I was invited to speak at the World Trade Day conference last August in Louisville, Ky., where the opening session was a fireside chat with a deputy undersecretary at the United States Department of Commerce . I was interested in hearing the official narrative he would offer the business audience on the Donald Trump administration’s trade policy.
Essentially, the administration had reached the conclusion that previous U.S. assumptions regarding trade deals had changed and so the U.S. was now changing these arrangements. “We did not get the deals that we thought we were getting,” he said.
He offered two examples. China’s entry in the World Trade Organization and the North American Free Trade Agreement (now the Canada-U.S.-Mexico Agreement ). In general, he said “the rules-based order that was provided did not work out.”
The undersecretary made a point of reminding us that the U.S. was engaged in a battle with China to determine who would lead the world on AI.
On the administration’s approach to negotiating, he also offered that the Art of the Deal is not just a book, but also a way of governing.” A different model where the government of the U.S. will not hesitate in future deals to put its hand on the scale “even if very gently.”
As I listened to the narrative about the U.S. government arguing unforeseen assumptions about trade and other countries, I asked myself whether this same government asked itself how these new policies would change the assumptions that other countries had about the U.S. and the impact it would have on their economy and their longer-term position in the world.
How does this affect Canada?
If we are going to emerge a better and stronger country from this new world of changed assumptions, the place to start is taking a hard look at ourselves.
Over the past few years, Canada and Canadians have become complacent.
We live next to the richest and most powerful economy in the world. With unfettered access to the U.S., we neglected to diversify our trading partners. We signed a significant number of trade agreements, but did not follow up by going into these new markets.
Business investment dropped and Canada became one of the world’s worst performers in terms of productivity.
Over the past decade, we have earned the reputation of a country that cannot get big projects done. With overlapping federal and provincial policies, laws and regulations, the obstacles in some cases became unsurmountable.
Interprovincial trade barriers have become entrenched to the detriment of economic growth and our ability to trade among ourselves.
On defence, Canada was a laggard. We did not live up to our basic responsibility to occupy and defend our territory. On this issue, Trump is right.
These are some of the issues that we are facing as a country.
Now comes the good part. Canada has great strengths. We have one of the world’s best-educated populations. We are blessed with extraordinary natural resources in energy, minerals, agri-food, etc. We are also a knowledge-based economy with great capabilities, notably in transport, aerospace, biotech, AI and quantum computing.
Trump has shaken us out of our lethargy, and we now have in front of us a historical opportunity to shake off past assumptions and build a better, more competitive and stronger country.
In our relationship with the U.S., we need to be strategic and smart. The U.S., no matter what happens, will always be our most important trading partner.
We should never confound the people of the U.S. with the present-day administration. As people of our respective countries, we are fortunate to share the same neighbourhood.
We must now rethink and redesign our economy to become more competitive and offer the world much of what it needs. We must invest more in our resources, including energy, strategic minerals and agri-food. We must invest in infrastructure, including a dual-use approach for defence.
Our federal system of government is sound, but we need to update the operating manual of federal-provincial relations. Changing our economy will require an unprecedented level of cooperation between all levels of government.
We need to co-opt our universities, which are among the world’s best, for basic research and commercialization that will allow us to develop sovereign capabilities.
With investments, new technologies, innovation and defence spending, we need to find a path towards stronger productivity growth.
Our newfound sense of urgency should allow us to fight off the inertia of government and legacy business processes to deal with inter-provincial trade barriers and the building of all the infrastructure needed to bring our products to market.
We already have more than 50 trade agreements and more on the way, but if they are going to be effective, we must urgently diversify into new markets.
What we know about the new assumptions is that from now on national security and strategic autonomy are new imperatives that we must take into account in everything we do, whether it is trade, supply chains or national defence.
From my perspective, one thing stands out. The change we need to do in Canada is more than just about policies, laws and regulations. It is a once-in-a-lifetime generational change of our business culture to innovate more, invest, commercialize and engage in a new world based on our assumptions, as opposed to those who would impose their own assumptions on us.
Jean Charest is a partner at Therrien, Couture, Joli-Cœur, a member of the Advisory Committee on Canada‑U.S. Economic Relations and a former premier of Quebec.