The Decibel - How Ottawa is preparing for a possible second Trump term

Episode Date: May 17, 2024

As the U.S. election looms, Prime Minister Justin Trudeau’s team is getting ready for both possible outcomes: a Biden re-election and a second Trump term. They are assembling a team of officials to remind American politicians about the importance of free trade across our borders.Adrian Morrow is The Globe’s U.S. correspondent based in Washington, D.C., and he explains who is on this so-called Team Canada, and how their strategy works.Questions? Comments? Ideas? E-mail us at [e-mail]

In a few short months, we're all going to be inundated with U.S. election news. And while some people may not want to even start thinking about the upcoming Trump versus Biden match, the Canadian government is. That's because our country is inextricably linked to our southern neighbor, especially economically. In fact, over a trillion dollars worth of trade happens between the countries every year. But while the U.S. is our most important economic partner, we're just a small player to them. So to keep Canada's trade priorities front of mind in America, Prime Minister Justin Trudeau has assembled a group of high-ranking officials to remind

their American counterparts that what's good for us is good for them. They're known as Team Canada, and their sport is trade. Adrian Morrow is joining us today on the show. He's The Globe's U.S. correspondent based in Washington, D.C., and he's going to tell us about this team and how they plan to promote Canadian trade interests with whoever wins the White House. I'm Cheryl Sutherland, and this is The Decibel from The Globe and Mail. Adrian, thanks for being here today. Thanks for having me, Cheryl. So to start, Adrian, let's talk about Team Canada and who's on this all-star trade roster. So who are the main players on this team?

Yeah, so the captain of Team Canada is Kirsten Hillman, who's Canada's ambassador to the US. And then she's helped out on the wing by industry minister, François-Philippe Champagne. And then trade minister, Mary Ng, is also a main player. And then they've got sort of a rotating roster of supporting players among cabinet ministers, provincial premiers, and business leaders who sort of come down and

join them on some of these missions across the U.S. Adrian, thank you so much for indulging me in those sports analogies. That's amazing. So let's get into what is Team Canada's mission here and what exactly is the goal of their work? So essentially what they want to do is ensure that Americans know how important the bilateral relationship is between the two countries and most specifically that in the U.S. they know how important Canada is for the American economy, for American security, and sort of how much the U.S. would stand to lose if there was any rupture in the relationship or problems with trade. And the entire reason that they're doing this is because there's a very good chance that Donald Trump might win the presidential election later this year.

And there's a worry that they might, as they did in 2016, when they did not anticipate Donald Trump winning, that they might be sort of caught on their back heel if he does get in. So this is sort of meant to preempt that. Also, if Biden gets reelected, they think it would be beneficial to have all of this kind of ramped up anyway, just to continue the current relationship, if there's anything that he wants to do that's, that's protectionist. And you said there that is important for Team Canada to show America that Canada is important here. So how exactly does Canada do this? How do they make sure that the US knows that they do need Canada? The way they've mostly been

doing it is trying to take a lot of the big high level numbers and boil them down to the local level. One thing that Kirsten Hillman, the ambassador has been doing is handing out these Maple Leaf Awards to various members of Congress whose districts or states do a large amount of business with Canada. There's two tiers of awards. One is for $250 million worth of annual business, and the other one is for over a billion dollars worth of annual business. And the idea is basically to show people, okay, it's not just these high level numbers of $1.3 trillion of annual trade between the two countries, but specifically in your district, it's a billion dollars that supports a certain number of jobs that supports these specific companies that these particular people's livelihoods depend on. And if there were to

be any problem with trade between the two countries, then this is how it would be a problem in your district or in your community. And there's actual awards called Maple Leaf Awards that are handed out? Yeah, yeah. So they've got these things that they sort of look like an amateur sports trophy or something. It's in the shape of a maple leaf. It's like a plastic glass analog sort of thing. That's amazing. This may seem like an obvious question, but why does the Canadian government feel like this work is necessary? Mainly because a lot of people take trade for granted. I think that's true in Canada, but I think it's even more true in the United States where they've got such an enormous internal market. Their economy is something like nine times

the size of Canada's or 10 times the size of Canada's that they don't necessarily think about trade all the time or think about the fact that a car, for instance, is really manufactured between three countries where you have components made in Canada, the US and Mexico assembled in one of the countries that exported to the other ones. And so if you were to put any trade barriers in place, it would just make everything more expensive, and would make it difficult to figure out supply chains. So people kind of take this relationship for granted, because it's often tends to be pretty frictionless. And they think people have to be reminded how important this is so that, you know, they don't get caught in a situation where somebody comes in like Donald Trump and says, let's make some changes here to put up some some tariff barriers or sort of cut Canada out of the U.S. market. And Canada is in a situation where a lot of Americans don't sort of understand how damaging that would be. And how much money are we talking about here? Like how much money is traded between the two countries? So it's about $1.3 trillion Canadian in annual trade that goes back and forth between the two countries. And so it's a mix of exports of products from Canada to the US, like oil, for instance, you know, softwood lumber. Some of it is finished products, things that are

manufactured, and especially in the manufacturing sector in southern Ontario. And then obviously, a lot of it is services as well, where you have banks and financial services that do business on both sides of the border. It's about two thirds of Canada's foreign trade from that perspective. And Canada is a country that depends heavily on trade for its economic well-being, and especially with trade to the US. It's a huge number and it does show how important this relationship is for Canada. So I guess, how would you describe Team Canada's strategy here? There's these awards, of course, but what else is Team Canada doing? Yeah, it's really, I think of it as an inside-outside game. And so the outside game is the stuff that's maybe the most apparent where you know, this attempt to sort of go both in Washington,

D.C. and out in various states to meet with politicians and business leaders across the country. So some of that is being done by Hillman and Champagne and Mary Ng. Some of it is being done by other cabinet ministers, by provincial premiers, by business leaders. So for instance, they've gone to Detroit, Cleveland. Champagne has had meetings with the governors of Nebraska and Georgia so that if there's a situation where there's a fractious trade negotiation between Canada and the US, they can call on those people and say, hey, can you lean on the White House or lean on the administration and tell them this is why trade is important to my state, you know, don't mess it up.

Then the inside game is an attempt to make more contacts closer to Donald Trump and Joe Biden. You know, a couple of things that they've done, for instance, is late last month, Champagne was in Washington, and he and Hillman had a meeting at a restaurant in DC with a group of former Trump administration officials. And the idea basically there was partly to build the relationship so that if these people end up back in government, they've got sort of aligned to these people. And then part of it was to give them, you know, some of Canada's message on how important the relationship is. And so they said, you know, look, we know that this trade war with China is a big priority for Donald Trump. And if you pursue

that, if you got back into office, you know, Canada can actually be helpful there in the sense that you want to move your supply chains out of China. You want to stop depending on China for critical minerals and other things that are important to U.S. national security. You know, Canada can be a solution there because we have a far better trading relationship with you than China does. And we're your ally. You know, we're not your rival in the way that China is. The other series of meetings that I heard about was that Katie Telford, who's Justin Trudeau's chief of staff, and Brian Clow is her deputy and is a sort of Canada-U.S. relations guru. He and her came down to Washington, D.C. for the White House Correspondents Association dinner. to try to get to know or rekindle relationships with former, possibly future Trump administration officials, as well as with people in the Biden administration, to try to kind of gather intel on,

okay, if Trump got back in, what specifically would he do on trade with Canada? What's he thinking about? And if Biden gets reelected, is there anything kind of on his radar for trade that we need to be aware of and sort of prepare for? Okay, so it sounds like, you know, in some of these meetings, they're trying to make sure that the US knows how important Canada can be in certain conversations. And they're meeting with people in the Trump campaign, in the Biden administration. Is there anyone they're targeting in particular? Nobody would tell me specifically who they met with, either at this Hillman champagne dinner or during the conversations between Telford and Clough and various former Trump officials. I think they're just sort of afraid that because these were meant to be kind of discrete conversations and were not sort of formal meetings, they're sort of afraid that if people start seeing their names out there, then they'll stop talking to people on the Canadian side.

So nobody would really tell me sort of who the meeting partners were. I mean, one name that does come up with some regularity is Robert Lighthizer, who was Donald Trump's trade representative, was the point person on renegotiating NAFTA, and is generally thought to be in line for a cabinet job either back at USTR, potentially as Treasury Secretary or Commerce Secretary. If Trump gets back in, I don't know if he was part of any of these meetings. I just know that he's someone that the Canadian side is very interested in sort of cultivating or kind of understanding his thinking. And because, you know, ultimately, they were able to make a deal on NAFTA, and it sort of worked out. But he has sort of subsequently expressed some misgivings. He wrote a memoir last year,

where he expressed some misgivings about how he felt that the Canadian side was too tough during the NAFTA renegotiations and, you know, wouldn't play ball with him enough. And ironically, actually, he was very angry in that memoir that the Canadians previously did something similar, where they kind of tried to cultivate these relationships outside of Washington to then put pressure on the administration. But they know, the Canadians are well aware that he's a, you know, going to be a big player. And there was a business group on the Canadian side that brought Lighthizer in for a paid speech at their meeting in Calgary. But basically, it looks like there, some of these industry leaders are also trying to sort of get a line on what Donald Trump might potentially do via Lighthizer. So he's someone everyone's interested in knowing the thinking of, but I'm not sure how much they

know at this point. We'll be right back. So, Adrian, we talked about this inside-outside strategy, which I have to say sounds somewhat familiar. You've kind of talked about this a little bit here, but it's reminded me of Trump-Trudeau 1.0. So can we go back in time for a moment and talk about when exactly this quote-unquote Team Canada strategy really became a thing? Yeah, so what happened before the 2016 election is that unlike this time around, the Trudeau government was totally unprepared for Trump to win. They were convinced that Hillary Clinton was going to win. Apparently, they had a warning from David McNaughton, who was their ambassador in Washington at the time, told cabinet, you know, you have to be aware that there

is a chance of Trump victory. But apparently, they didn't really take any steps to sort of prepare for it. And so morning after they woke up with Donald Trump having won, they sort of put this kind of inside outside type strategy together. And so part of it, and maybe the part that became the most famous, was members of Trudeau's inner circle sort of identified people in Trump's inner circle that they then sort of tried to cultivate. And so Gerald Butz, you know, kind of established a rapport with Steve Bannon. You know, Katie Talford kind of struck up a good sort of relationship with Jared Kushner. And they sort of tried to use these back channels to get a better read on

Trump's thinking and to sort of shape, they hoped anyway, so to shape the conversation within the White House. And then they also activated this broader kind of Team Canada outside game, where similar to what they're doing now, but on an even larger scale, they dispatched a whole bunch of politicians and premiers and business leaders into the US to sort of try to build these relationships and then get people, especially Republicans in red the US to sort of try to build these relationships and then get people, especially Republicans in red states, to sort of advocate for them to the Trump administration and say, hey, trade's important to my state, don't blow up NAFTA. It did seem to work fairly well for them. There was, you know, the maybe most obvious example, because it was so

contained, was there was a point very early in the Trump administration, where he, a couple of advisors, I believe it was Bannon and Peter Navarro, had drafted a executive order for him that would have withdrawn the US from NAFTA or would have at least started a countdown clock to an American withdrawal. And the Canadians found out that this had happened, that this executive order had been drafted, but Trump had not yet signed it. And they sort of went into this kind of five alarm fire where they were phoning people within the White House to try to get this stopped. And then they also activated all these contacts on Capitol Hill, elsewhere in the administration, and in the states and US

industry to all sort of bombard the White House with pleas for Donald Trump not to do this. And the famous story is that Sonny Perdue, who's the Agriculture Secretary, went in and kind of made a presentation to Donald Trump where he said, OK, here's all the agricultural products that we export from the U.S. into Canada, to Mexico. If you pulled us out of NAFTA, here's why it'd be so bad for all these farm states that tend to vote Republican that all voted for you. And by the end of the day, Donald Trump decided not to do it, that he would just go ahead and do a NAFTA renegotiation without this sort of threat of withdrawing imminently. So, yeah, like you said, said, the strategy seems to have worked. And I guess it does make sense then why the government would re-up this strategy today.

But I'm just wondering, does it matter if the US already knows this playbook? It's true that they're not starting from fresh. Like they basically are going to be starting in a place where anybody who's in the White House knows that this is what happened last night. If Donald Trump gets back in, he's going to know. And a place where anybody who's in the White House knows that this is what happened last night. If Donald Trump gets back in, he's going to know. And certainly if Lighthizer's in cabinet, he's, tariff barriers are great, that the trade is pretty zero sum, you know, and that

there should be more protections, you know, built up around the US economy, and perhaps less trade, that a lot of Republicans fundamentally still don't agree with that. And certainly people, I mean, certainly people in business don't agree with that, for the most part. And then on top of that, there's this kind of messaging around China and trying to sort of say to Donald Trump, like, OK, USMCA was your legacy. You did this renegotiation originally. Trade is pretty good now. And so if your primary attempt is to go after China, then Canada is not your enemy. And in fact, it can be helpful if you're trying to move supply chains around to move them to North America. And we can help with that. Okay, I want to come back to the present now and put all of this in the context of the upcoming

US election, which is happening in November. Trudeau and Biden are leaders that operate in a more conventional manner, I think it's safe to say, and they're politicians of a similar ilk. But does that mean that Team Canada doesn't have to lobby Biden officials? To a certain extent, yes. It's really two things. I mean, on the micro level, there are trade irritants between the US and Canada with Biden in charge. Pipeline's the obvious one. The Trudeau government very much likes pipelines. Biden revoked the federal permits for Keystone XL on his first day in office. And he has basically refused to intervene to save Line 5, which is a Canadian oil pipeline that the government of Michigan is trying to shut down. The other one is by American. I mean, Biden talks a lot about wanting to put more stringent by American rules

in place. It's not clear that he's actually done anything all that substantive on it, or, you know, at least from people I've spoken with, it's a lot of sort of minor tweaking. But even so, you know, it's the kind of thing that people do sort of worry about. Okay, so talked about Biden, let's talk about Trump. Has he signaled what might be on his mind when it comes to trade if there's a second term? The big marquee promise that he's made is that he wants to put a 10% tariff on all goods coming into the United States. Whether that's actually legal is certainly a pretty big question. but the gears turn slowly when it comes to international arbitration on trade. Essentially, what likely is that if you did that, it would trigger a massive global trade war, and you would probably have all these countries that are putting

tariff walls in place. The other thing you potentially do is that the USMCA in 2026, the three countries essentially have to decide whether they're going to continue the deal as is, or whether they're going to reopen it for further negotiation. And just a reminder that the USMCA, which is the United States, Mexico, Canada agreement, is essentially the new NAFTA. Yeah, that's right. It was rebranded by Donald Trump, but it's basically NAFTA with a handful of changes that were made in negotiations in the first Trump administration. And so a lot of what the Canadian government has been trying to do and having conversations with people close to Trump is figure out exactly what he would do vis-a-vis Canada. So A, would the 10% tariffs apply to Canada and Mexico and other countries the US has free trade agreements with? And then B,

is he going to reopen USMCA in 2026 if he gets back in? And if so, what specifically is he going to demand? I want to talk a little bit about the Trump-Trudeau relationship and how that affects the work of Team Canada, because it seems like Trump and Trudeau have a less friendly relationship than Trudeau and Biden, which is probably putting it lightly. Will that be a major challenge? They do have a difficult relationship. I mean, and it's not just the fact that they fundamentally disagree on a lot of things. The Americans became very frustrated with Canada during the NAFTA negotiations in 2017, 2018,

where essentially what they decided to do on the Canadian side is they thought, if you concede anything to Donald Trump early on, it's just going to mean that he'll ask for more and more and more, and you'll end up having to give up more than you intended to. And so their strategy during the negotiations was to hold back as long as possible, and only start really putting things on the table once they kind of got to the end. And they thought, okay, you know, we can see some movement here. And they're willing to take some of their most protectionist demands off the table. That enraged the Trump people. And I remember hearing that at the time, but I don't think I quite realized until after the fact just how angry they were with the Canadians. And Lighthizer, you know, in his book, he wrote about how he said that, you know, early in the negotiations, he felt like the Canadians didn't really want to talk to him. They only

wanted to talk to all these other people across the country that were going to help them pressure the administration to drop his protectionist demands. He recounted, you know, his side of what happened at the G7 summit in Charlevoix, Quebec in 2018, where he said that Trudeau basically presented Donald Trump with a, what he called an anemic NAFTA deal. So essentially, it was, I think it was a very limited deal that would have made some provisions on cars, some provisions on dairy, and kind of left everything else untouched. Donald Trump rejected that. Justin Trudeau then went into a press conference and criticized Donald Trump for putting steel and aluminum tariffs on Canada.

Donald Trump got mad and tweeted that Justin Trudeau was weak and dishonest. And according to Lighthizer, there was just no talking after that for several weeks. It wasn't until the fall when the US and Mexico sort of came to an arrangement and peer pressured Canada to get in that the Canadians finally sort of came back to the table and made a deal, you know, very quickly. So yeah, so I think that's certainly part of the context too, that if there were a second Trump administration, they would not be coming into this with a lot of goodwill towards the Trudeau government. Adrian, to end here, I'm just wondering how worthwhile this approach to diplomacy is when there are so many unknowns coming up in the near future, like who the president will be

come November, how long Trudeau will be in power, all of these things could change. So is this Team Canada approach even worth it? Yeah, I think it's not a bad idea to strengthen the relationship, you know, no matter who's president after November. The relationship between the two countries is sort of nonpartisan. I mean, there's kind of a consensus at this point around free trade. No matter who's in office in Washington, it's not a bad idea to have these relationships. that a conservative government or an NDP government would probably do something similar or would want to do something similar in order to sort of keep the relationship working and prepare for the next time any American president wants to bring in some protectionist policies, that there's a plan in place to deal with that. Adrian, it's been really great talking to you today. Thanks so much for

coming on the show. Thanks for having me. That's it for today. I'm Cheryl Sutherland. Aja Sauter is our intern. Our producers are Madeline White and Rachel Levy-McLaughlin. David Crosby edits the show. Adrian Chung is our senior producer and Matt Frainer is our managing editor. Thanks so much for listening.