Canada’s dilemma facing NAFTA

American farmers are increasingly impacted by tariffs caused by ongoing trade disputes with Canada, Mexico and China.

The impact is so big the US Department of Agriculture is now handing out $4.7 billion in farm aid to offset losses from retaliatory tariffs. And it’s not just farmers getting hurt.

In America’s heartland, retaliatory tariffs threaten some $1 billion in exports from Iowa, $660 million of that with Canada alone. And while hog and soybean farmers are impacted, so are steel, pesticide and other manufacturers. The story’s the same across the US.

That’s why Chamber of Commerce President and CEO Thomas J. Donohue on Friday urged negotiators to reach a deal that includes all three NAFTA signatories.

“NAFTA’s many strengths rest on the fact that it ties together three economically vibrant nations, drawing upon each of our strengths to boost the competitiveness of the whole,” Donohue said in the release. “If you break off one member of this agreement, you break it all, and that would be bad news for US businesses, for American jobs, and for economic growth.”

Clearly, trade disputes hurt everyone –farmers, employers, workers and consumers. And just as clearly, Canada, Mexico and the US economies are deeply integrated.

Economic and political pressure will eventually resolve the Canadian current disagreement.

Meanwhile, the remaining hurdles for Canada (Mexico and the US have a tentative pact) appear to be over access to the Canadian dairy market, preserving NAFTA’s cultural exemptions and maintaining a dispute resolution mechanism.

Donald Trump’s rhetoric may be inflammatory but his job is to get a better deal for Americans. He also risks a political battle with Congress over NAFTA and growing backlash from ordinary Americans, despite his booming economy, as the trade dispute increasingly disrupts jobs and prices.

The Canadian prime minister, Justin Trudeau, on the other hand has mismanaged negotiations from the start, including by shoehorning his progressive agenda into talks.

The Americans should have more access to the Canadian dairy market. Supply management is a costly, protectionist hangover that bilks consumers in this country.

Extending cultural protection costs the US little but they do need a way to resolve disputes.

Both Trudeau and Trump need a NAFTA win, and, for all sakes, Canadians hope both get one.