Let's talk about Trump vs Canada: Tariff backfire on defense industry edition.... - Belle of the Ranch

[TexasTowelie]

Well, howdy there Internet people. It's Belle again. So, today we're going to talk about Trump versus Canada Defense Industry Edition.

Canada was set to release its new strategy paper dealing with defense production last week, but due to events in British Columbia, that release was delayed. Well, the new strategy paper says Canada will increase its defense spending to 5% of its GDP, raise serviceability rates of Canadian equipment, increase defense exports by 50%. That's right, exports, and it will create more than 100,000 jobs.

That brings us to the question, Belle. I'm just wondering if Trump just destroyed 125,000 defense manufacturing jobs in the United States with a stupid trade war. I'm looking at the Canadian plan and it looks like they're basically scrapping all reliance on the US. Am I reading this wrong? He's reshoring jobs to other countries while we lost 100,000 manufacturing jobs last year. Is there any reversing this?

Yes, the economists were right. Trump was wrong. The trade war is absolutely backfiring in big ways. Okay, so let's hit these questions one at a time. Did Trump really just destroy 125,000 defense manufacturing jobs? Not exactly. It isn't a zero sum game. The addition of jobs in Canada doesn't mean that exact number of jobs will disappear in the US. Canada was a customer of the US defense industry. So them striking out on their own will damage the US industry, but by how much isn't certain yet? I'd say tens of thousands, but not a hundred thousand.

From the Canadian side of things, this is part of a much larger reinvestment in their defense industry. In fact, the funding for this is only taking about 10% of money allocated for defense revitalization in last year's budget. It turns buying domestically for defense into the default option. As Carney recently said, "75 cents of every dollar of capital spending for defense goes to the United States." That's not smart. This attitude signals a long-term shift. This isn't the country saying we're going to boycott. That was last year. This year is we're investing capital to never purchase these products from the US again.

The other question was can this be reversed? The overall situation will be reversed eventually. The tensions will eventually decline. Trade will eventually normalize with this specific industry. The defense industry is different. Look, US allies feel betrayed. They saw deals destroyed. They saw half of Americans cheer those decisions. So, it can't be blamed just on Trump.

If you can't trust a country to honor a simple trade agreement, why on earth would you trust them with your national defense? My guess is that nobody old enough to have sent that message will still be alive when and if Canada ever starts to totally rely on the US industry again. The damage this administration's trade policies have done can't really be overstated.

Anyway, it's just a thought. Y'all have a good day.

[OAITW r.2.0]

1. Canada holds all of the cards. Trade with Canada has benefited both countries for 60+ years.

Trump wants to go trade war with Canada? We lose automotive. areo-space, energy, rail/port revenue, and fertilizer. Also, huge defense revenue for US defense contractors. Corporations will go where predictable trade policies reside. I'm betting Trump is getting his economic and geo-strategic policy directives. directly from Putin.