Trump has Aimed his NAFTA Criticism at Mexico. But Canada is now Worried.

 

For Justin Trudeau, life is about to get a lot more complicated.

After Friday’s inauguration of Donald Trump as U.S. president, the Canadian prime minister will be entering uncharted territory with Canada’s most important economic, defense and political partner. Gone will be his brief, 15-month “bromance” with Barack Obama, in which the two like-minded leaders bonded over issues such as free trade, climate change and human rights.

Facing the unpredictability of a Trump presidency and its possible negative impact on Canada, particularly when it comes to economic ties, Trudeau has acted quickly. He has sent his two most trusted aides to the United States for talks with Trump’s closest advisers and shaken up his cabinet, naming Chrystia Freeland, a Harvard-educated former journalist with extensive links in the United States, as his foreign minister.

“The stakes are high for Canada,” Roland Paris, a former senior foreign policy adviser to Trudeau and a professor at the University of Ottawa’s Graduate School of Public and International Affairs, said in an interview. “Three-quarters of our manufacturing exports go the U.S., and that accounts for one-fifth of our GDP. Given Mr. Trump’s comments on trade issues in relation to other countries, red lights are flashing in corporate and government offices across this country.”

“It’s the uncertainty that everybody is worried about,” said Michael Kergin, a former Canadian ambassador to Washington. The future of the North American Free Trade Agreement is of particular concern, even if Trump has been targeting Mexico and saying nothing publicly about Canada. “He’s certainly got Mexico is his sights but it’s a three-way agreement. What hits Mexico will inevitably have an impact on us,” Kergin said in an interview.

“If barriers are put up against Mexican imports into the United States, we would be affected because of supply chains,” said Gordon Ritchie, who helped Canada negotiate the Canada-U.S. Free Trade Agreement, the precursor to NAFTA.

In the North American auto industry, parts often go back and forth across borders seven or eight times before they end up in a final assembled vehicle. Other sensitive trade issues include Buy America rules, U.S. efforts to limit Canadian exports of softwood lumber for homebuilding and Canada’s laws that effectively block U.S. farmers from sending dairy products and poultry to their country’s northern neighbor.

So far, Trump’s protectionist tweets have primarily been aimed at automakers who transfer production to Mexico from the United States, although in recent days he has also threatened German carmakers with a 35-percent import tax if they don’t build more cars in the United States. Canada has so far been spared. Ironically, when Trump attacked Toyota this month for building a new plant in Mexico, he didn’t mention that its planned output of Corolla small cars will be transferred from a Toyota plant in Ontario, with no impact on U.S. jobs.

Kristin Dziczek, director of the industry, labor and economics group at the Center for Automotive Research in Ann Arbor, Mich., said Canada was never a primary target of Trump voters in Michigan, Ohio and Pennsylvania. “There aren’t a lot of angry autoworkers ticked off at Canadians,” she said in an interview. “I’m not sure an anti-Canada message resonates.”

Yet Canada remains vulnerable. Only 12 percent of the cars assembled in Canada are sold domestically, with the vast majority being shipped to its southern neighbor.

Incoming White House press secretary Sean Spicer made it clear in a briefing last week that Canada isn’t going to get a pass when it comes to jobs. “When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico or any other country seeking to put U.S. workers at a disadvantage,” then the new president “is going to do everything he can to deter it,” he said.

While there are concerns on Trump’s trade policies, Canada’s oil industry and the Trudeau government have been heartened by Trump’s support of the Keystone XL oil pipeline, construction of which was halted by Obama on environmental grounds.

Ritchie credits the Trudeau government for doing all it can to develop relationships with the incoming Trump team, including a reported visit by Trudeau’s top two aides to see Trump son-in-law and adviser Jared Kushner and chief strategist Stephen K. Bannon. As part of this effort at outreach, Trudeau and Canadian Ambassador David MacNaughton have signaled a willingness to open talks on modernizing NAFTA, and the two have appeared in a video welcoming members of the new Congress and reminding them that Canada is “the largest international customer for goods and services made in the U.S.”

The appointment of Freeland, who replaces the cerebral but dour Stéphane Dion as foreign minister, is part of that outreach effort. “She understands the U.S. She’s familiar with the U.S. business community, and she’s interacted with the CEOs of major multinationals,” said Paris, the former Trudeau adviser.

A native of rural Alberta, Freeland attended Harvard and then moved to Ukraine, working as a stringer for The Washington Post and other news organizations. She then earned a master’s degree from Oxford University on a Rhodes scholarship and embarked on a journalistic career with the Financial Times, the Globe and Mail, and Reuters, taking her from Moscow to London to New York, with a brief stint in Canada.

While in New York, Freeland was a frequent panelist speaking on economic issues on CNN and MSNBC. She returned to Canada in 2013 and ran for Parliament in Toronto as a Liberal when Trudeau’s party was still in opposition. Appointed minister of international trade after the Liberal victory in October 2015, Freeland was credited with completing tough negotiations with the European Union for a groundbreaking free-trade deal, famously walking out of the talks at a key point when the Belgian region of Wallonia threatened to scuttle the deal.

Freeland, whose mother is of Ukrainian ancestry, has angered Russian President Vladimir Putin with her outspoken criticism of the Russian annexation of Crimea and was hit with a travel ban to the country in 2014. The Russian Foreign Ministry has reportedly offered to lift the ban but only if Canada removes its economic sanctions against Russia, an offer Freeland’s spokesman has rejected. Asked whether she will be able to travel to Moscow in her new job, she responded, “That’s a question for Moscow.”

So far, Trudeau has been restrained in his comments about Trump. Last week, during a cross-Canada electoral-style tour, Trudeau told a town hall meeting in Belleville, Ontario, that he will continue to develop “a constructive working relationship with the incoming American administration.”

Then he reminded his audience that he won’t change his fundamental beliefs. “There are things that we hold dear that the Americans haven’t prioritized. And I’m never going to shy away from standing up for what I believe in, whether it’s proclaiming loudly to the world that I am a feminist, whether it’s understanding that immigration is a source of strength for us, and Muslim Canadians are an essential part of the success of our country today and into the future.”

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