Carlo Dade

Published in the Globe and Mail

November 6, 2024

Carlo Dade is director of trade and trade infrastructure at the Canada West Foundation.

Republican presidential candidate Donald Trump’s win in Tuesday’s U.S. election is poised to bring larger economic harm to Canada than anything the country has seen in the modern area of its engagement with the United States.

To defend against the coming challenges, there are two key points for Canada to be able to anticipate, understand and survive a second Trump administration.

The first is that as a second administration, as opposed to the first, Mr. Trump and those who will populate his cabinet will not be surprised to be in power this time – they will be prepared.

The second point, related to the first, is to follow the paper and people. Instead of the tweets issued in a void of serious policy work, this time there is “substance” – for lack of a better term – to help determine which of his tweets and seemingly random announcements aren’t that random.

With this Trump administration, there are MAGA-affiliated think tanks and individuals, many of whom will likely be in the administration, who have been doing the research and policy formation to implement a Make America Great Again agenda, or their particular variant of it.

A good case study comes from last week’s tweet by then-candidate Mr. Trump about using water from Canada to irrigate California. There was no paper trail to this tweet – i.e. no tie to a former Trump administration official working in a MAGA-affiliated think tank. It was a random thought that popped into the candidate’s head. These random ideas can instill panic, but without substantive work behind them, they have a hard time becoming legislation and policy.

On the other hand, Mr. Trump’s proposal for a tariff on all goods coming into the U.S. is not a random utterance. The proposal for what its proponents call a global tariff is a radical economic policy for an initial 10-per-cent tariff that rises 5 per cent every year the U.S. runs a global trade deficit, but which could drop 5 per cent a year if the U.S. runs a global trade surplus. In short, this is nothing like the tariff with which we are familiar – such as those on individual items, like softwood. It is a variable, unpredictable charge that weaponizes uncertainty within foreign manufacturers and investors to force them to move production and jobs to the United States from abroad. That includes Canada.

These details are clear in the source material produced by proposals from American Compass, the JD Vance-affiliated think tank affiliated with vice-president-elect JD Vance, where former Trump U.S. trade representative Robert Lighthizer is an adviser. Mr. Trump’s articulation of the policy proposal is, literally and figuratively, all over the map – 10 per cent, 20 per cent, 60 per cent, everyone, China only, etc. The policy changes with every tweet. But the proposals and work done by groups like American Compass are what will become policy and law, not his incoherent tweets.

With the tariff, the failure on the part of Canadian policy makers to go to the source material has led to a potential misunderstanding of what is being proposed and the damage it will do.

This policy proposal is being carried into a Trump administration by Mr. Lighthizer, who is reported to be leading president-elect Trump’s economic transition team and likely by vice-president-elect Mr. Vance.

Similarly, this is likely to be the case with Project 2025, the comprehensive set of policies for all government agencies drafted by the MAGA-affiliated Heritage Foundation think tank. Despite Mr. Trump publicly disavowing the document, if those in his administration bring elements of it with them into government, it’s administration policy.

Two additional points flow from the framework of following people and paper to understand and manage relations with a second Trump administration.

One is to know the – new – people and the new sources of paper, the think tanks and political groups behind the new nationalism and the new populist economic thinking. Canada’s traditional friends and allies in U.S. business associations and think tanks will be of little use here.

The final point to managing relations with the new administration is to understand the dynamics of the-still forming MAGA movement. That MAGA is not the traditional Republican Party with which we have been familiar is obvious. But, while we know what it is not, we do not know what it is.

For Canada, understanding the think tanks and forces behind the populist new economic theories will be most important. On economic policy some of these MAGA-affiliated groups can align more with Bernie Sanders and the Canadian Centre for Policy Alternatives than Ted Cruz and the Business Council of Canada.

We may have to throw out all our old playbook and start from scratch to operate in this environment.