Negotiation, to be successful, must meet two conditions. The first is that stakeholders must be in good faith. The second is that the outcome of these negotiations must satisfy each of the parties.
Unfortunately, it can be seen that negotiations on customs tariffs between Canada and the United States do not meet any of these two conditions. The good faith of the American president remains doubtful. L'” art of the deal “, In his own words, a form of extortion is more like imposing unjustified customs tariffs.
Regarding the second condition, Canada has already made a lot of concessions even before it has happened to an agreement: massive investments to protect the border, abandonment of digital services tax, commitment to spending 5 % of GDP in national defense. In exchange, the Americans offer us little if not even higher customs tariffs.
The deadline of 1is August who had been imposed to negotiate being exceeded, we must now reassess our strategy in relation to the American posture. Three scenarios are possible.
Scenario 1: Continue to negotiate
From the 1stis August, the Minister of Intergovernmental Affairs of Canada, Dominic Leblanc, said he wanted to continue negotiations with Washington, and that he expected a discussion between the Prime Minister of Canada and the President in the coming days.
The continuation of negotiations is justified by the uncertainty experienced by the business community. The conclusion of an agreement would effectively allow companies to ensure more stability and better predictability. However, avoid falling into the trap of negotiating an agreement too quickly and at all costs.
The resumption of negotiations does not guarantee us that a short -term agreement is favorable to us. Without outcome, the situation could even accentuate the level of uncertainty.
In addition, a large part of the trade between the United States and Canada is currently protected by ACEUM (Canada-United States-Mexico) Agreement, which allows us to put the overall impact of customs tariffs in the short term. It is provided, however, that the ACEUM is modified or renegotiated in 2026.
The American president could even decide to reopen this agreement without delay. However, this possibility comes to question current discussions. Indeed, what good is it to negotiate now, knowing that there would also be negotiations on the ACEUM in 2026?
Scenario 2: reprisals
We may not negotiate, maintain and even add reprisal measures by counter-tale or by limiting our exports to the United States. It is the scenario of the hard line which is also the one recommended by the Ontario Prime Minister, Doug Ford.
The intention here is to arouse the maximum impact on the American side and the minimum on the Canadian side, hoping that the Americans ask to return to the negotiation table by lowering their conditions and their tariff requirements.
We can always hope, but this strategy can also create a considerable wrong. Although she is spectacular, her first problem is that she penalizes the Canadian population. It even risks immersing us in recession because the Americans could bid by new prices as they have already threatened us, but also because the taxes imposed on American imports increase the price of imported goods, generate inflation and therefore have the effect of maintaining high interest rates.
It should also be noted that the provinces are not affected in the same way by retaliatory measures, because the most affected industrial sectors are not also distributed among the provinces. Limiting oil or electricity exports, for example, would first penalize Alberta and Quebec.
Sennatio 3: ignors Donald Trump
We could dry Donald Trump, that is to say not to negotiate and do not apply reprisals. This strategy relies on the time that the American president’s economic policies will take to manifest itself by negative effects. Time is, in fact, our best ally.
Customs prices are criticized by the Americans themselves, even in republican circles, because they harm the American economy. Pressures would therefore come from the interior of the United States and not from the outside.
As the US economy deteriorates, internal pressures will be stronger and question the economic leadership of Donald Trump. This is just a matter of time. So we could take our pain in patience.
The latest figures on employment and inflation in the United States tend to confirm this scenario. Donald Trump did not accept the latest employment data in the United States and allowed himself to thank the person responsible for statistics. He also threatens to dismiss the president of the American federal reserve, Jerome Powell, believing that interest rates are currently too high. These are signs that show that Trump’s economic policies do not work.
In addition, a court of first instance has already judged that the prices imposed so far are illegal and that the president does not have the power to impose indifferent customs taxes. The cause was made on appeal. But, being confirmation of the first judgment, Trump himself believes that the United States would not recover. Trump would no longer have any credibility.
Why then sign an illegal agreement? Should we at least wait for the judgment of the courts? Canada has a developed economy. We have enough resources to support our industries affected by Trump’s prices. Isn’t the best strategy to assume our own development ourselves and wait for the Americans to make their mistakes? Is it really necessary to respond to the threats of Donald Trump?
