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June 10, 2018 | Our Place in Hell

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

That little conflab in Quebec this week – the G7 – cost Canadian taxpayers $800 million. The federal government spent that staggering amount building a media centre, having wall-to-wall cops, compensating local businesses and even outfitting a temporary prison and courtrooms in case protestors (none showed up) got out of hand.

Justin Trudeau was supposed to look like a visionary, competent, progressive, enveloping world leader. It was a platform stepping into the next federal election cycle. But today it’s in tatters, with the Canadian economy at far more at danger than it was on Friday.

Weekend events were stunning. Trump came late, insulted T2 by refusing to support his billions-for-girls initiative, then left early. After hearing Trudeau’s post-gabfest presser in which he bragged about talked rough to the US boss, Trump lost it. He instructed officials to withdraw support from the joint communique, then Tweeted the kid in the socks was ‘weak’ and ‘dishonest.’

That was just the start. The White House followed that with an anti-Canadian barrage that can only be described as hissy historic. “There’s a special place in hell” for people like Trudeau, WH trade director Peter Navarro told Fox News. He also used words like “bad faith diplomacy” and accused our guy of “stabbing (Trump) in the back on the way out the door.” Just to reinforce it, he added Trudeau had orchestrated a “stunt press conference” and made “one of the worst political miscalculations of a Canadian leader in modern Canadian history.”

“All Justin Trudeau had to do was take the win. President Trump did the courtesy to Justin Trudeau to travel up to Quebec for that summit. He had other things, bigger things on his plate in Singapore. And what did Trudeau did — do as soon as — as soon as the plane took off from Canadian airspace, Trudeau stuck our president in the back. That will not stand.”

It gets worse. Larry Kudlow is now the chief economic czar in Trump’s White House, directly responsible for influencing trade policy, and he’s pissed. “It was a sophomoric, political stunt for domestic consumption,” he said of the Trudeau media remarks. “That’s a betrayal. That’s a double cross.” Of course, from Air Force One, Trump broadcast that our prime minister made “false statements,” is “dishonest” and will pay the price.

Hmmm. Hard to see how this could have gone worse.

But this is not just about dissing a guy who may have deserved it. After all, none of us know if what Trudeau said in public was what he relayed to the Big Guy in private. If he embellished, bragged, exaggerated and pumped, he earned some grief. But the Trump Team response seems so over the top it may well be a prelude to economic consequences.

So far the US has derailed NAFTA and probably killed it. Washington says it wants bilateral deals with Canada and Mexico, instead of a three-way deal – because it would obviously dominate both. The punitive tariffs on steel and aluminum were imposed on a feeble excuse (America’s ‘national interest’ was threatened by we beavers). Now Trump is thumping about big tariffs on cars assembled in Canada, even though the companies doing so are American and we’ve had a mutually-beneficial Auto Pact since 1965 (signed by Lester Pearson and Lyndon Johnson).

This is a mess. Canada-US trade relations have not been worse in my lifetime. Failed deals, new levies and now open derision, attack and manshaming. The stakes are massive. Trade between the two countries is the second-largest flow of goods in the world – $630 billion a year. We send about $310 billion a year in stuff to them and they truck $320 billion worth to us. In every year for more than three decades, trade has been in favour of the Yanks – and now Trump seeks to rewrite that by focussing on tiny issues like Canada’s closed market for dairy and eggs. Pure hyperbole.

Trade with the States makes up about a third of our economy. It was to prevent trade wars and secure long-term, stable access to the huge American market that Brian Mulroney did the Free Trade deal – which dairy farmers fought hoof-and-nail. That was followed by NAFTA, bringing Mexico into the mix and creating a continental trading bloc to counter that in Europe and erode the cost of goods and services. It worked. Not perfectly, but far better than what went before – and what appears to be coming.

Trump is a populist elected on a platform of nationalist, America-first, jingoistic protectionism. His electoral base has swallowed the line that erecting a wall around the States will deliver good stuff – factory jobs, higher wages and a better life – without any of the bad – higher prices, more inflation and lower growth. History have proven over and again that protectionist policies make economies weaker and lead to crappy social consequences. They helped turn a stock market event into a global depression in the last 1930s. Had Trump been in office in 2008, we might be all Grapes of Wrath today.

Well, if this past weekend leads to a quixotic Trumpian tariff on cars and further barriers at the border, there will be two men to blame.

And you paid for it.

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June 10th, 2018

Posted In: The Greater Fool

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