REGINA – From threatening tariffs over control of Greenland, to new recent threats of 100 per cent tariffs on Canada after their recent deal with China, President Donald Trump continues to make life unpredictable for countries and investors around the world.
“I mean, it’s a lot of chaos, but it seems to be the way things are getting run these days,” said Jason Childs, professor of economics at the University of Regina, last Thursday about the situation.
Childs was referring to Trump’s announcement of a deal with NATO regarding Greenland, where Trump dropped demands to annex Greenland away from the Kingdom of Denmark and also dropping his threats to impose tariffs on European countries that opposed him.
In the wake of that deal, Childs said there were still many unanswered questions about what it was Trump has actually agreed to with respect to Greenland.
“There’s nothing on paper or that’s been shared on paper that we can actually analyze the text of the agreement and know what stuff really means. And so we’ve got – what are we told it looks like? We’ve told that they’ve got a significant amount of space they can build military bases on and other infrastructure and some engagement in terms of development with minerals in Greenland. So, we’ve got – that was the big thing I think that was missing from any sort of previous agreement or understanding with Greenland was the mineral rights and access to development, that kind of stuff. That’s a big change. I can see that ultimately having some impact down the road. But short term, I don’t think it’s going to do anything.”
In any event, Trump’s latest threats over Greenland — and his quick about-face — repeated a similar pattern to his previous tariff threats on countries in the past year, where he would announce tariffs only to reverse course after stock markets reacted.
Right on cue, the US markets again took a major dive Tuesday in the wake of Trump’s threats about Greenland. And as was the case with the previous stock-market dives, Trump reversed course a couple of days later.
That prompted people to again use the phrase “TACO” to describe the President: “Trump Always Chickens Out.”
Childs believes many traders are beginning to wake up to Trump’s constant tariff threats and reversals, and are instead looking to see if there is any actual action behind the threats.
“I mean, in terms of the stock market, we’ve seen the movements. In terms of other markets that move more on, I think more and more traders of real commodities and physical things are learning to ignore a lot of the noise and watch for the actual action, watch for the actual agreement, watch for the actual implementation of tariffs and all that other stuff,” said Childs.
“So, OK, Trump said ‘this’ this week. Great. Let’s watch and see what happens with it before we get too excited in a positive or a negative way. Unfortunately, not everybody’s learned that lesson yet, but hopefully we will soon.”
As for whether we can expect the pattern of tariff threats from the White House to continue into the future, a looming U.S. Supreme Court decision on Trump’s executive powers could throw a wrench into his ability to impose tariffs in the future.
“I don’t have a good read on the U.S. Supreme Court. My understanding from the little bit I’ve been following my cases, Trump’s representative made a fairly strong case,” Childs.
“We’ll see whether the justices agree or not. I don’t think the Supreme Court is going to want to take this power away from presidents in a precedential way. So I don’t think so, but I don’t have a really good read on the U.S. Supreme Court and what they’re likely to decide.”
He did say that Trump has “never been a free trader. And the Americans have always sort of reluctantly been free traders. There is sort of this American exceptionalism idea, and they’ve opened up quite a bit.
“And when you move from protection to trade, there are costs. There are big benefits, but there are costs, and those costs, we can see them in the Rust Belt and other factors that once trade opened up, it changed the shape of the American economy. It was great for consumers, but it hurt a lot of producers and a lot of people on the working side. So those costs are real, and the American system hasn’t handled them well.”
On Canada’s deal with China
The deal struck with China to lift tariffs has gotten a mixed reaction. On the one hand, the lifting of tariffs on canola was hailed by farm groups within Saskatchewan who wanted a resolution to that issue.
But the lifting of tariffs on China EVs landed with a thud with Ontario Premier Doug Ford, who called it a terrible deal for the auto industry.
It also prompted an angry reaction in recent days from President Trump, who accused Canada of becoming a back door for Chinese EVs to enter the USA. Trump has now threatened to impose 100 per cent tariffs on Canada in response.
In speaking to SaskToday prior to Trump’s latest tariff threats on Canada, Childs made known his belief that diversifying trade is a good thing — up to a point.
“I mean, look, I’m a big believer in free trade. Canada is a trading nation,” Childs said. “The only reason we have the standard of living we have is because we do engage in a lot of trade. And I think we should be trading with as many different partners as we possibly can, and we should be trading with everybody.”
He noted that if you rely on one major customer and that customer goes into a recession, “historically that’s dragged us into a recession as well a lot of the time.”
But he adds he is not talking about signing security deals, or letting every single product in.
“I think there are dimensions on which we need to be really, really careful in how we engage with other countries in terms of not just shipping products back and forth but the broader political context.”
He pointed to the need to be clear-eyed on the issue.
“The U.S. is the biggest game in town. There is nobody bigger. There is no more dynamic, wealthy economy. And they’re next door. We have – the geography is real. And Trump won’t be there forever. It is a democracy. They still have, despite protestations to the contrary, they still have reasonable legal systems and reasonable justice and lots of other things. There are problems. Don’t get me wrong. But we’re not talking about China.
“Remember, the Chinese Communist Party announced just recently that they have vigorously disciplined more than a million people in the past year for things the Chinese Communist Party did not like. I mean, that’s who we’re talking about here. So some guardrails, I think, are absolutely essential. I don’t think – I don’t want us to adopt a very Chinese style of governing.”
He did see the lifting of the tariffs on canola as good news for Saskatchewan. But Childs also pointed out it was Canada that touched off the trade dispute with China by tariffing Chinese EVs in the first place.
“So when we’re talking about the trade war with China, we started it, right? We put the 100 per cent tariffs on Chinese EVs, likely to align with the Biden government in the U.S., and they responded. We’ve lifted the tariffs. We’ve gone back to the import levels, quota levels that were what was actually being imported prior to the imposition of this tariff. And they’ve lifted the tariffs on canola seed and meal – not lifted all the tariffs, but reverted to the earlier tariffs and opened up more of the agricultural market. That’s great news for Saskatchewan. Do not get me wrong at all. Having that return to where we were is very, very important for Saskatchewan, and it’s going to be very beneficial for Saskatchewan. But I don’t give a lot of kudos for cleaning up your own mistake.”
