Vassal Statehood Averted

A vassal state is a nation that, while often appearing to be independent, has its sovereignty and decision-making powers significantly constrained and dictated by a more powerful state. Its ability to act autonomously, particularly in areas like foreign policy, defense, or economic affairs, is limited to what the dominant power permits or grants.

I woke up yesterday morning with the news that the trade deal Canada had been negotiating with the U.S. was off. I was massively relieved, finally finding a peace of mind that had eluded me for days. Subsequently, I followed the media throughout the day.

Watching TV and reading online papers, it became clear that the Trump administration made last-minute demands that would have been complete folly to acquiesce in. The deal Canada was prepared to sign was bad enough.

As my previous post indicated I had a very bad feeling about the deal that was close to being signed. Apparently, it included all the things I had written about, with one inaccuracy. In yesterday's strong, statesman-like address,  Prime Minister Carney answered a large number of press questions, one of which led me to stand corrected: my assertion that the very bad deal they were about to sign gave the Americans almost exclusive access to our critical minerals. Taking Carney at his word, he said that wasn't true, that he would never have done for that.

So what saved us from that deal and led to this retaliatory trade war in which Canada can hold its head high? Apparently, Howard Lutnick suddenly appeared, making the demands that led to Canada walking out. We owe that malign influence a huge debt of gratitude, as Adam Radwanski writies:

[Lutnick] did Canada a service by reminding Mark Carney and his negotiators who they were dealing with — and saving us from a bad deal that probably would’ve only looked worse down the road.

The deal narrowly averted appears to have essentially ensconced in perpetuity tariffs on a myriad of our goods, Had it been signed, it would have been a slippery slope to the bottom.

Trump appeared to have successfully moved the goalposts with his threat of new 50 per cent tariffs on a range of products, leaving Canada so determined to avoid those that it was willing to live with less relief from his existing tariffs than it had previously demanded. Modest cuts to the levies on our automotive and steel exports, among others, would have locked in rates still too high for those industries to be viable in the long run.

Meanwhile, Canada would’ve had to give up what leverage it had, including both counter-tariffs and the provincial bans on U.S. booze that have gotten under Trump’s skin. Plus, we appeared poised to scrap Buy Canadian procurement policies, giving U.S. companies relatively unfettered access to government contracts here, even as Canadian access to the U.S. market remained restricted.

Apparently the pending deal was so bad that Ontario's Doug Ford called Carney on Wednesday urging him not to sign.

“I thought it was a terrible deal and I was very clear with the Prime Minister, once you make these deals they can last for years and years and go into decades.”

Campbell Clark provides additional details on what the foul triumvirate of Trump, Greer and Lutinick demanded at the last minute, clearly sensing Canada's weakness and therefore going for the kill. 

U.S. negotiators declared that the lower tariff rate on cars wouldn’t apply to Canadian trucks, he [Mr. Carney] said. They wanted language that would restrict Canada’s ability to strike new trade deals with other countries, he said. And they pushed for Canada to give up some protections for culture and the French language, he said, including labelling on products. 

That’s hardly the kind of package that Mr. Carney could sell back home. It would be insane to hand the trade bully more power to shake us down by allowing them to dictate the terms of Canada’s trade with other countries. It’s hard to imagine a more poisonous pill than making a deal with the U.S. that suggests the French language be taken off labels, especially when it is six weeks before a Quebec election.

Justin Ling says in the aftermath of this attempted  shakedown, things are much clearer for everyone.

We know now, with no ambiguity, that Trump does not want efficient supply chains, nor mutually beneficial co-operation.

Donald Trump believes he can fuel America’s economy by stealing his supposed allies’ industries. He is skulking around the parking lot, siphoning gas from empty cars. 

In walking away, we have preserved our ability to fight back and go elsewhere.

Even though there will be a hard economic toll from these tariffs and counter-tariffs, I believe Canada is in a much stronger position than it was on Friday. We have finally established that despite the series of unrequited concessions we gave up to this point, we have reached the breaking point, and, as Carney put it, anything the Americans sign is written in pencil.  

Oh, and one other thing. As the Prime Minister pointed out, 

“Canada fuels American growth, supplying 99 percent of their natural gas imports, 85 percent of their electricity imports, 60 percent of their crude oil imports,” Carney said. “I don’t think they want us to stop sending any of that energy.”

Not a bad trump card to keep in one's pocket, eh?