Trump, Trade, and Canada’s Special Relationship with the United States

Christo Aivalis

Used under CC BY 2.5 via Wikimedia Commons

In mere days, Donald J. Trump will conclude his improbable rise to the highest office in world’s most powerful country. What this means has been explored from numerous perspectives, but one issue growing in coverage is how Justin Trudeau’s Liberal government will relate to this new Republican administration. In fact, many political analysts have suggested that Trudeau’s recent cabinet shuffle was undertaken in part to prepare for Trump’s regime.

All this would be important in any case, because relationships between Prime Ministers and their Presidential counterparts often play a role in diplomatic affairs. But Trump’s protectionist campaign rhetoric offers a special challenge to Canada’s leadership. Because when Trump calls for NAFTA to be renegotiated or scrapped, it could very well lead to the erosion of a close relationship with our southern neighbour that has help define the Canadian-American relationship for much of the postwar era. An example of this can be found in Pierre Elliott Trudeau’s dealings with U.S. President Richard Nixon.

Looking back a little bit further, we can see how Canada’s 20^th century was determined in large part by the politics of traded with the United States. Canada’s 1911 federal election was fought on the issue of free trade with the USA, with the Liberals backing the concept and the Conservatives warning of how it would harm Canada’s imperial relationships. While the Conservatives won the1911 election, the following decades saw a decline in trade with Britain, along with a steady reliance upon American markets and capital. The result was that many Canadian industries became dependent upon the American economy or became owned by American capital in a branch-plant economy.

After World War II, Canada’s economic reliance upon the USA led some to suggest that there existed a continental economy, rather than two national economies. This was due to raw economic integration, but also to special trading arrangements—key among them the Canada-US Automotive Products Agreement (Autopact)—which lowered restrictions in the movement of auto parts and assembled vehicles across both borders. Importantly, no such pacts previously existed between the USA and any other major automotive nations, giving Canada a special relationship in terms of access to the gargantuan American car industry.

But Canada-US relations became more complicated in the early 1970s during Richard Nixon’s presidency. The USA, while still the undisputed global capitalist power, was facing intensified competition from Japan and Western Europe, whose economies were emerging out of the literal and figurative postwar rubble. As historian Bruce Muirhead has noted, the Nixon administration instituted a series of tariffs meant to address this which would also impact Canada and unlike with the USA’s 1963 Interest Equalization Tax, Canada was not to be exempted from this policy. Some Canadians at the time deemed the ‘Nixon Shock’ to be an existential threat to the economy and Canadians’ ways of life.

The response from Canada went beyond normal trade talks, taking on a full-fledged diplomatic effort which included key cabinet ministers and Prime Minister Trudeau himself. They would talk up the special historical relationship between the two countries, as well as Canada’s presence as a steadfast economic, ideological, and military ally. This was not without meaning, because American bureaucrats saw value in Canada as an ally on the world stage. And while the USA did not depend on Canada as much as the inverse, American businesses still had numerous ties to the Canadian market, and any sort of tariff upon Canada would be a tariff on many Americans.

Trudeau would travel to Washington in 1971 to meet with Nixon. Trudeau had a long-standing distrust of nationalism and protectionism, but as The Toronto Star notes, he was willing to give this up if it meant preserving the special relationship: “If you’re going to be protectionist, let’s be in it together…I am not a nationalist, I am not a protectionist – if you were going to take a very protectionist trend, our whole economy is so importantly tied to yours, we’d have to make some very fundamental decisions.” Trudeau was alluding to alternative arrangements outside the continental economy. While he would not abandon a general distrust of nationalism, Trudeau became more receptive to programs like the Foreign Investment Review Agency and the National Energy Program. Likewise, this incident spurred interest in strengthening trade ties with the European Union.

Nixon for his part was adamant that Canada could no longer take its relationship with the USA for granted. In a 1972 address to Parliament, he expressed that—whatever the historical ties between the countries—each had to follow their own path based on their own self-interest. Speaking of past leaders, Nixon said:

In focusing on our peaceful borders and our peaceful history, they have tended to gloss over the fact that there are real problems between us. They have tended to create the false impression that our countries are essentially alike. It is time for Canadians and Americans to move beyond the sentimental rhetoric of the past. It is time for us to recognize: that we have very separate identities; that we have significant differences; and that nobody’s interests are furthered when these realities are obscured.

But despite these tensions—and Nixon’s implication that the special relationship was dead—integration between the Canadian and American economies was not halted. The Autopact was not scrapped as a result of Nixon’s reforms, and in 1987-88 both countries accepted free trade, with Mexico being brought in a few years later to form NAFTA. In a sense, the special relationship was perhaps altered, but not scrapped. Currently America still serves as Canada’s largest trading partner and access to Canadian resources still has great financial and strategic value to the American economy.

But while Ronald Reagan, Bill Clinton, George Bush (Sr. and Jr.), and Barack Obama have all been champions of trade liberalization with Canada, Trump ran an election campaign against this concept. In fact, Trump administration spokespeople have just last week suggested that while the Trump campaign targeted car imports from Mexico, actual policy might include similar tariffs upon incoming Canadian automotive goods, which could have devastating effects on many communities. Justin Trudeau’s goal, much like his father’s was, will be to promote Canada’s interests—which include access to American markets—but he must do so without appearing to condone the regressive stances Trump holds in his policies and personal conduct. If Trudeau is successful, he will maintain Canada’s access to the American market, which has been—and will continue to be—one of Canada’s key political objectives.

Christo Aivalis is an adjunct professor of history at Queen’s University. His dissertation examined Pierre Trudeau’s relationship with organized labour and the CCF-NDP, and has been accepted for publication with UBC Press. His work has appeared in the Canadian Historical Review, Labour/le Travail, Our Times Magazine, Ricochet, and Canadian Dimension. He has also served as a contributor to the Canadian Press, Toronto Star, CTV and CBC. His current project is a biography of Canadian labour leader A.R. Mosher.