Canada puts themselves in a tough spot

Sundance writes at The Conservative Treehouse,

Today Canada released an updated list of retaliatory tariffs designed as countermeasures to the U.S. Steel and Aluminum tariffs [SEE HERE] which will begin Sunday, July 1st.

Additionally, Foreign Minister Chrystia Freeland, Innovation Minister Navdeep Bains, and Employment and Labour Minister Patty Hajdu, announced they would initiate an emergency program to use Canadian taxes compensate workers, expand unemployment benefits, and subsidize impacted industry. Yes, in a transparent display of political ideology (throwing capitalism directly out the window), Canada doubles-down on centralized government subsidies to offset market impacts. Brilliant ‘eh!

…Team U.S.A. have applied tariffs to Canadian softwood lumber, Steel and Aluminum as Canada refuses to negotiate new terms for NAFTA where North American products are prioritized. Canada demands the ability to continue importing Asian, mostly Chinese, products for their assembly-based market.

With the latest counter-move by Justin and Chrystia from Canada, it is increasingly likely President Trump will levy a 20% tariff on imported Canadian automobiles. Last month (May) the Canadian economy dropped over 31,000 full time jobs.

Canada has put themselves into a tough spot. The current Canadian government cannot support any NAFTA agreement that requires the actual manufacturing of goods in North America. Both Canada and Mexico have structured their economies to import goods from Asia, mostly China, and use their access into the U.S. market to trans-ship their final goods.

Chinese central government, as well as Asian and EU corporations, pay Canada and Mexico (through trade agreements) for U.S. market access. Essentially Mexico and Canada are trade brokers or pass-throughs. Neither Canada nor Mexico have the actual raw material, infrastructure or processes in place to manufacture goods in North America; they both generally only assemble parts made overseas into finished products.

Because of this structural flaw, the Canadian government is doubling down on their intent to keep the status quo in place. However, this approach also makes it a futile exercise to continue talking about renegotiating NAFTA.

Mexican elections are being held July 1st (Sunday), it is yet to be determined if Andres Manuel Lopez Obrador (AM LO), Mexico’s virtually guaranteed-to-win next president, will support a Mexican withdrawal from NAFTA.

Read more here.