their economies until they capitulate. They must know that you can't just abandon all your old allies and multilateral organizations, and suddenly support a country that had been an implacable enemy for decades. They must know that American industry and the stock exchanges are reacting with panic.

All this is not the behaviour of a sane, serious politician. But the Republicans, thus far at least, seem willing to go along with it, repeating his nonsensical arguments to the press day after day. It's almost like they are hypnotised somehow by Trump's certainty, by his star power. When a Democratic congressman had the temerity to protest at Trump's wild State of the Union speech the other day, MAGA Republicans merely rallied round, chanting "USA! USA!" like a football crowd, or a gang of kids. As though that was a valid response, as though a supposed show of vocal patriotism outweighed everything else.

It's all kind of disturbing and sad. You have to hope that some day soon they will wake up and shake themselves, mumbling, "Wha... Where am I? What has been going on?" Because this is like a fever dream, almost completely divorced from reality. Unfortunately, though, it's all too real. Make America Great Again? If they only realized what damage they are doing, and how long (if ever) it will take to fix.

The dubious legality of Trump's tariffs

If you were thinking, hold on, Trump's tariffs on Canada can't possibly be legal, then yes, that's quite right, but probably irrelevant. An expert on international trade law lays it all out.

Firstly, yes, we have a free trade deal with the USA. Known to us as CUSMA (Canada-United States-Mexico Agreement) and to the Yanks as USCMA (and probably to the Mexicans as MUSCA, which is the easiest one to say), President Trump signed it himself in 2018 (and the final version in 2020), and it replaced the original 1994 NAFTA agreement. And yes, Trump's tariffs are a clear violation of CUSMA, which explicitly states that member countries cannot simply increase tariffs unilaterally.

And yes, there is a dispute mechanism involving a legal panel. Canada would probably win any such dispute, even if the US uses various national security defences (Trump is mainly using the International Emergency Economic Powers Act - IEEPA - to justify his tariff impositions). But if he is willing to directly contravene the wording of the Agreement, it is unlikely that he will care much about a ruling by some dispute panel.

There is also the World Trade Organization (WTO), of which the US is still technically a member, although Trump has repeatedly threatened to withdraw from it. Canada would probably win a case before the WTO too, but Trump is unlikely to abide by any decision (and could just pull out of the organization if it suited him). The WTO has no real teeth to enforce its rulings.

Of the two, the CUSMA route is probably the best bet, although, as has been said, Trump does not appear to care about the agreement, or about legalities in general. He would just steamroller through regardless. Although such a case could be brought relatively quickly (meaning within a year!), the US could stall the process of picking a panel for quite some time, and the majority on the panel is decided by (quite literally) a coin toss, which is a bit bizarre.

There is also the possibility that US domestic lawyers could challenge his use of the IEEPA, which was never intended to be used for tariffs against a friendly nation. The Government of Canada could be involved as an amicus (intervenor) in such a case.

All of these legal remedies, however, take time, and in the meantime both Canada and Mexico (and the USA!) are suffering economically. And there is no guarantee that Trump would abide by any legal decision he doesn't like; he is past the point of concern with legal niceties. It may still be worthwhile pursuing from an international optics point of view, but again, Trump does really not care about optics, and the rest of the world already knows he is in the wrong.

A highly symbolic encounter between a Canada goose and a bald eagle

Seems appropriate to share this. 

An Ontario photographer captured this stand-off between a Canada Goose and a Bald Eagle on a frozen lake near Burlington, ON, recently.

While you might think the conclusion was foregone, it turns out that the plucky goose fought back bravely against the eagle's attacks, and eventually the eagle gave up and flew away.

Rife with Canadian and American symbolism, this encounter might give hope to the underdog Canadians, as the US goes all out to dominate Canada through tariffs and other means, and Canada does what it can to fight back.

Would US tariffs on Canada really be as bad as predicted?

I thought I understood how the expected US tariffs would affect Canada. But then, the more I thought about it, the less certain I was. So, I'm going to write it down to see if it makes any sense. Some of this is based on my own interpretation of analyses like Dalhousie University's Ask An Expert. I'm no economist, but this is how I see it - am I wrong?

So, say Donald Trump, in his infinite wisdom, decides to impose a 25% tariff on imports of Canadian steel and aluminum tomorrow. The only immediate effect would be that US importers of our steel and aluminum would be paying 25% more for their goods. 

So, they may decide to import less and source their steel and aluminum elsewhere (not easy, certainly in the short run). Trump expects the US steel and aluminum industries to up their game and produce more domestically, but that is also not easy, particularly in the case of aluminum (Canada accounts for 56% of US aluminum imports but only 15-20% of steel imports; the US produces a lot of its own steel, but very little aluminum). 

Or US companies may continue to import from Canada, and either take a hit to their profits due to their higher costs, or, more likely, increase the prices of their end products (or some combination of the two). Bear in mind that steel and aluminum are only two of the ingredients of their final products, and, due to market considerations, they may not decide to pass on all of their cost increases anyway. So, the prices American companies charge their customers will increase, yes, but not by 25%. 

Either way, thus far, Canadians are not affected at all by the tariffs. When we become affected is when we decide to import these now-more-expensive products from the US. The costs for Canadian companies importing these goods will go up but, once again, their final products will not be 25% more expensive when sold to Canadian consumers, because these US imports will not be 25% more expensive (as mentioned above), they will not typically make up 100% of the final Canadian product, and the Canadian exporters may not pass on all of their increased costs to final Canadian consumers (or they may).

So, the eventual impact on  the general Canadian public may actually be minimal (but hard, even impossible, to predict). Inflation may go up a little, although it inflation is currently pretty well controlled here (unlike America's inflation situation). If the loonie continues to depreciate against the greenback, as is also likely, the effects are further diminished.

If the US tariffs are imposed on ALL American imports from Canada, however, as they are also threatening, the effects would be more widespread, but still mainly borne by American companies and American consumers, only affecting Canadians to the extent that we import affected goods from America, and again by much less than 25% (for the reasons stated above).

In addition to all that, of course, there would be an effect on Canadian producers of steel and aluminum (and other products if the tariffs are expanded). If it becomes more expensive for American companies to import from Canada, they may import less, or source their raw materials elsewhere. 

This is where the sky-is-falling predictions of Canadian industry groups get their dire prognostications about the entire Canadian steel and aluminum industries closing down, with hundreds of thousands of layoffs  (estimates vary from 30,000 jobs to 600,000!) and myriad insolvencies. But it's not that easy for American companies to just switch suppliers, so it seems to me that there may be some industry layoffs, but maybe not the complete decimation many commentators seem to be suggesting.

After the 2018 temporary Trump tariffs on steel and aluminum, Canadian steel exports to the USA went down by a sizeable 38%, and aluminum exports by a more modest 19%. (Note that this is specifically the effect on US exports, not total Canadian steel and aluminum production). I have not seen any figures on industry layoffs or insolvencies.

There's more, though. If, as seems more than likely, Canada responds to the US tariffs with commensurate tit-for-tat dollar-for-dollar retaliatory tariffs of its own, then the effects on Canada will be much more more pronounced. In that case, Canada would suffer the immediate affects that the US is described as suffering above, while the US would only feel the more limited secondary effects described above.

Either way, it's a race to the bottom. But what's a country to do? In the end, it's a political calculation of what people think may sway Donald Trump. And that, as we already know, is a known unknown.

So, "existential threat"? Maybe not. Pain in the ass, to be sure. "Ceases to exist as a viable country" without the US (as Trump recently claimed)? Not neither.

It truly seems like both Trump and his hapless Press Secretary Karoline Leavitt totally misunderstand how tariffs work in practice. In a recent presser, poor Ms. Leavitt claimed, "Tariffs are a tax hike on foreign countries that, again, have been ripping us off. Tariffs are a tax cut for the American people, and the President is a staunch advocate of tax cuts." Er, no. Tariffs are a tax on imports, and they are paid by the US company importing the goods. Typically, they will pass that cost on to the American consumers, which is why economists on both sides of the border are calling ot a "lose-lose" strategy, and why the stock exchamge is reacting quite so negatively.

Trump's EV edict makes no sense (and will cost a lot of money)

If you needed yet another example of how illogical and ideology-driven Donald Trump's new presidential term is, you need look no further than his roll-back of electric cars and chargers for federal government workers.

Last week, Trump ordered that 654 EV charging stations at government facilities be immediately removed and decommissioned, and about 25,000 government EVs be summarily sold. This will flood the EV market, so that the EVs will end up being sold at about 25% of their original value, resulting in a $225 million loss (the original $300 million paid for the chargers and electric vehicles is a sunk cost). Decommissioning the chargers could cost a further $50 to 100 million, and an estimated $700 million will need to be invested in new replacement cars. 

That's over a billion dollars of public money wasted on a whim. You could add to that a further 6 billion in savings that the EV fleet would have realized over their working lives compared to a conventional combustion fleet, as estimated by investment consulting firm ICF. How many of the EVs to be sold are Teslas is not clear, but best buddy Elon Musk is probably going to be pissed.

And why? Why would a move like this be worth a billion dollars to Trump? It seems that economics doesn't come into the equation at all, and it is all because Donald Trump - for whatever reason - doesn't like EVs, and is scared of progress of any kind (and particularly environmental progress).