Paul Wheaton

🇺🇸/🇨🇦 Trump Eyes Total Ban on Canadian Alcohol, Dairy & Steel — The Blockade Play That Could Crush CUSMA Did Trump intend to pave the way for trade bans by speaking of halting trade entirely with certain countries that ran a trade surplus with the United States? Anyone with even a modicum of economic knowledge deemed the idea unfeasible, given the dire consequences it would have for Americans. However, we were thinking rationally, forgetting that reason has long since ceased to drive decision-making in Washington. Today: the Globe and Mail reports that bans is a real possibility : "The Trump administration is considering banning imports of Canadian alcohol, dairy products and possibly steel". Thus, if total bans on the sale of certain categories of Canadian products on U.S. soil were to be imposed, the economic repercussions would be severe, painful and an escalation in the Trade War that could make CUSMA implode. Let us examine how and why: THE CASE OF STEEL This is by far the ara where most damage would ne caused, given the high level of integration within North American supply chains, which rely on a constant flow of steel inputs back and forth across the border. Consequences for the U.S.: Immediate product shortages in the automotive, aerospace, and construction industries, among others. Price inflation for steel-related products due to sudden scarcity. Industries would be forced to urgently find more expensive alternative sources, either domestically or abroad. Consequences for Canada: Massive production cutbacks at factories. The U.S. is their primary customer; an abrupt loss of this market would force them to scale back production, leading to potential layoffs and plant closures. Shrinking profit margins. As Canada would be left with a significant steel surplus and would have to lower prices substantially to offload it in other markets. THE CASE OF ALCOHOL Canadian alcohol flows freely south of the border. An embargo would disrupt the hospitality and retail sectors. Consequences for the U.S.: Failure to restock shelves would make Canadian brands scarce, driving up their prices. Various hotel chains, restaurants, and retail stores could face intense customer dissatisfaction. Consequences for Canada: Distilleries and breweries—like the steel sector—would lose their most profitable export market, leading to a decline in revenue and production, with the associated consequences described for steel. THE CASE OF DAIRY PRODUCTS A ban that is symbolic more than anything else, since neither market interacts sufficiently with the other to cause major repercussions. Yet, ironically, this is the very issue—along with alcohol—that might just kill CUSMA... THE END OF THE CUSMA AND THE ONSET OF THE LAW OF THE JUNGLE CUSMA prohibits bans. Article 2.11 of the CUSMA explicitly forbids quantitative restrictions and total import bans between member countries—unlike tariffs, which allow products to enter while subjecting them to taxes. Physically blocking the import of a good therefore constitutes an act of economic warfare that falls outside the treaty's legal framework. In the case of steel, the U.S. "can" (however tenuously) invoke national security to exempt the sector from the CUSMA and impose tariffs—or even a ban. To attempt a legal justification for a "ban" without officially destroying the treaty, the Trump administration could invoke the infamous Section 232 (national security). But for cheese? Alcohol? That argument—flimsy as it was—no longer holds water. It is becoming ridiculous. Under international law, it is moreover indefensible. The World Trade Organization and CUSMA rules tolerate tax hikes in the event of a major dispute, but they virtually prohibit "blockades" (except for extreme health reasons, such as a cattle epidemic). However, one can safely assume that the Trump administration cares little for international law or the WTO, having repeatedly demonstrated its contempt for any international constraints placed upon its will. THE GOAL BEHIND THE BANS Getting rid of the CUSMA is a rational hypothesis—likely to use the economy as the ultimate lever to achieve Trump's ends, manipulating tariffs and bans at will. Historically, bans have served only one purpose: to force the enemy to capitulate, whether politically or militarily. That was Napoleon’s strategy against England in 1812. Indirectly, this led to a war well known in Canada... the last attempted serious armed invasion by the USA. So, if there is only one thing you take away from this essay, let it be this: A blockade aims for the subjugation, capitulation, and defeat of the target country. Canada is the target. #cdnpoli

TRUMP’S DIVIDE-AND-CONQUER TARIFFS: SHIELDING SOME PROVINCES, CRUSHING OTHERS By almost completely shielding some provinces while viciously targeting others, Trump is employing a proven conqueror’s strategy: Divide et impera—divide and conquer. Before a new wave of tariffs hits on August 19—and it will, for Trump is unlikely to abandon his favorite hammer; the only questions are its intensity, its scope, and who the victims will be... Currently, the provinces hardest hit are British Columbia, Quebec, and Ontario. By the numbers: percentage of exports to the U.S. subject to tariffs B.C.: 13.7% QC: 10.8% ON: 9% AB: 1% SK: 1% Source: Trevor Tombe, Economist, University of Calgary What do the last two provinces have in common? Each broke ranks with the united provincial front and continued selling American alcohol within its borders. They also show the highest levels of support for Trump in Canada—ranging from 21% to 27%, according to a Léger poll. And one of them, Alberta, is flirting with an "independence" that would bring it under U.S. control for good—regardless of the public protests of the Alberta secessionist movement. The dreaded clause of a new wave of tariffs: it carves out. The infamous Section 338, which justifies the tariffs of July 19, contains a clause that is rarely discussed but is extremely dangerous. It allows for discrimination against one province over another in the sale of the same goods and services, something that was not possible until now. Take alcohol, for example. Thus, Trump could impose tariffs on wines from Ontario and Quebec, and completely exempt beers from Alberta and Saskatchewan. Diplomats involved in negotiations with the Americans warn us that this strategy of division and fragmentation is underway, and not being sufficiently reported in the public sphere. Divide and rule has always been the method of empires, whether that of Rome, the Spanish in Aztec and Inca territory, or England in India. To resist the law of the strongest, Canada must, more than ever, minimize its internal conflicts, discard old grudges between provinces, and adopt the motto of Dumas and the Musketeers: One for all, All for One. #cdnpoli #polqc