Lorne Gunter: Build American cars without Canadian aluminum? Good luck

A little more than a week ago, I wrote that U.S. President Donald Trump was a jackass.

I fear I was too kind.

After agreeing to give Canada a 30-day reprieve from his tariff threats, just a week later he signed an order imposing a 25 per cent tariff on our steel and aluminum.

That makes Trump unreliable at best and a liar at worst.

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Now he’s threatening a 100 per cent tariff on automobiles from Canada because, “We don’t want their cars. We want to make the cars in Detroit.”

Both moves show just how little Trump understands about trade, particularly between the United States and Canada.

Lots of Albertans know our country (and mostly our province) provides the Americans with 25 per cent of all the oil they use. Not just 25 per cent of the oil they import, but 25 per cent of all the oil they consume, domestic and imported.

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And that was deliberate. During the Bush administration, the White House intentionally sought to replace imported oil from Saudi Arabia, Venezuela and elsewhere with oil from a secure, stable source that didn’t fund terror — i.e. Canada.

Trump is being even more foolish (if that’s possible) by targeting Canadian aluminum. We provide them with 60 per cent of their aluminum, which is vital to their defence and automobile industries.

Even if Trump moves to repatriate automaking to Michigan, he cannot do it without Canadian aluminum. And he can’t produce modern weapons systems with us, either.

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Finished cars built in Canada and shipped to the States account for less than 10 per cent of the American domestic market. Over a decade or more, the Americans might be able to replace that at domestic factories.

But parts from Canada make up more than 15 per cent of cars and light trucks made in the U.S. by the domestic Big Three. That cannot be erased by a loud-mouthed lout pontificating that he wants American vehicles built in America by American workers. There isn’t factory capacity in the U.S. to make up for the lost parts from Canada.

And if Canada responds by limiting the import of American vehicles, we lack the capacity the make enough of our own to overcome the shortfall. So we turn to China. Does Trump really want his northern neighbour dependent on imports from America’s Communist rival?

Besides, while Trump might sound off about the elimination of the Canadian auto sector, he can’t do it legally. The treaty smoothing cross-border trade in cars and car parts celebrates its 60th anniversary this year.

Trump might initially bulldoze the 1965 Autopact and subsequent free-trade agreements, but eventually international trade organizations and U.S. courts will reverse him.

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And maybe the U.S. Congress will some day remember that it is a vital part of the U.S. Constitution’s checks-and-balances arrangement. Perhaps Congressmen and senators will stop accepting without objection every dictate that issues from Trump’s pen, especially the ones that in fact require Congressional approval.

At worse, Canada may have to agree to reopen free-trade talks and in the end sign on to something less than fully free trade. (And we throw supply-managed agriculture under the bus, which needs to be ended anyway.)

There is another reason, though, why Trump is completely wrong that tariff “is the most beautiful word in the dictionary.”

Tariffs, especially the reciprocal kind Trump is set to impose on the world, made the Great Depression very much deeper and longer.

The stock market crash of 1929 is widely seen as the cause of the Depression. However, the substantial tariffs the Americans imposed the following year caused the 25 next-largest economies in the world to set matching tariffs, which nosedived everyone’s economies.

American farmers, for instance, were hammered by the dust bowl, but hammered far more by lack of export markets that created a glut of domestic supply and drove down prices.

Now Trump appears set to repeat all the same disastrous errors.

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