Foreign Policy Blogs

Trade, National Security, and Canada

Prime Minister Justin Trudeau of Canada. Some people think there’s a special place in hell for him.

Canada is the United States’ second largest trade partner after China. While issues exist, it is not a problematic partner. President Trump, however, has imposed economic sanctions on it, has threatened more sanctions, and singled it out for special condemnation in his rhetoric. A high point in the latter regard came when Peter Navarro, the president’s trade adviser, claimed there was “a special place in hell” for people like Prime Minister Justin Trudeau. Navarro, of course, later apologized for this, presumably because it sounded so silly.

“National security” is the stated reason for these sanctions, as it is for sanctions the administration has imposed on other countries. The principal reason for invoking national security is that it permits the administration to bypass the World Trade Organization and its complex rules, procedures, and standards for fairness. (In the process, the administration threatens to undermine the trade system that the United States helped forge to strengthen global growth and stability, but that is a separate topic.) The administration faces no real need to justify that decision, and so it has made no real effort to do so. Could such an argument be made?

A National Security Argument for Not Relying on Allies

The national security reference has been met with considerable derision because allies, by definition, do not pose a threat, but that, in and of itself, is not really a complete answer. There can be valid reasons for not relying on allies for goods that would be required in times of war.

For argument’s sake, let’s say we rely on South Korea for a substantial portion of steel. Steel is something that we would need to produce airplanes, tanks, howitzers, cartridges, etc. in time of war. We would not expect South Korea to cut off our steel supply for malicious reasons, but:

• What if the war in question occurs in Korea? Then the supply would be cut off despite Seoul’s intentions.

• What if the war occurs between the United States and China, and China fills the Pacific Ocean with submarines capable of sinking ships arriving from South Korea? That would also be a substantial threat to supply.

• What if ships are simply not available in adequate supply when they are most needed? During World War II, the United States rationed sugar, among other items. This curtailment of the civilian sugar supply did not occur because it was a vital war material needed for troops in combat. Just the opposite. It was curtailed because it was a low priority. While some sugar from cane growers in places like Louisiana and Florida and from sugar beet growers mostly in midwestern and western states was available, other normal supplies from places like Hawaii, Cuba, and Brazil required ships for transport and the ships were being commandeered for convoy duty (where, in many cases, they were sunk by submarines). Steel today would be a much higher priority than sugar was then, but keep in mind as well that the number of U.S.-flagged ships is infinitely smaller now than it was in the 1940s and there would be competing claims on them.

Yes, a national security argument can be made for avoiding reliance on overseas allies for the supply of vital war materials. To be sure, this would not be not without costs and could be considered misguided in terms of value trade-offs. Despite what Trump thinks, trade policy and treaties do not affect trade deficits as much as this country’s high spending rate, its low saving rate, its ability to attract foreign capital, and the role of the dollar as an international currency do. The anticipated increases in the budget deficit resulting from recent tax cuts and spending hikes will likely lead to worsened—not improved—trade deficits regardless of Trump actions on trade. Moreover, trade barriers worsen competitiveness, favor producers over consumers, and create jobs in some sectors of the economy only by destroying them in other sectors. Still, an argument could be made on the basis of national security if that is your priority.

But Canada?

Yet none of the national security argument applies to Canada, our Number 1 supplier of foreign steel! Canada is no more inaccessible than Minnesota or Upstate New York. Supply routes from Canada are no more vulnerable to disruption than any route within the United States. Canadians are highly unlikely to cut off supplies for malicious reasons—as long as we do not keep kicking them in the shins for no good reason. Overall, the administration’s reliance on national security to justify its trade policy is specious, but with regard to Canada it is downright absurd.