The recent trade tariffs imposed by the US new administration on goods from Canada and Mexico threaten to deliver serious negative economic damage to Canada, Mexico and the US. So why is the US administration imposing these tariffs? What can Canada do to respond and how can we negotiate our way to a win-win solution? To respond to these big questions... let’s just take a moment to go back to basics.

"Negotiation 101" refers to the basic principles of negotiation, including understanding our own needs and priorities, actively listening to the other party, identifying common ground, making concessions, and aiming for a mutually beneficial outcome through a "give and take" approach, where both sides communicate and  reach an agreement. 

When “under attack” or “being pushed into a corner”... my experience tells me to avoid “reacting”. The best way is to “respond” appropriately. But what is the difference between reacting and responding? "Reacting" refers to an immediate, often emotional, and instinctive response to a situation, while "responding" implies a more thoughtful and deliberate action, where you take time to process information and consider the best course of action before acting. Essentially, a reaction is impulsive, while a response is considered intentional. Jumping into negotiation unprepared – no matter how unfair treatment is displayed -  is really a trap that sets us for failure which is what I believe happened to Canada so far with the recent tariff threats.

NAFTA, signed in 1992 ... went into effect in 1994 and established a free-trade zone in North America by removing tariffs on most goods produced by the US, Canada and Mexico. In 2020, USMCA replaced  NAFTA, so to the best of my knowledge, all three countries are bound by the agreement and its conditions. Introducing tariffs would be contrary to the agreement unless there is an emergency or a matter of national security, which I do not believe exists on the Canadian border.

If as stated the prime motivation behind the new tariffs is better control over border security and flow of illegal migration and drugs, then that should be addressed seriously and with urgency. Not only by Canada but by both countries. Since 2016, there have been over 49,105 opioid-related deaths in Canada. Reliable estimates also suggest that between 300,000 and 600,000 people live in Canada without valid documents. Do we need our neighbour to threaten us to fix these issues? Are these number not enough to convince us to take serious and decisive action?

For over 150 years, Canada has had no closer friend and ally than the US and vice versa. At home and abroad, we not only worked together but we fought together and paid heavily with lives to make our citizens' lives safer and more prosperous.  Both, Canadian and Americans have a huge responsibility to protect this solid friendship and strengthen it in a world that needs more than ever, peace, human rights supporters, healthy economies, democracy and wise management of our planet.

If the unstated motivation behind the tariffs is balancing the trade deficit of the US with Canada, we can surely sit down with our neighbour and review where the imbalances are and what can we both do to manage our trade in a mutually beneficial way. Wise cooperation rather than forced self-destructing tariffs is the answer. In fact, taking away the energy component, the US has a surplus trade with Canada, so where is the problem? If we quickly develop infra-structure to export energy from Western and Eastern Canada, we should easily find customers that want our energy and are willing to pay higher prices! How great is that?

A “tit for tat” with a US that is 12 times bigger than us is OK as a retaliation for the short term and for “feeling good” but is not the right strategic response for the long term. I fully understand the ease of the proximity but, the US is our number one customer with a whopping +/- 80% of our exports and our largest supplier with +/- 60% of our imports. In simple business terms that would be suicidal. We can significantly reduce that vulnerability with a simple strategy of diversification through investments and policy change. Customers would line up for our goods and energy.

Lastly, if another hidden motivation behind the tariffs is for swallowing Canada... we can say thank you for the compliment but we are not for sale.       

Over the years, the relationship with our neighbour has had its ups and downs, which is normal, but today, our neighbour is more unpredictable. More reasons to manage the US relationship carefully and with a strategic plan that protect Canada’s interests.

Some key actions ... 

• Getting Canadians united and removing trade barriers within Canada and rallying up behind a strong and fresh leadership with a clear strategy and direction.
• Putting our overdue fiscal and budgetary house in order.
• Developing our incredibly vast resources responsibly and wisely.
• Growing our economy in a healthy manner and reducing our dependency on the US.
• Re-building our armed forces with a priority for readiness and modernisation.

None of the above is” rocket science” but will not happen unless our government gets its act together. I see the coming season as a pruning season for Canada. Pruning is the process of selectively removing branches from a plant to improve its structure, health, and appearance. It can also help keep pests and disease away.  

It may be painful but pruning generates healthy growth and it is exactly what Canada needs after several years of stagnation and going in the wrong direction.

W 930 Personal Note Feb 2025 Pruning Season 4 Canada