Trudeau's U.S. visit delivers wake-up call about new North American reality

Prime Minister Justin Trudeau's visit to Washington delivered a wake-up call about a new North American reality. Protectionism wasn't just a Trump-era fad. Canada must navigate a world where a worried superpower designs policies with China and Mexico in mind, and we’re the collateral damage.

Americans see trouble ahead — and see protectionism as a solution

Biden and Trudeau met in the Oval Office and then with Mexico's president on Thursday. (Evan Vucci/AP)

The helicopter buzzing overhead was just one sign during Prime Minister Justin Trudeau's trip to Washington of a tough new reality Canadians face.

Trudeau's failure to persuade Americans to ease up on Canada in a landmark electric-vehicle plan capped a visit that served a long, loud wake-up call to this new reality. 

Former U.S. president Donald Trump's protectionist impulses were no aberration: this era is vastly different from the one that produced the 1965 Auto Pact and spurred decades of Canada-U.S. economic integration. 

Our challenge now involves living beside a worried superpower that's distracted by generational challenges in which Canada is at best a bit player.

The point was driven home at a swanky hotel overlooking the White House, where Trudeau had just delivered a speech about the precious bond between our two countries.

A green and white helicopter soon appeared on the horizon, and drifted slowly onto the south lawn of the presidential abode. Out from Marine One popped Joe Biden.

While Trudeau touted those ties, the U.S. president was swooping back from his own speaking event where he doubled down on his auto-sector plan despite Canadian objections.

Biden arrived home by helicopter after a speech in Michigan where he doubled down on the policy Canada opposes. Trudeau had just finished his own speech nearby as Biden landed. (Joshua Roberts/Reuters)

At a GM plant in Detroit, Biden clearly articulated the goal of his tax-credit plan for electric vehicles: "To buy American-made, union-made, clean vehicles."

It's now China, China, China

But the president said something else in that speech that reveals an aspect of the American psyche that pervades everything else at this particular moment.

Biden called this an inflection point in history, comparing the globe to a chessboard where all the old pieces are moving around; he predicted future generations will ask a question about our time: Did the United States compete with China?

That fear of losing pervades nearly everything in Washington — lost economic power, lost manufacturing capacity, lost military supremacy.

Even in a week where the United States hosted its two closest neighbours and biggest customers for a so-called Three Amigos summit, North America was the second-biggest international story here.

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A virtual call between Biden and China's Xi Jinping not only drew far more media coverage, but infinitely more curiosity from the American public.

Check out the Google search stats: Searches for Biden and Xi vastly dominated those for Biden and Trudeau.

When American reporters got a chance to ask Biden a question in the Oval Office during his meeting with Trudeau, they asked about China: Would he consider a diplomatic boycott of the Beijing Olympics? 

Biden said he might.

At the same time as Trudeau's visit, Congress came closer to passing a China competition bill, which funds high-tech industries and demands reports on how U.S. allies, like Canada, are working on China issues.

Trudeau also met with members of Congress and U.S. Vice President Kamala Harris this week in Washington. (Kevin Lamarque/Reuters)

Closer to home, Mexico is the priority

The U.S. has other concerns closer to home, too.

When American politicians talk about this continent or their borders, it's usually about concerns involving Mexico. 

Their worries involve migration coming from the south, and manufacturing jobs going to the south.

In fact, those fears are one reason Americans are so hesitant to tinker with Biden's vehicle plan: One goal of this tax credit is to steer assembly plants back from Mexico — and it's hard to exempt one U.S. neighbour, but not the other.

Canada even ranked as an afterthought at the White House media briefing Wednesday on the Trudeau trip. There were no questions about the vehicle issue. And that's because no Canadian media outlets got a question in. 

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The questions were focused on Mexico, dominated by migration, the border, Central America and Mexico's move toward renationalizing energy markets.

The White House did not schedule a trilateral news conference after the North American leaders' summit.

During one of his appearances, Trudeau hinted at an awareness of how Canada gets overlooked by the only country it borders.

"You've got so much going on at home. It's easy for you not to be looking around the world," Trudeau said at a think-tank event. 

"Canada has the advantage of being small enough that we're always looking — across the border at what you guys are doing and around the world as well."

What could Canada do differently?

Trudeau's own domestic critics might contend that some of our lost clout is self-inflicted. That Canada talks more than it contributes in world affairs, in terms of peacekeeping, foreign aid, or continental defence

Or that Canada could, as Stephen Harper has suggested, have used the NAFTA renegotiation to try reverting back to a more one-on-one relationship with the U.S. 

Or that Canada has frustrated the U.S. by not articulating a clear China policy or taking a stand on letting Huawei into the 5G network.

We can't test those counterfactuals now.

What we can do is take stock of the world as it currently is compared to the world we are accustomed to.

In his Michigan speech, Biden cast this as a moment in world history, where things are changing fast and what matters is whether the U.S. competes with China. (Jonathan Ernst/Reuters)

Back in the dawn of North American economic integration, when America was a young superpower, Canada and the U.S. signed the Auto Pact deal that presaged the continental free-trade agreement.

Canada didn't get that deal by being polite: It threatened tariffs. The New York Times credited the northern neighbour's aggressive trade actions for forcing Washington's hand.

America now vs. the America of the Auto Pact

In January 1965, both leaders put aside their differences and spoke of the growing confidence between the two countries as they signed the deal.

The pact had an immediate effect. On the very day it was sent to Congress, Chrysler said it would build 80,000 cars in Canada for export, while at the same time, U.S. exports to Canada of parts and cars also swiftly increased. A textbook win-win. 

Over time, however, the U.S. lost its manufacturing dominance — not only over the global auto market but also over its own domestic market. Within a few years, the U.S. went from importing four per cent of its cars to nearly 25 per cent. That trendline continued, as the country lost millions of manufacturing jobs to Mexico, China and automation.

Now a new trade philosophy is sweeping Washington — one that's been articulated at length by Trump's former trade czar. 

That view: that manufacturing isn't just any other industry. That it's vital to a thriving middle class, healthier communities and high-tech research that ensures future wealth.

So getting manufacturing plants back is often cast as a tonic for reversing some bleak trends — in a country that once had 40 per cent of the global GDP and now has just over 20 per cent; spent more than half the world total on defence (it's now 40 per cent); dominated everyone in research spending (it's now almost tied with China); and went from a skyrocketing life expectancy to small declines driven by so-called deaths of despair.

Where does this leave Canada?

The U.S. was the world's uncontested economic superpower with no rivals in auto manufacturing when these two men, Lester Pearson and Lyndon Johnson, signed the Auto Pact in 1965 and launched decades of Canada-U.S. integration. (Canadian Press)

It's not impossible that the vehicle-tax credit might change. It passed the U.S. House of Representatives on Friday, just as Trudeau was leaving Washington, in a symbolic if unwanted farewell development to cap his trip. 

It could still be adjusted in the Senate, perhaps by a senator, or perhaps by the official who interprets Senate rules who could determine it out of order for a budget bill.

Yet Canada is dependent on the U.S. as ever 

But some originators of the 1965 Auto Pact feared a moment like this. 

Concerns about that agreement extended beyond the U.S. Even within the Canadian cabinet, there were worries it might make our country forever dependent on our southern neighbour, vulnerable to its whims.

Nowadays Canadian cabinet ministers like to come to Washington and remind everyone who'll listen that we're their No. 1 customer and we help create millions of American jobs.

It happens to be true; about 20 per cent of U.S. exports went to Canada in 1965 and today, it's still about 18 per cent.

But there's a corollary that Canadians are less fond of raising in public: that we're more dependent on them and we're more dependent than ever.

Trudeau and Biden exchanged friendly greetings, despite their differences. "This is one of the easiest relationships that we have,” Biden said of Canada. (Jonathan Ernst/Reuters)

We are four times more reliant on them as customers than vice-versa — even more so than in 1965. The U.S. was buying less than 70 per cent of Canada's exports in the late 1960s, and it's now 75 per cent.

Canada's mission now involves navigating a world where its vital partner designs policies with China and Mexico in mind; where we're the collateral damage; and Washington either doesn't notice or is too tied up to care. 

Biden shared his warm feelings for Canada as he kicked off his meeting with Trudeau. 

"This is one of the easiest relationships that we have," he said, sitting next to Trudeau in the Oval Office. "One of the best."