Convince Americans that a trade war will cost them, says Paul Martin

Former prime minister Paul Martin said this week he still hopes a global trade war over new U.S. tariffs on steel and aluminum can be avoided — but Americans themselves have to understand first that there's a price to pay for starting one.

'Nobody comes out of this thing unscathed,' ex-PM says

Former Canadian prime minister Paul Martin addresses a gathering during a meeting of the G7 Finance and Central Bank Governors in Whistler, B.C., on Thursday, May 31, 2018. (Jonathan Hayward/THE CANADIAN PRESS)

Former prime minister Paul Martin said this week he still hopes a global trade war over new U.S. tariffs on steel and aluminum can be avoided — but Americans themselves have to learn first that there's a price to pay for starting one.

"The United States has to understand the seriousness of it for itself," Martin said Tuesday in an interview for the podcast edition of CBC Radio's The House.

"If you take a look at the United States, the number of people who are affected, whether they be farmers, whether they be manufacturers, spread throughout the country … I think the Americans have got to understand that nobody comes out of this thing unscathed."

U.S. President Donald Trump last week imposed duties of 25 per cent on steel and 10 per cent on aluminum imports from Canada and Mexico. The two countries had been given a reprieve from those duties — which also have been imposed on the European Union — pending the outcome of talks to revamp the North American Free Trade Agreement.

Trump insists the measures are necessary to protect American businesses from unfair competition overseas, and to return jobs to the United States.

The U.S. 'stunned everybody'

The tariffs have become a flashpoint with America's allies and emerged as a major international irritant last week, when G7 finance ministers met in Whistler, B.C.

Martin was among the guests invited to that meeting, and while he said conflicts between G7 partners are hardly unusual, they're rarely as dramatic and headline-grabbing as the one that has erupted over Trump's decision to target long-standing allies with tariffs by citing alleged threats to 'national security'.

"The way it was handled by the United States stunned everybody," Martin said.

"The use of the national security issue when you're talking about countries like Canada and the European Union, it doesn't make a heck of a lot of sense at all."

He compared the tariffs to one infamous example of American tariff policy: the Smoot-Hawley Tariff Act, passed by the U.S. in 1930, just as the Great Depression was taking hold.

That law — intended to protect American farmers and manufacturers — raised tariffs on over 20,000 imported goods to their second-highest levels in 100 years. Many historians and economists blame Smoot-Hawley for triggering a cascade of counter-tariffs around the world, strangling trade and worsening the Great Depression — which gave rise to social unrest, isolationism and nationalist movements globally.

The reaction to Trump's tariffs internationally, and within the Republican Party, has been one of almost universal condemnation.

Britain's Prime Minister Theresa May has called the tariffs unjustified — a statement echoed by French and German leaders.

Prime Minister Justin Trudeau made a similar argument, calling the use of the national security rationale "insulting" to the memory of Canadians who fought and died alongside Americans in two world wars and Afghanistan.

Trudeau and Foreign Affairs Minister Chrystia Freeland announced that Canada will impose retaliatory tariffs on U.S. steel and aluminum imports, along with a long list of other U.S. consumer products ranging from candy and bourbon to mattresses and laundry equipment.

Timing is everything

Those tariffs won't take effect until July 1 — the hope being that lobbying efforts by Canada and U.S. business interests might convince Trump to change his mind. That pressure has already begun: the billionaire Koch brothers, Charles and David, have deployed a multi-million-dollar lobbying and advertising campaign against the Trump tariffs.

Even so, Martin said he isn't sure there's enough time before Canada's July 1 deadline arrives to turn things around. And while he said no one can win in a tit-for-tat trade and tariff dispute, the position the federal government is taking now is the right one.

"I think that Canada has set a deadline and has to act by that deadline. Whether a deal can be reached within that short time remains to be seen," he said.

"Obviously if a solution can be reached within that current time, then good. If it can't, so be it. We will carry on."

On The House midweek podcast, Chris Hall talks to former Prime Minister Paul Martin about what the escalating trade dispute between Donald Trump and some of the United States' key allies might mean for this week's meeting of the G7. Then, Crown-Indigenous Relations Minister Carolyn Bennett explains the government's decision to grant the national inquiry into murdered and missing Indigenous women and girls a 6-month extension. 23:56

About the Author

Chris Hall

National Affairs Editor

Chris Hall is the CBC's National Affairs Editor and host of The House on CBC Radio, based in the Parliamentary Bureau in Ottawa. He began his reporting career with the Ottawa Citizen, before moving to CBC Radio in 1992, where he worked as a national radio reporter in Toronto, Halifax and St. John's. He returned to Ottawa and the Hill in 1998.

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