Canada sleepwalks into another trade war

Trade dispute with China

Photo: Chung Chow/BIV

Vanterm container terminal at the Port of Vancouver

The lack of foresight in Ottawa’s trade and industrial policies is astonishing. And farmers keep paying the price,

Canada has walked itself into an unnecessary trade war with the United States’ biggest geopolitical rival, China. The consequences are now clear--new retaliatory tariffs from China directly target our farmers, affecting over $3 billion in agri-food commodities and products. These measures are a direct response to Canada’s decision to impose a 100 per cent tariff on Chinese electric vehicles (EVs) back in October—a move designed to align with U.S. trade policy and shield the North American auto sector from low-cost competition.

But now, the landscape has shifted. (former U.S. president) Joe Biden is no longer in office , current U. S. President Donald Trump is signalling hostility toward Canada and China is retaliating against Canadian farmers. Meanwhile, the United States is also taking an aggressive stance against Canada, unprovoked, further complicating trade relations.

Canada has been in this position before. During the Huawei affair in 2018, China employed similar tactics. When Meng Wanzhou, a top Huawei executive, was arrested in Vancouver, China swiftly imposed restrictions on Canadian canola, pork and other agricultural exports. China’s geopolitical strategy is calculated and effective, targeting industries that generate maximum pressure on the Canadian government.

By contrast, Canada’s trade policy is often reactionary, driven by optics rather than strategic, long-term planning.

Now, China is once again sending a clear message by targeting Canadian farmers in retaliation for an EV tariff—even though Canada has yet to import a single Chinese-made electric vehicle. This comes at the same time that Canada installs a new prime minister to replace Justin Trudeau, the leader who originally imposed the EV tariffs. The symbolism is undeniable, yet it remains unclear whether Ottawa grasps its significance.

At the heart of this issue is Canada’s flawed strategy on EVs—a policy that mirrors the protectionist nature of supply management in the dairy sector. The federal government has poured over $50 billion into the EV and battery industries, supporting domestic manufacturing, critical minerals and supply chain development. Beneficiaries include Volkswagen, Stellantis-LG Energy Solution, Northvolt and Honda, among others.

To protect these investments, Ottawa followed the U.S. lead in imposing tariffs on Chinese EVs, effectively limiting market competition and driving up domestic EV prices over time.

This raises an important question: if the Canadian government is still serious about climate action, shouldn’t it prioritize making EVs more affordable rather than blocking cheaper imports? Instead, Ottawa has chosen to prioritize jobs in the auto sector over environmental concerns. The inconsistency is staggering.

Meanwhile, the EV and battery industries that Canada is trying to protect remain in their infancy. We are not importing Chinese EVs, yet our agricultural sector is bearing the cost of this policy misstep.

To put the misallocation of funds into perspective, let’s consider what else could have been achieved with the $50 billion funnelled into EVs and batteries. The beef sector, a vital component of Canada’s food security, offers a compelling case study.

With $50 billion, the meatpacking industry could be revolutionized. A mid-sized meatpacking plant costs roughly $200 million to build, meaning these funds could support the construction of approximately 250 plants, each capable of processing between 500 and 2,000 cattle per day.

Alternatively, large-scale industrial plants, like those operated by Cargill and JBS, typically cost $800 million each, meaning this investment could fund around 62 massive facilities, each capable of handling 4,000 to 7,000 cattle daily. For context, Cargill’s High River plant processes 4,000 cattle per day, while JBS’s Greeley facility in the U.S. handles about 5,000. This level of investment would decentralize the North American meat supply chain, increase competition and improve food security by reducing reliance on a handful of dominant processors.

The lack of foresight in Ottawa’s trade and industrial policies is astonishing. If a country controls its food supply, it holds far greater economic and strategic leverage. China understands this well. The question now is whether Canada’s next government will learn the lesson before more damage is done to our farming sector.

Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Trump's shadow looms large over Carney's path forward

Canada's new PM

Photo: Maria Rantanen

Mark Carney in Richmond on Jan. 16, 2025. He was selected as Liberal Party leader this past Sunday.

There aren’t many among us today in Canada who can thank U.S. President Donald Trump for an improvement in their station in life but new Liberal Leader and prime minister-designate Mark Carney is one.

His dominant Liberal leadership victory Sunday had a lot to do with the U.S. president and the on-again, off-again, up-again, down-again, soon-again, probably-again, more-again threats, bluster, reprieves, musings, restatements, demands, dial-backs and mind games.

Were it not for Trump, he might have won the leadership but been roadkill in an election. As it stands, and for how long no one knows, he is now a presumptive prime minister. Canadians, for the time being at least, consider him a better foil for the guy behind the desk in the Oval Office, and for the time being that appears to be what matters.

Conservative Leader Pierre Poilievre, who could have coasted to victory only a couple of months ago in delivering an axe-the-tax, stop-the-crime, build-the-homes message, now has to earn the job seemingly all over again with a Canada First message against Carney’s Canada Strong one. Just as Poilievre shed his glasses for contact lenses and the blue suit for a wider fashion ensemble, he has to shed the Canada-is-broken mantra for Canada-is-great jingo. It must feel to him familiarly like one of those squandered third-period Vancouver Canucks leads that now has to go into overtime.

Campaigns matter, and in today’s climate of constant change, no one can tell what a handful of weeks will reshape in voter intentions. But if the election is about Trump, it leans toward Carney. If the election is about outgoing Prime Minister Justin Trudeau, you can’t be all that sure.

It is worth wondering why, if Carney is the answer, there are such questions about him. But there are: about his real role as a bank governor here in suppressing a recession, in England about ministering to Brexit; about his role in Brookfield Asset Management’s decision when he was chair to situate headquarters in New York; about his deficit accounting scheme to separate capital from operational spending; and how vigorously he will pursue an agenda on climate change spending while contending with the uncertainty of Trump tariff threats. There appear to be blanks to fill in on his housing strategy, his blueprint for Indigenous reconciliation, Canada’s defence and our place in the wider world.

It is worth wondering, because to date we can’t get these answers ourselves. Carney has consciously been selective about his media access and hasn’t seen it necessary to sell himself through local and regional media – and hardly ever through the national press – as he sold himself in his leadership campaign. The strategy can’t last, of course. He will call an election any day or week now and he can’t get more than a few days in a bubble.

Understanding Trump is an impossibility. Despite what his famous book says, there appears no Art of the Deal anyone can follow. There are insufficient powers to neutralize him, and mollifying him appears to be an embarrassing exercise in sycophancy. As best as anyone can tell, we need to stay awake to constant provocation for the next three-and-a-half years. It’s as if we’re entering COVID 2.0 with a cross-border social distancing. Is Carney, who will have to reset the game with Trump even if he has a brief period in office, the guy who can penetrate the fog?

The choice for voters, then, amounts to electing a prime minister with no political experience or one with only political experience, one with vast private sector experience or one without any.

It was a little disconcerting that Carney’s low-octane acceptance speech Sunday had the energy of a concession. His intellect has not yet stepped aside to unfurl what lies beneath in emotion. The polls may show Canadians trust his credentials to best stand for the country in this existential moment, but would it have hurt him to at least revel and rev us up in the moment?

Former Liberal prime minister Jean Chretien was the king of turning down the political temperature, and perhaps Carney also sees the value in soothing and not stoking the frayed nerves of the country. Maybe, too, he is borrowing from the subtlety of (hockey legend) Gordie Howe in playing the "elbows-up" game without advertising it. Whatever the case, the time ahead will be politically fascinating like nothing we can recall.

Kirk LaPointe is a Glacier Media columnist with an extensive background in journalism who is vice-president in the office of the chairman at Fulmer & Company.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

B.C. budget leaves province vulnerable just as a trade war begins

Budget in a time of tariffs

Photo: Government of B.C./Flickr

Finance Minister Brenda Bailey tabled B.C.'s latest budget in Victoria on March 4, the same day the Americans unfurled wide-reaching tariffs on Canada.

Delivered in the first inning of an unprecedented Canada-U.S. trade war, this week’s B.C. budget was out-of-date before it was printed.

While the budget documents acknowledge the threat of U.S. tariffs – and the B.C. government has published estimates of how a bilateral tariff war could affect our economy – the economic and fiscal forecasts underpinning the budget embody an oddly a rosy outlook, basically ignoring the still unfolding bilateral trade conflict.

Rather than economic (real GDP) growth of 1.8 per cent in 2025 and 1.9 per cent the following year – as assumed in the budget – the province is likely to experience a near-term recession, provided the just-announced tariffs are in place for the rest of the year. The outlook for 2026 depends heavily on what happens on the trade front in the next few months.

Once we factor in the American and Canadian retaliatory tariffs, the effect is to render null and void many of the budget’s fiscal projections. True, the Ministry of Finance has included a hefty $12-billion “contingency” to reflect the impact of the tariff war on the government’s bottom line over the revised three-year fiscal plan.

But much of that sum will end up being allocated to cover pay increases still to be negotiated with over 350,000 public sector employees in 2025-26, leaving little room to draw on the contingency funds for other purposes.

Even ignoring the impact of tariffs, the NDP government was planning for a string of epic $10-billion deficits through 2027-28, along with a rapidly rising debt attributable to the rivers of red ink gushing through the operating budget as well as record amounts of borrowing to finance capital projects.

The worst news in the budget is that B.C.’s accumulated taxpayer-supported debt is on track to exceed 34 per cent of GDP by 2027-28. When David Eby was sworn in as premier in the late fall of 2022, the net debt stood at 15 per cent of GDP.

Government debt will have more than doubled, relative to the size of the province’s economy, in five years. The story of B.C.’s debt explosion makes for grim reading and will surely prompt further credit rating downgrades later this year.

Regrettably, Eby’s mismanagement of the books in his first two years in office has left the government’s finances in shambles, just as a trade war begins.

If the budget’s economic and fiscal projections lack credibility, so too does the government’s by now tiresome economic narrative.

B.C. does not enjoy a “strong” economy, if by “strong” one means an economy that reliably produces steady gains in output and real income measured on a per person basis, where the largest export industries are actively encouraged to invest and grow here, and where entrepreneurial ambition and wealth creation are championed as principal drivers of prosperity.

Fundamentally, B.C. is grappling with an unappetizing mix of stagnant productivity, waning competitiveness, sluggish business investment (outside of a few big energy-related projects), very costly housing, and an ever-increasing regulatory burden that is making it harder and costlier for companies to invest and do business across a range of industry sectors.

Little of this is acknowledged, let alone meaningfully addressed, in the budget. For the most part, this is a “more of the same” budget, focused on growing B.C.’s already expansive public sector, and earmarking additional funding for key public services.

We at the Independent Contractors and Businesses Association understand the importance of the latter, but were hoping for a commitment to create a world-class business environment that attracts private sector investment and top talent and fosters the business growth needed to pay for government services.

Finally, the budget forecasts a marginal rise in housing starts beginning in 2025, following a drop last year.

Specifically, starts are predicted to reach 46,540 this year and 47,815 in 2026, up slightly from 2024 but well below the 50,500 starts recorded in 2023.

The projected increases in starts are underwhelming judged against the province’s housing affordability crisis and the cumulative gap between housing supply and demand that has emerged since 2019. More taxes, more regulations, and more public funding for non-market housing – the main implements in the NDP’s housing policy toolbox – do not seem to be producing the results sought by our political leaders.

Jock Finlayson is chief economist of the Independent Contractors and Businesses Association.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Boycotting American products just short-term emotional satisfaction

Canada needs new strategy

Photo: The Canadian Press

A sign in front of the American whiskey section at a Vancouver liquor store after American-made products were removed from shelves last month.

The scene in the Oval Office on Feb. 28 between Ukraine's President Volodymyr Zelenskyy and U.S. President Donald Trump was deeply unsettling.

The geopolitical ramifications remain uncertain, but one thing is clear: peace in Eastern Europe may have drifted even further out of reach. For global food security, stability in that region is critical, and the current trajectory suggests an increasingly bleak outlook for Ukraine and its ability to regain economic and agricultural footing.

What has transpired in negotiations between Ukraine and the United States under the new administration should serve as a stark warning to Canada. While the rhetoric surrounding Canada as the so-called “51st state” may be irritating and dismissive, what could unfold in the coming months is far more concerning.

The U.S. has leveraged Ukraine’s desperate need for support to secure access to its valuable mineral resources, all while using peace as a diplomatic cover. The global community has now witnessed a new form of economic coercion – offering military and financial assistance with explicit expectations of resource control in return. It was not diplomacy. It was a transactional power play. And Canada must take note.

While international leaders have stepped up to defend the sovereignty of nations like Panama and Greenland, Canada has not received the same level of support. Not one global leader has spoken out against President Trump’s recent inflammatory statements about Canada’s status. Even British Prime Minister Keir Starmer, while in Washington last week, avoided commenting on Canada’s sovereignty when directly asked. That silence is telling.

Canada’s political class has thus far responded to the “51st state” rhetoric with nothing more than performative indignation. The idea that the U.S. would formally annex Canada is absurd. The U.S. has no need to assume the burden of governing Canada when it can simply extract value from our vast wealth of resources through economic and trade policy.

As Canada’s former foreign minister Lloyd Axworthy recently pointed out, a country can exert control over another without outright annexation. This can be achieved through strategic access to three fundamental assets: natural resources, energy, and data.

From a food security perspective, these are the pillars of a resilient agri-food sector. Canada is uniquely positioned as a world leader in all three, making it a prime target for foreign influence.

Water, potash, and oil are among Canada’s most valuable resources – resources the U.S. desperately needs to sustain its economic dominance.

However, an often-overlooked asset in this equation is data. Canada’s agri-food sector is undergoing a transformation, with advanced data analytics driving efficiency, sustainability and resilience. The U.S. understands that enhanced access to Canada’s agricultural data and biotechnological expertise could propel its own agricultural sector far beyond its current capabilities.

Canadians can worry about symbolic threats of annexation, but the real concern should be the looming economic and geopolitical maneuvering that could compromise our strategic resources. The coming months may bring further challenges, and Canada’s political landscape is poised for change.

However, whoever takes the helm must move beyond mere anti-annexation rhetoric and reactionary trade measures. The priority should be safeguarding Canada’s competitive advantages – its resources, energy independence and agri-food data.

Rejecting American products and boycotting American tourism may offer short-term emotional satisfaction, but such gestures will not shield Canada from a White House that plays geopolitical chess while Ottawa remains stuck playing checkers.

The real defence against economic subjugation is a proactive strategy to fortify the industries that make Canada a global leader in food security and sustainability.

Sylvain Charlebois is the director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.