Trump is poised to escalate the U.S.-Canada trade conflict, with a threatened 25 per cent tariff on U.S. vehicle imports from Canada. Trump is also targeting the Japanese and German auto sectors. The Trump threats have not been accompanied by a timetable for implementing the tariffs.

That devastating strike at the heart of Canada’s manufacturing sector would cost Southern Ontario tens of thousands of jobs, lead Canada into a recession and depress an already weak loonie by as much as 15 per cent against the U.S. dollar, raising the cost of living for 36 million Canadians, according to a report this week by TD Economics.

One strives to avoid hyperbole, but Donald Trump is a clear and present danger to Canadian well-being.

Trump either is risking or inviting a full-blown global trade war without precedent since the Dirty Thirties. The resulting economic injury to Canada’s trading partners would be a further drag on Canadian GDP growth, in addition to the Canada-specific tariff damage.

What started in late May with steep U.S. tariffs on steel and aluminum imports from Canada, Mexico and the European Union (EU) vastly widened this week to Trump threats of U.S. tariffs on as much as $450 billion (U.S.) on U.S. imports of Chinese goods.

The question for Ottawa now is: Are the Americans bargaining in good faith, using tariff pressure to get the best possible deal for themselves in a renegotiated North American Free Trade Agreement (NAFTA)?

Or is Canada simply being made an example of, to frighten America’s other trading partners, especially a China that is the sharpest thorn in Trump’s paw, into bending to Trump’s “America First” vision for his country?

Bringing a 24-year-old NAFTA into the 21st century is a worthy if wrenching exercise. But if that’s not Trump’s game, all the concessions in the world by Ottawa and Mexico won’t save NAFTA.

Ottawa has acted as though Trump’s manic disposition makes him difficult to read.

Actually, Trump’s method is plain, and the Trudeau government needs to be guided by it.

In a report last week, the C.D. Howe Institute, a pre-eminent Canadian economic think tank, aptly describes Trump’s signal tactic as “weaponized uncertainty.”

“Under the Trump administration, U.S. trade policy has been characterized by implausible claims, demands and threats, which are then retracted, then reasserted and so on,” the institute notes.

Trump’s tactics include “outlandish, unworkable proposals to manipulate trade flows that appear deeply misinformed,: threats against U.S. multinationals, proposed negotiations that would break up EU policy solidarity [and] flip-flopping on a policy for China.”

Trump’s proudest boast is that he is a dealmaker without equal. Keeping negotiating partners off-balance is a well-worn tool of veteran dealmakers.

And yet, suppose we were to take Trump at his word, that he really does seek a mutually beneficial trade relationship with Canada, an arrangement Trump sees as currently lopsided in favour of Canada and Mexico? What might we do?

Justin Trudeau has declared himself “flexible” on changes to Canada’s supply management system in dairy, poultry and eggs — the egregious protectionism that obsesses Trump, since it’s the only Canadian example he can find.

In exchange for a U.S. phase-out of quotas on Canadian softwood lumber, the Canadian PM could Lower Canada’s average 7.5 per cent tariff on imported U.S. dairy products to a rate closer to the modest 3.1 per cent average Canadian tariff on all U.S. goods.

Canada could raise the dollar-value threshold at which we apply tariffs on U.S. imports, from the current $20 (Cdn) to about $1,000 (Cdn), the U.S. level. That would exempt a great deal of U.S. import volume from duties.

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In the auto sector, Canada could meet U.S. demands for minimum vehicle content made by workers paid at least $16 (U.S.) per hour, and agree to a higher level of North American content per vehicle.

China alone accounts for more than half of America’s trade deficit with the world. And China seeks to achieve global supremacy in several high-tech fields by 2025, at the expense of other economies. Having given itself just seven years to reach the commanding heights of the 21st century economy, China, of necessity, is an ambitious buyer and thief of intellectual property worldwide.

Canada could spearhead a coalition of Western economies to ban Chinese investments in high-tech enterprises in their jurisdictions, to prohibit Western joint ventures with China that require a handover of Western intellectual property to China and to help create a joint monitoring system to ensure that Chinese steel and aluminum destined to be dumped in the North American and EU markets can no longer be shipped across third countries to evade U.S., Canadian and EU tariffs.

The above efforts would be futile, however, if Trump’s “America First” gains, like those sought by China, are to be carved out of its trading partners’ prosperity. The toughest countermeasures would then be required, stronger than those already announced by Canada, China and the EU.

If Trump does attack Canada’s auto sector, that is the moment for severe countermeasures, invoked quickly and together for maximum effect.

Canada could announce its imminent suspension of U.S. drug patents on Canadian soil. There is precedent for that. Before NAFTA and its predecessor, the U.S.-Canada Free Trade Agreement (FTA), Ottawa routinely granted Canadian drugmakers the right to produce U.S. drugs. Canada could leave the door open to extending that practice to other U.S. intellectual property rights, as well, from computer components to U.S. cultural products.

Big Pharma, one of the most powerful lobbies in Washington, would put tremendous pressure on U.S. lawmakers to reverse U.S. trade actions that cost them their patent protection in Canada, before that loss of Big Pharma’s most valuable asset spreads to other countries.

Trump has called for increased military budgets in NATO countries, to reduce America’s share of NATO’s costs. Canada could muse about simply quitting NATO, which is, after all, an extension of the Pentagon and the U.S. State Department. As such, Canada, Britain and Germany have been subsidizing NATO missions that the U.S. alone has controlled since NATO’s inception, in 1949. Quitting NATO is hardly an unfamiliar policy option, having long been a plank of the NDP platform until relatively recent years.

NORAD, the U.S.-Canada joint venture to protect North America from Soviet missiles, which proved useless in preventing the tragedy of 9/11, is arguably obsolete and another candidate for curtailed Canadian participation. Branded a continental defence system, NORAD in fact serves to protect the U.S., Canada being an unlikely target of intercontinental missile attacks by Russia and the very few others who could mount them.

Canada, without an enemy in the world, would find support among Western democracies in its defence of its people’s well-being.

And if Canada’s example was emulated, on U.S. patents and NATO alone, the resulting damage to America’s geopolitical and economic interests could mark the end of Trump’s presidency.

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