Trump and Trudeau meeting hits right notes for Canadians wary of trade threat

The much-anticipated meeting between Prime Minister Justin Trudeau and U.S. President Donald Trump on Monday did much to assuage fears of Canadian businesses wary of the prospect of a trade war.

Instead of tearing up NAFTA, Trump pitches 'tweaking' of trade pact

U.S. President Donald Trump was all smiles in his meeting with Prime Minister Justin Trudeau, which came after several months of speculation as to how the two would deal with thorny trade negotiations. (Andrew Harrer/Bloomberg)

The much-anticipated meeting between Prime Minister Justin Trudeau and U.S. President Donald Trump on Monday did much to assuage fears of Canadian businesses wary of the prospect of a trade war.

After a formal greeting between the two leaders followed by meetings, the White House and the Prime Minister's Office issued a joint statement on Monday reaffirming the strong bonds between Canada and the U.S.

"No two countries share deeper or broader relations than Canada and the United States," the statement read, making note of the two countries' "shared economic interests," including the $2 billion in trade that flows between the two every day.

That's a much different tone than the one witnessed on the campaign trail, when Trump repeatedly attacked the North American Free Trade Agreement that governs commerce between the U.S., Canada and Mexico.

Mexico has been the frequent target of Trump's ire, but Canadian businesses and commentators in Canada had concerns that the new president would also seek to tighten the trading border to the north. Much is written about how key the U.S. is to Canada's economy, but 32 states claim Canada as their largest export market, shipping $267 billion worth of goods and services north, BMO economist Michael Gregory said.

While the joint statement itself made no formal mention of NAFTA, its tone was fundamentally in favour of the status quo — at least with regard to Canada. "We affirm the importance of building on this existing strong foundation for trade and investment and further deepening our relationship."

"We have a very outstanding trade relationship with Canada," the U.S. president said at a press conference after his meetings with the Canadian contingent accompanying Trudeau, adding that he plans to be "tweaking … certain things."

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That's a departure from his previous harsh tone and likely pleased many in Canada, including Robert Hattin, the president of manufacturer Provantage Automation in Ancaster, Ont.

"This is kind of like a ride on the roller-coaster," he said of watching trade negotiations from afar when businesses like his have so much at stake. "It can go really well or it can go off the rails really, really quick."

Open trade is key for a manufacturer like Provantage, because the company's supply chain is global. The company assembles products whose components come from countries including Mexico, Germany, the U.K., Philippines and the U.S.

Aside from parts, Hattin said, his business depends on the free flow of people, too. "The exchange of people getting across the border is probably the most important," Hattin said. "It's not the spring, it's not the controller, it's our people getting back and forth."

Which is why the tone of Monday's press conference was good news for anxious Canadian businesses, associate professor Walid Hejazi at the Rotman School of Management said. 

"Businesses do not like uncertainty," he said in an interview.

Despite Trump's rhetoric, he doubts that Canada was ever on the new administration's radar in terms of trade, because both sides know it is "incredibly important" not to have any "irritants" get in the way of two-way trade, which he described as "well-balanced."

"Donald Trump and his administration don't see Canada as the problem they seek to fix," Hejazi said. 

Michael Kergin, Canada's former ambassador to the U.S., agreed with that assessment, noting he was pleased to see a softening of the tone of the discussions Monday compared with what was heard on the campaign trail.

"On NAFTA, going from tearing it up to tweaking it is a huge leap forward," he said. The president's use of that word, "tweaking," is a major win for the Canadian contingent, which aims to sell him on how Canada can help him create jobs in the U.S.

As Hejazi put it, "Trade between the U.S. and Canada is not zero-sum — it's actually win-win."


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