University of Saskatchewan economics professor Dr. Joel Bruneau said Canada might not have anything to gain by imposing retaliatory tariffs — instead, a ‘wait and see’ approach might pay off as homegrown American opposition to Trump’s tariff threats gathers momentum.
Dr. Bruneau is Department Head of Economics at the University of Saskatchewan. His research interests include international trade and environmental economics. He teaches advanced courses on economics theory, global systems, and policy related to international trade.
Dr. Bruneau has contributed to journals including Canadian Public Policy, the Canadian Journal of Agricultural Economics, and the Journal of International Cooperation.
Q: What’s on your mind regarding economics as it pertains to Saskatchewan?
Well, it’s those tariffs, right? Is the Trump administration really going to impose tariffs? And I think the consensus is that he’s going to do it, but then the question is, what are they going to do with those tariffs?
Is it going to be across the board, the way that he promised, or is it going to be piecemeal, or are there going to be exceptions? Is it all threat, is he going to put it off again?
There’s much, much more pressure now not to do it, and so we’ll just have to see how that pressure manifests itself over the weekend.
Q: Is this a kind of ‘boy who cried wolf’ scenario? Do his continual threats of tariffs and annexation actually weaken over time?
Yes, you would say that a sort of rational politician, who looks at the electoral map, who looks at support, who looks at the data that you would want to initiate policies with, they might say, ‘You know what, it was a good idea, but it’s not gonna work. There’s too much pressure.’
But that doesn’t seem to be something that constrains this administration necessarily, so I wouldn’t feel that if he just said, ‘OK, I’ll put it off,’ — I still think there’s a high probability that he just triggers it again, because he seems to be capricious.
Even if he puts it off this time, the threat each time damages our economy and it damages the American economy. So, the only way that those damages will evaporate is if he purposefully takes tariffs off the table and people believe him.
Q: Could our economy adapt over time to not need the US? Not just a backlash, but a separation?
I think we forget when we’re talking about this that, in a sense, ‘Canada’ does trade with ‘the US’ — it’s Canadian firms trading with American firms. Canadian firms source from American firms and American firms source from Canadian producers.
It’s not government-to-government. And the United States is the biggest, richest economy in the world. They pay their bills, and at least up until now, they honour their treaties. If you’re moving away from the United States, you’re moving to your B-list.
If that’s China, guess what? They’re worse, in terms of capricious government action. If it’s India, they’re probably no better than the US. So, it’s not clear that there are better markets out there.
I would totally trust the EU to follow through on their commitments, I’m not so sure I would trust China. Clearly, we’re no longer trusting the US. Maybe we still trust Mexico? But if the whole NAFTA framework is broken, then, will Mexico still feel they can follow the rules, at least with respect to Canada?
It’s just this great deal of uncertainty. ... It’s not good.
Q: Are international trade agreements still working?
Well, the WTO (World Trade Organization) ... my understanding is that the adjudication process is stopped, because the United States has not agreed to having tribunals set up. So, the WTO simply can’t resolve any disputes.
We have NAFTA (North American Free Trade Agreement), but if the United States is basically going, like, ‘We don’t care about this agreement that we signed six years ago,’ then, you know, they’re breaking the agreement without telling you they’ve broken the agreement.
So, this mechanism to deal with disputes is really fractured. ... It’s a breakdown of that international system which the Trump administration seems to be quite comfortable with.
From Canada’s perspective, this breakdown of international agreements, and the unwillingness of some of our trading partners to adhere to the agreements they have made, is really, really problematic.
Q: What are the university discussions like right now?
Basically, we’re all rolling our eyes. First off, we’re Canadians, right? And we’re going, what’s he doing here? This is just bad policy, that happens to harm an ally, and a neighbour, and your best friend. How is that a good thing?
One of the things that I’m going to be most concerned about is ... Donald Trump’s capriciousness and meanness could exacerbate the provincial/federal unfriendliness that’s already here.
I’m concerned that the West will feel it’s being used to solve the problems of Ontario, that ‘we’re suffering to offset the pain in Ontario’. That’s where I’m really concerned with our policy response, and how that fits in with Confederation.
Q: Is a ‘wait-and-see' strategy still viable?
I think doing nothing is a legitimate response. Let the Americans complain about an American policy and see if there’s sufficient pressure to get the administration to change.
The federal government will do some actions, but they’re focused on, ‘how do we have an action that has significance, but not a big impact.’ Because trade restrictions only hurt your partner country if they also hurt you. So, retaliation is going to hurt us in an attempt to hurt the United States.
(We need to) make sure that there’s good communication with the feds on this one so that there’s a team response. If there isn’t a team response, then that sort of ‘divide and conquer’ mentality starts to take over.