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The trade and politics stampede

Free Market Reflections with Steve Dittmer

The trade picture between the U.S. and China has ‘more twists and turns than a cow’s G.I. tract.’ – Steve Dittmer.

This trade circus reminds me of the chuckwagon races at the Calgary Stampede. The U.S. and China keep going round and round and ending up at the same place. President Trump threatens more tariffs and then like the outrider in the chucks, he closes in the last few yards from the finish and pulls them back if China plays nice. Frankly, I’m beginning to wonder if the U.S. forgot to throw the stove in the back of the wagon at the start.

Maybe Trump dropped that sheet iron stove right close to Xi’s foot at the outset, just to warn him the U.S. was serious.

China’s government data shows definite cracks in their economic situation and no one believes it’s as good as the government stats. They didn’t devalue their currency because times were too good.

But even though a chuckwagon race is a lot more complicated than it looks, this trade picture has more twists and turns than a cow’s G.I. tract. For Canada to get caught up in the Huawei deal this way is like watching through the window as the prime rib gets cold and the ice cream melts — while locked out of the house. The U.S.-China fight and the African swine fever have created a grand opportunity for Canadian agriculture to ship gobs to China — and it has gotten all “Menged” up.

Additionally, Canada’s Foreign Minister Chrystia Freeland has met with Chinese counterpart Wang Yi regarding the two Canadian citizens China has detained. She indicated the face-to-face was “positive.” The two agreed to keep communicating but that didn’t sound like it would be lickety split. Canada has gotten support from several G-7 countries. That’s made China mad. They don’t like it when the world gangs up on them.

Yet, that is exactly the parade President Trump is leading. The rest of the developed economic powers are happy he’s calling China to account — they are just too chicken to join the parade. Prime Minister Trudeau is not regarded by many as a hardcase, but holding Huawei’s Meng for extradition has put him squarely in the camp calling China to account as the world’s chief flouter of trade principles and rules. Either he has more grit than anyone thought — or his administration miscalculated how big this thing was. After all, in the beginning of the Huawei fracas, Trump’s team successfully kept it out of the trade discussions. But China decided it was a hold card they would play.

While the Canadian government is trying to conduct their efforts privately and quietly, their political opposites are critical, vocal and threatening hearings. Former officials have been commenting through the media — allegedly discouraged by government officials.

Meng’s extradition hearings are scheduled for this fall. If she gets shipped to the States, will that transfer the heat to us? Will China make up with Canada or will China stay mad? There’s a good chance that they will be hurting enough to want Canadian beef, pork and grain. They will be less peeved at Canada than with the U.S. Things might ease up once she’s gone — either to the U.S. or back to China. Maybe.

To add insult to injury — the matter of the fake meat export papers. We’re sure the investigators are busy but they’re not talking or leaking. One would think they would know by now. That is, if there is anything to be found on this side of the ocean. Finding skullduggery over there is tougher. No one has ever trumped up a reason for a country to stop importing goods to “send a message” to the exporting country, have they?

The crisis in Hong Kong must be disturbing President Xi. The Communist Party is not to be trifled with and those folks in Hong Kong are pushing the limit. Xi certainly must not want another Tiananmen Square. That stain has not faded in 30 years. But a near-revolt cannot put Xi in a conciliatory mood about anything. More pressure on the U.S.-China-Canada round robin.

What about the CUSMA-USMCA trade deal? Canada has indicated it does not want to move before the U.S. ratifies. But Trudeau may not have that much time. While the U.S. Congress will go back to “work” September 9, will they get anything done but argue about guns?  Reportedly, committee staffers in the Democratic-controlled House have been working through August with U.S. Trade Representative Robert Lighthizer to resolve their differences for a treaty vote this fall. But by the time they get around to it, the Liberals may not have the clout they had before Canada’s elections. Trudeau’s scandal over a major engineering firm is, well, engineering big trouble, the polls indicate. Parliament resumes September 15. Will they do something before the October 21 election regardless of the U.S. vote status, so a critical piece of Canada’s economy gets handled? It is Trudeau’s treaty, after all.

Complications, complications, complications.

About the author


Steve Dittmer is the CEO of Agribusiness Freedom Foundation, a non-profit group promoting free market principles throughout the food chain. He can be reached at [email protected]



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