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On his very first day in the Oval Office, President Trump made good on his campaign promise to rip up unfavorable trade deals, as my friend and colleague Larry Edelson previously noted.
China has long been a favorite target of Trump as our trade deficit with China stood at a whopping $347 billion last year. On the campaign trail, he branded them currency manipulators and threatened to slap a 45% tariff on Chinese imports.
But after meeting with China’s President Xi Jinping in Florida recently, Trump backed off the tough talk. He even declared victory after China offered concessions for better U.S. access to their financial markets, plus opening up access for American beef producers.
But now Trump has a new trade target in his sights: Our neighbors to the Great White North, and our largest trading partner, Canada.
U.S.-Canadian relations are quickly deteriorating as Trump intensifies a trade dispute by slapping tariffs of up to 24% on lumber imports from Canada. Apparently, this escalating trade war is retaliation for recent changes in Canada’s dairy policy that U.S. milk producers claim violate NAFTA.
The biggest losers so far in this growing trade war are the Canadian dollar, which slumped to a four-month low of 73 cents to the dollar … and American home builders, with lumber prices climbing to a 13-year high!
But there’s a whole lot more at stake here than the timber industry and Wisconsin dairy farmers, where this dispute got started.
Canada is the world’s largest purchaser of U.S. products, and it is the most important foreign market for 35 out of 50 U.S. States.
In fact, Canada is one of the few nations that we enjoy a trade SURPLUS with, exporting $337.3 billion worth of goods and services, versus imports of $325.4 billion … a surplus of nearly $12 billion!
And according to data from our own Department of Commerce, U.S. exports to Canada support an estimated 1.7 million U.S. jobs.
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The Trump administration should consider carefully how it proceeds with trade policies. Just look what happened in the 1930s. In an effort to “protect” American jobs, the U.S. slapped tariffs on more than 20,000 imports, some as high as 59%. A trade war soon followed that only deepened the Great Depression.
Sadly, the cycles of history look like they are repeating, just as our E-Wave model predicted. And you can expect even more chaos in global markets as a result.
The chief reason why the U.S. runs chronic trade deficits with most of the world is because of our abnormally high corporate tax rates here in the U.S. That’s why tax policy should be right at the top of the Trump administration to-do list, rather than picking one-off fights with our trading partners.
Good investing,
Mike Burnick
P.S. What Wall Street insiders don’t want you to know … Why the U.S. stock market is slated for sudden destruction — but only AFTER it spins off two massive fortunes for investors who make the right moves now: Read more here …
Mike Burnick, with 30 years of professional investment experience, is the Executive Director for The Edelson Institute, where he is the editor of Real Wealth Report, Gold Mining Millionaire, and E-Wave Trader. Mike has been a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. He also served as Director of Research for Weiss Capital Management, where he assisted with trading and asset-allocation responsibilities for a $5 million ETF portfolio.
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Classic trump B.S. Our great trade deficits are with Mexico and China, NOT Canada…. Always trying to get people to take their eyes off what he is really doing (which is really NOTHING productive for the country)…. What’s the problem with China and Mexico? Do too many of his billionaire buddies have plants there? Canada buys as much from us as they sell us! He needs to get to work and begin really getting jobs back to America from Mesico and china, just like he promised…. Remember those pre-election promises? They seem to have vanished, in terms of real progress….
He’s trying to “save dairy-farmer’s jobs” while not caring one hoot about the Canadian dairy-farmer’s jobs.
You’re right! He’d better off turning his eyes in a different direction.
Mike:
I have lost count. Is .this the 4th or 5th time that the US has put duties on lumber exports from Canada and each time the US has lost at the World Trade Commission? There is a word for someone who keeps repeating the same action expecting a different result. The large Canadian lumber companies already have shifted some operations to the US and they will enjoy the higher prices which are already being charged to US home builders. The losers are home buyers in the US and small producers in Canada. The winners are the US lumber cartel and its lobbyists.
The US Department of Agriculture says the problem with milk is over-supply in the US
Here in Canada we also have an oversupply of milk. I read last year that about a million gallons (equiv.) of skim milk was being dumped (into pig-feed) every month.
We don’t really need any of the US’s rBGH milk here.
Nailed it. Even most of the Diary Farmers say it is over production not Canada’s diary.
Get into a lumber battle with Canada…not a great idea..housing prices will go up in the USA..and only the small producers in Canada will be effected.
As a proud Canadian I can only shrug my shoulders at the circus in Washington. As for retaliation, maybe we should skip the trade war and launch a missile into Lake Ontario and conduct a nuclear test off the coast of Nova Scotia. Mr. Trump seems to take notice of such things.
Methinks their is more to the milk war if one exams things. It seems Wisconsin is home to many important Republicans and is also a state that helped put Trump in the White House. Milk production in Wisconsin overshadows total Canadian production and there is over production. Even some Wisconsin dairy farmers admit to this. Always keep in mind politicians do absolutely zip for voters nada zilch its all political payback.
As a proud Canuck, it appears that I’ve got some ‘skin in this game’. trudeau became an easy mark for Trump to conquer, unlike world powers e.g. China . who would start a nasty trade war if punitive counter duties were imposed. trudeau is a wimp. He invites more of the same by agreeing we should redo NAFTA. trudeau reminds me of the little waif in the play “Oliver” who asks “please sir, can I have more”,
We shall see. Trudeau is no easy mark. You should know this after the last election just how easy a mark he is!! This coloumn was not about our Prime Minister it is about our lumber/milk trade…no one has even gone to the table..we as Canadian should be supporting our government on this issue regardless who the PM is..not divide it by comments like this. This is not the place. We get together in Canada….!
Thank you for telling it like it really is between us, Blunt facts beat bluff and bluster again!
To make the point you didn’t have to get into minutae like: Canada buys 5 x as much US milk products than they sell. The milk problem is US made uncontrolled factory farm oversupply dramatically reducing prices and family farm incomes. A Canadian quota system avoids that.
These and other realities like the lost jobs impact of our finished goods buying vs your raw material buys are being quietly but firmly delivered in Washington.
Now, if we could just get your message to the rest of America we might even stop these
‘alternative facts’ deal makers from burning both of our bridges and forcing us to look to our new EU free trade partners and China for our trading future. .
Are you serious saying “…chief reason why the U.S. runs chronic trade deficits with most of the world is because of our abnormally high corporate tax rates here in the U.S…” ?
Have a look at Sweden, Danemark, Germany…
What about tax avoidence by famous corporations and what about the huge spending for “defense” (by far more then Russia, China and Europe all together)?
Funny how Trump shifted from the biggest trade deficit Nation and economic superpower to a trade surplus Nation with a much smaller economy. It’s kinda like when America entered World War I against Germany some people would go around kicking Dachshunds to demonstrate their patriotism but somehow didn’t kick Dobermans or German Shepards. I guess his next target will be Lichtenstein.
All hat, no cattle (except what Daddy gave him)….. Net worth recently, acccording to Forbes, about 3 Billion. If he had just put Dady’s money into an S&P fund, he would have about 10 Billion!……Successful Businessman?
Sorry,I don’t agree, his next target will be North Korea.Until the world bank pulls the plug.The U.S. no longer has the funds to service it’s debt.Each successive interest increase will only worsen an already desolute situation.Trump will only serve one term,if he is lucky.More likely than not,Pence,patiently waiting in the wings,will assume power sometime soon.People will soon realise how intellectually challenged the President actually is.He is like a petulant child, who nobody likes and he can’t understand why.There is a famous quote from an Irish sitcom,Father Ted,where one of cast says….Idiot Man-Child.Frankly, nobody can better that, it fits to a T.Perfect.
I never understand before how important Canada is to the U.S. They are the only other country with an economy so intertwined with ours. We need to nurture this relationship.
Canada is the US’ number one supplier of energy; far exceeding Saudi-Arabia.
As a Canadian, I cringe whrn I see the amateurish antics of our PM. Sure he is a liberal who hates conservatives like Trump. But he still needs to realize that Canada will not win a trade war with the US. So why start one by giving fellow Quebecers a tarrif? The former PM was a conservative who didn’t much like Libera but he at least realized that he had to play ball with Obama. This is what Canadians get for electing a drama teacher.
Trudeau (the Kid) actually believes he can win against a master negotiator like Trump. Some hope!
He doesn’t have to win. All he has to do is stall him long enough to enable the Republican party to remove and replace him with Pence.Pence is waiting patiently, like a snake in the grass,for his chance.Trump won’t even see it coming. Did you actually call him ( a master negotiator ) ? Boy do you have wicked sense of humour. Love it !!! However, intellectual midget fits much better.
Trudeau is a grade school teacher whose skills made him a “joke” of a teacher at the private school he taught at in Point Grey I was told by a teacher who used to work with him. Trump is a master businessman. This Trudeau is as useless as a fly at an airshow by comparison. He is a bigger joke than he was as a teacher.
If Trump jacks up taxes on Canadian products why can’t Canada do the same thing.
We don’t need to; we just lower the value of our Loonie a little more. That’ll amount to the same thing.
That’s dumb fraidy-cat thinking. Because you buy a lot of my goods I should let you rip me off on somethings. Ripping off is wrong no matter how you try to rationalize it.
Hello Mike,
Well said. It is refreshing to read a straight forward, honest and rational article on the realities that we are faced with today.
I enjoy your posts.
Keep up the good work.
Thanks much for providing some context for Trump’s seemingly mindless (and endless) blaming of other countries for the many problems the U.S. is experiencing now. If Canada has made one mistake in it’s seemingly endless battles with U.S. protectionism (disguised as many other things), it is not diversifying it’s trading sufficiently. Doing this could only help Canada weather the kind of nonsense (unilaterally re-opening treaties, etc., etc.) it is subject to on an all-too-regular basis, but, sadly, end up harming the U.S. How do higher home prices that will inevitably come from increased tariffs on softwood sound to those who so blithly cheer on attacks they would scream about if directed by other countries at them? Sorry for the rant, but again, thanks so much for a voice of rationality.
Canada turn away from your neighbor down south.They are not worth the trouble.Instead turn to Europe, you WILL find much more in common with Europe than with Americans.Well, it least until Trump commits political suicide.We can always hope he slips in the shower or falls down the stairs,preferably really long stairs.I wonder if praying would help the matter somewhat?????
As a Canadian yesterday I heard about the 24% lumber tax. I am no longer buying from the US companies. I have just finished having my name taken off all the email lists for them spending 10s of thousands of dollars on US products. First I will buy Canadian, then with the NZ dollar low like ours is, Britain and Euro low, which will pay for the difference in transport, so I have a choice of quality products. I have not met with others yet as to what they will do but I suspect they will also come to a decision best for them. The situation will snowball and I am not waiting to just react once it does.
Nice Mike
Ed
As a Canadian I have to agree with you that Trump should not be starting a trade war with their biggest trading partners and particularly a strong partner like Canada when we already spend more in the U. S. than they buy from us. If Donald Trump wants to “make America Great Again” then he should concentrate on tax and monetary policies. Unless he somehow convinces Congress to abolish, or at least drastically reform the Federal Reserve Act of 1913 then all his “bluff and bluster” and unrealistic campaign promises that got him elected will have been in vain. PHONY MONEY based on a DEBT financing fractional reserve currency monopoly by private bankers is the albatross around our necks that is drowning all nations in DEBT. If the foundation is flawed, (and it is). then a collapse of the economy on a world scale is imminent, it is a mathematical certainty. You can no more solve a growing debt problem by simply printing more increasingly worthless dollars than you can pull yourself up by your own boot-straps, a lesson our own P/M Justin Trudeau has not yet learned. As for Donald Trump, rather than “draining the Swamp” in D.C. as promised, with appointment of Goldman SUCKS alumni to his cabinet, and plans for tax cuts and huge infrastructure spending it looks more like he has been sucked in by the swamp and is opting for the status quo with the potential to double the national debt one more time like Obama did in his 8 years, except it might take Trump only one term barring a complete collapse of the system to leave him the scapegoat for the failed monetary policies that have been building for decades that got us in this untenable position of un-payable debt neither our children or grandchildren will ever be able to pay, they will just be debt slaves in perpetuity just as the International Banking Cabal planned in 1913 on Jekyll Island.
Wow,I am impressed !!!You have done your homework and hit the nail on the head.However, you have forgotten to mention that it is the Rothchilds of Europe that are behind it ALL, pulling the strings, making everyone dance like a puppet on a string.Including Trump,He actually thinks he is in control.Unfortunately until the Rothchilds are eliminated,one way or another, things will not change.Perhaps a world wide coordinated assault on their financial assets would be appropriate.Worth considering,all nations would be immediately debt free.It’s a small planet, where would the Rothchilds go?Nowhere for them to hide, literally no where!!Governments of the world, consider the possibilities……
As a Canadian your questionaire really does not apply. However, it is a sad commentary on the Administration as a whole and particularly on your President that he needs to show his dwindling voter base that he is delivering on his promises by attacking our soft lumber industry. Particularly since this issue has raised its ugly head five times before and in each instance Canada prevailed. We Canadians will not start a trade war. It is of no benefit to us nor to our friends to the South. Your numbers as quoted from our Globe and Mail newspaper are quite correct and I am sure that Mr. Trump and company are quite aware of them too. So, it makes no sense to do what he and Mr. Ross did a few days ago. Wait until his voter base discovers that Mr. Trump cannot deliver on all those mining jobs he has been promising. For that matter, all those jobs he plans to re-patriate. The only thing that he will be bringing back are jobs taken over by robots. Robots imported mainly from China. What a mess.
I have stopped buying at Walmart ;Home depot and carefully looking where it is made. This is my response to Trump
Clueless voters beget clueless government the world over. Boom and doom, war and peace, will the blunders ever cease?
Are not most nations “founded by genius, run by idiots?”
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Now that the US has achieved “technical” oil independence (technical in both sense of the development of technologies like horizontal drilling with fracking to produce oil and gas, and the development of new battery technologies for electric cars like cheaper li-ion battery, and the new potentially 3 times more powerful “glass” battery, and technically in the sense that by theoretical calculations, the US can produce all the oil it needs by massively going fracking, and converting to electrical cars, and to natural frac gas powered trucks, if it has to, in theory, although currently not doing so in reality,) the US needs no longer to kiss the behinds of oil producing foreign countries, and the US needs no longer to bend over, and to take it up the behind from some of these foreign oil producing countries. Foreign oil producing countries should no longer expect the US to kiss their behinds, and definitely foreign oil producing countries should no longer try to shove it up the behind of the US. They should negotiate with give and take, rather than using monopolistic powers of oil, which are no longer so powerful, as the US becomes more energy self sufficient. Before fracking, and before the now potentially super glass-batteries, the US had to import over 70 percent of its oil, that is growing by the year. Before the invention of horizontal drilling with fracking for natural gas, the US was running out of natural gas. Now the US is estimated to have several hundred years of domestic natural gas produced from fracking. It looks like the same for oil. Oil price has dropped from over a hundred to around fifty. If the super glass-battery developing in university labs works, and can be scaled up, electric cars will replace a lot of gasoline cars. Will many countries which are heavily dependent on oil prices collapse going into recession, or even depression? These countries will spend less for US goods with less of their oil income, as the need for oil decreases. Perhaps these countries will learn to butter up to the US for assistance and trade, if their oil prices collapse in the future?
Blindly giving corporations huge tax cuts did not work, as it is really a Marxist Communist idea in disguise. After President Bush gave the rich, and their corporations huge tax-cuts-for-the-rich, the US economy collapsed with the 2008 Great Recession, which would had been a depression, if it were not for the trillions in bailouts given to the rich, and their corporations and banks in the years after 2008. Yea, give money blindly to the “poor”-rich, and their “poor”-corporations, because they are so beaten up in the world market, that they have big needs, so that give to these “poor” corporations according to their needs. The Marxist concept of giving to the poor according to their needs (without considering merit) produced weak economies, as demonstrated by the old soviet countries that had economically collapsed, and that had learned to relegated the Marxist concept of blindly giving money to people without considering merit to the dust bin of history. Giving money blindly to the rich and their corporations without considering merit produced the economic collapse of 2008, which some have not learn, and still pushing this Marxist like concept. It is merit that is the key factor.
As far as the import tariffs in the 1930s it only affected about 2% of the GDP of the US so it was really a non-issue anyway.
As far as US dairy products are concerned, if the US banned the use of rBGH then we would be more likely to accept US milk.
As it is, we don’t want it!
One of our greatest allies in the world is Canada! How much Crime and Drugs does Canada import to the U.S.? Zip, Nada! So tell me again Mr Dump, why are you screwing with them when our Real Economic Enemies are Mexico and China?!!….. :( Geezz, could this poor imitation of P.T. Barnum be any worse!? Pray that the Independent Russia Connection Investigation gets going sooner rather than later, Aye?!!!…… :(
Canadian supply management system for dairy and poultry benefits 30,000 wealthy farmers at the expense of 36 million consumers to the tune of $6 billion Cad dollars annually. Anything Trump can do to end this highway robbery would or should get the thanks of all Canadians. Try buying cheese here that often sells for as much as $24 Cad. dollars a pound l!!
The reason for enormous US trade deficits and sky high debt is that running up these deficits IS DELIBERATE US GOVERNMENT POLICY and has been since Paul Volker’s speech at the University of Warwick on November 9, 1978. The US government wanted to maintain it’s global hegemony by running big trade deficits and enormous borrowing and didn’t give a fig for the suffering of the US populous, especially the middle class. This is typical blame the victim. China has a trillion dollars of soon-to-be worthless US$ as a result of US debt maximization policy and yet they are the ones blamed for what the US itself did. (See pages 70 and 71 of Yanis Varoufackise’s book “And the Weak Suffer What They Must”)
As regards the milk product in question, it is NOT subject to NAFTA because that product did not exist at the time NAFTA was written. US farmers were urged to produce more milk; a surplus resulted. What Canada did was to lower the price which is exactly what you do to absorb a surplus.
The US dairy industry in Vermont, if not throughout the US, is “sustained by” illegal immigrants working in inhuman conditions, presumably at lower wages than legal immigrant workers or US citizens. Other countries should not have to compete with this unfairly low wage or inhuman conditions. See…
http://66.133.112.116/radio/?clearls=1
Then, too, Canada, China and Mexico as well as the rest of the world should not have to try to compete with the slave labour rates the US gets from forced labour at it’s for-profit prisons. See….
https://www.youtube.com/watch?v=qa_FrO7ib-g
and
https://www.youtube.com/watch?v=L3Hd0wkcBQQ
For more information, go to
http://www.freedomforformeruscitizens.com
I believe that the lumber industries cartel in USA has adopted the same trade tactics four times in the past. And when the NAFTA trade ‘board ‘ rejected every single time this taxe, the US government had to pay back all the taxes imposed to Canada exporters. Naturaly it took between 2 and 4 years to solve these issues, the US lumber industry profitered in mean time .’The American lobbies are all very powerfull, and the unfair pressure that can be applied to your political system is exagerated. Canada only solution on the long term is to find new markets for its products, in Europe(it just signed a free trade agreement with CEE) that will seriously increase the trade for Canadians. China who is very fast becoming the world dominant economic, economic and political(even military as we see in the South China Sea, and in North Corea). I don’t think that this kind of bully tactics from US Executive will succeed in the long term and certainly will affect seriously in future our normaly good business relations . By the way the Canadian dollar is no more or less affected by our trade relations as you can observe with Australian or other curencies, and this has narhing to do with the recent economics tensions,