TRADE UPS AND DOWNS!

Trump just broke off trade talks with Canada so I went to my personal A.I. SAL-9000 and asked:

Sal, with the current trade deal negotiations between Canada and the U.S., would it be a better idea to remove all trade barriers and tariffs? What would be the advantages and disadvantages of that?

SAL said:

Completely removing all trade barriers and tariffs between Canada and the U.S. would be a bold shift—here’s a nuanced look at the advantages and disadvantages of such a move:

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✅ Advantages of removing all trade barriers

1. Economic efficiency & consumer gains

• Without tariffs, the principle of comparative advantage allows each country to specialize, increasing output and overall welfare heritage.org+15en.wikipedia.org+15m.economictimes.com+15.

• Canadian consumers would benefit from lower prices on U.S. goods (and vice versa), reducing inflation pressures. The Bank of Canada noted that tariff-induced cost increases could significantly feed into consumer prices reuters.com.

2. Boost to trade and growth

• Canada is the U.S.'s second-largest trading partner, responsible for ~75% of Canadian exports barrons.com+15m.economictimes.com+15facebook.com+15. Removing tariffs could increase export volumes, helping GDP and supporting jobs.

• The Bank of Canada estimated U.S. tariffs alone could shave 1.1% off Canada’s GDP; elimination would help avert this downside bankofcanada.ca+15m.economictimes.com+15reuters.com+15.

3. Supply chain stability

• Integrated supply chains—especially in sectors like automobiles, energy, metals—would function more efficiently, boosting competitiveness axios.com+15energypolicy.columbia.edu+15blackbuckinc.com+15.

4. Strengthened bilateral relations

• A barrier-free regime would ease tensions over digital‑tax and dairy conflicts, reducing retaliatory threats and fostering cooperation.

5. Attracting investment

• Predictable, open markets are a magnet for investment. Businesses are more confident planning cross‑border operations without trade frictions.

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⚠️ Disadvantages and challenges

1. Loss of protected sectors

• Industries currently shielded—like Canadian dairy, poultry, and eggs under supply‑management—would face intense competition from U.S. producers ft.com+7ft.com+7wsj.com+7en.wikipedia.org.

• Similarly, U.S. steel, aluminum, and manufacturing sectors could suffer.

2. Adjustment costs

• Freeing trade could cause short‑term dislocation in sensitive industries, requiring job retraining and social support. While in the long run gains offset these effects, the short‑term pain can be politically challenging en.wikipedia.org.

3. Loss of revenue and policy tools

• Tariffs currently provide some government revenue and can be used strategically, for example in negotiating digital‑tax concessions. Removing them limits flexibility.

4. Political backlash

• Sudden liberalization could provoke backlash in regions with vulnerable industries, triggering populist or protectionist pushback (as seen with Trump’s 2025 “Liberation Day” tariffs) theaustralian.com.au+1axios.com+1.

5. Strategic leverage lost

• Tariffs are a bargaining chip in broader negotiations. Without them, it may be harder to secure concessions on issues like digital services taxation.

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🌐 The bigger picture: the USMCA and WTO context

Under USMCA and WTO, most goods already cross tariff-free—exceptions include autos, dairy, steel, and aluminum (where tariffs were imposed in early 2025) ft.com+4apnews.com+4axios.com+4ft.com+3en.wikipedia.org+3en.wikipedia.org+3. Complete removal would likely require treaty renegotiation (e.g., USMCA review due in 2026). However, full free trade would maximize the economic benefits from integrated markets.

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🧩 Summary

Pros	Cons
Consumer price relief, inflation control	Disruption to protected and strategic industries
GDP growth, trade volume increases	Short-term job losses & adjustment costs
Streamlined cross-border supply chains	Loss of policy flexibility and revenue
Stronger Canada-U.S. partnership	Potential political backlash

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👥 Is it a “better idea”?

Economically, yes—the consensus among economists favours free trade for its efficiency gains and growth benefits. 

Politically and socially, the reality is more complex:

• You’d need transition policies: training programs, targeted support, and phased liberalization to ease industry adjustment.

• Negotiating side agreements could protect genuinely vulnerable sectors (e.g., supply‑managed agriculture) while opening others.

• Both governments must manage domestic political pressures to avoid backlash.

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🔄 Bottom line

Removing all trade barriers could unlock significant economic benefits, including stronger growth, lower prices, and deeper integration. But success hinges on managing the inevitable disruptions and crafting compensatory policies to support affected sectors. If both countries are willing to negotiate thoughtfully, a phased, strategic removal could ultimately be a win-win

A letter from British Columbia!

Allan: Since Canadians have begun boycotting US products, what are some Canadian products we can boycott in return? "A Proud American!"

 Danielle said: Remember, it is your guy that started this and is using falsified data to justify his actions. 

You should be embarrassed to think about boycotting Canada. 

 Your country is the one trying to destroy the country next to you and absorb it into yours. This is the same as Russia invading Ukraine. 

 If you are shocked over Canada rejecting joining what you have been told since birth is "the best country in earth," it is because you have been lied to about this!!! 

 In quality of life for average people... the USA is not even in the top 10 in most things. 

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 Canada is standing up to an unjustifiable act of aggression by the USA. An act that has cost the USA all of its friends and is making it an international pariah. 

 Open your eyes and you will see that in less than a month you new leader has made the USA one of the bad guys in world affairs. 

At the same level as Russia. 

 Now watch as the prices of almost everything in the USA go up... as well as unemployment. 

You will be lucky if the USA does not break up into several countries in the next few years. 

 Danielle... lives in Metro Vancouver!

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A quick way to solve the trade dispute with the United States of America!

 When Trudeau talks to Drumpf this afternoon... his course of action should be obvious!

There will be NO attempts to try and get the "Orange Turd" to reduce the tariffs!!!!

Instead... Trudeau should just say: "Unless you cancel ALL the tariffs TODAY... by this time tomorrow, the Eastern Seaboard of the United States will be hit with rolling "brown-outs" and"black-outs!"

That will fix his clock!!!

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NOW!

As for Alberta... since they wouldn't stand up with the "REST OF CANADA," ...they had better not expect ANYTHING from the Federal Government the next time they come... "cap in hand!"

P. S. Greetings from... Brookfield, Wisconsin!

Marci to the Rescue!

 I got an e-mail question today that should be Addressed! 

Q: Will Trump’s tariff wars end up doing massive damage to the US economy?

But...! Instead of answering it myself...

I will hand it over to  Marci Moroz: 

A: Allow me to bypass the experts on the economy and politics to answer this question from a perspective where I have some expertise. (She's a psychologist! By the way... did you notice that she used my favourite word... "Perspective!" - ed.)

Trump’s tariff war has done massive damage to the relationship between Canada and America. The damage is so severe that I am comfortable predicting that it will not be reparable. When things happen that are out of Canada’s control, something fascinating follows.

Canada is forced to examine what happened from a personal perspective. What did Canada ignore about the relationship with the United States? What made Canada so complacent about living next door to a country that creates wars that aren’t their own wars? You know, wars that kill people, destroy infrastructure, create hatred towards the United States. Why did Canada blindly trust that the USA would never turn on us? How did we get to this place of complacency and vulnerability that so many Prime Ministers had warned us about? Liken this to a marriage you trusted. A spouse that you believed had your back, would never harm or betray you. Someone you trusted was a “soft place to land”. Then suddenly and unexpectedly left you, divorced you, and tried to take all the joint assets of your life together.

Divorce trauma is a real thing, with symptoms consistent with post traumatic stress. Canada now has “Tariff Trauma”, identified by several stages- Denial (Canada has been sleeping next to an elephant and ignored the obvious risks),Bargaining (Canada added measures of border security despite illegal alien and fentanyl statistics that proved Canada was not the main source of illegal immigration or fentanyl), Anger (NO, Canada is not for sale!), and where we recently arrived, Depression (WTF happened?). The final stage will be Acceptance as Canada moves on with tough lessons learned.

To quote Prime Minister Justin Trudeau, who said yesterday, “Canadians are perplexed”, I would agree, and add that perplexed does not adequately capture the multitude of other “tariff trauma”emotions Canadians are experiencing. Even if the tariffs were removed before they gained traction, it would do nothing to repair the damage already done to our relationship.

However, there is a silver lining! Canada is now awake (I said awake, Canada has always been “woke” and in Canada woke is not a dirty word). Canada knows beyond the shadow of a doubt, that it is time to break the pseudo trusted alliance with America, away from the whims of a deranged president, toward economic freedom. Canada will quickly find new markets (some have identified themselves already) and will become more financially independent, even if that means allowing foreign investment that was previously denied because America doesn’t like Canadian relationships with other countries. You know, like a jealous spouse.

Canada has its own identity that eschews the USA (even more obvious when Trump floated the idea of a “51st State”). Now it is time to make new friends, open new bank accounts, apply for new credit cards, and start dating again. From that new position, Canada will watch “the ex, USA” stumble in the dark (a serious possibility that Canada will contribute to this), with no guilt or remorse. The US will get what it has coming, and Canada will witness karmic retribution from a safe place, never again having to make excuses for America’s reprehensible behaviour!

(And that's the name of that tune... )