Trudeau Supports EU Folly at G7

Justin Trudeau has said that the US President won’t be allowed to kick Canada around. He believes that the US should give up its strategic investment in iron and aluminium in order to keep the “rules-based trade regime” in place. He seems to think that Canada’s war efforts deserve that sacrifice by US workers.

Trudeau’s Trade Rules

In Trudeau’s world, a quota system for dairy imports, plus a 300% tariff on non-quota imports is “rules-based.” I wonder what rule is being invoked here.

Yet it is only natural that Canada doesn’t want to surrender its dairy industry to that in the milder climate US industry. So also in the USA, the steel and aluminium industries are being destroyed by cheaper imports.

Apparently, Trudeau is not sharp enough, nor are his advisers, to see the parallel between dairy and the US aluminium and steel industries. One could say that Trump doesn’t want to surrender his aluminium industry just because Canada has cheaper electricity (due to more plentiful supply of hydro-electric power inĀ  Canada.)

EU’s Trade Rules

EU has a tariff of 10% on the import of motor cars. USA has a 2.5% tariff on the import of motor cars. I have not seen any suggestion from the EU that they would prefer a US 10% tariff on their car exports.

Rather, it would appear that the G6’s “rules-based-order” is intended to keep the EU’s tariff advantage unchanged.

Claiming the high ground when you are actually crawling around in the gutter makes interesting reading. If the press were not so obsessed with its anti-Trump bias it would quickly see the hypocrisy. However, it is hard for a hypocrite to see the hypocrisy in a fellow “pretender.”

A new Rules-Based-Order?

What no-one will consider is whether a new “rules-based-order” mandating a fixed 20% tariff on all goods & services will actually work more effectively than the current WTO aim of zero tariffs. Try answering this proposition without the usual “tariffs are bad” mantra, if anyone dares. I am still waiting for a mature response from an economic leader or advocate for more free trade, or even a humble academic.

Zero tariffs are loved by economists, since they believe in the creative destruction of any “weak” segment of the economy. I don’t think too many ordinary workers will agree with them in any country that is actually a democracy (once they realise that they have been dudded by their “friends”).

On the other hand, the economists’ “creative destruction” would not be accepted in China, which is growing at 5% per year.

Bring on Trump’s so-called trade war. Even though the excuses for its likely economic success will be deafening, I reckon the voters won’t care.