Vincent J. Curtis
29 Apr 25
Donald Trump is particularly responsible for driving Justin Trudeau from office. Confronting Trudeau with a list of complains and demands at a pre-inaugural meeting at Mar-a-Lago, Trump began teasing and, sensing weakness, taunting Trudeau as the “Governor” of the 51st state. He claimed that the United States subsidized Canada to the tune of $200 billion, and said that he was tired of it. Canada, as an independent country didn’t work without these subsidies, and that Canadians would be much better off if they became American, with him as president.
It never occurred to Trudeau to reply that if Canada were a 51st state, she wouldn’t be able to extend political asylum to Mr. Trump when the Democrats attacked him with lawfare. President Putin of Russia missed a chance to humiliate the Biden Administration by not offering Mr. Trump political asylum in Russia, in the midst of his legal travails before his election in November, 2024. But I digress.
To date, no one has asked President Trump to account for this $200 billion claim. In recent years, Canada has opened up a trade surplus with the United States in the order of $60 billion a year. In every voluntary economic transaction, both sides think they benefit. In this annual set of voluntary transactions, America nets $60 billion worth of Canadian stuff, and Canada takes in exchange, pieces of paper covered in black and green ink, and embossed with the image of a deceased American worthy. Canadians consider this fair exchange!
An accumulation of large amounts of these pieces of paper, ordinarily, would become intolerable; but Canadians continue accepting these pieces of paper in exchange for their stuff because other people will take these pieces of paper in exchange for their stuff that Canadians want. A German will exchange these pieces of American paper for a new BMW. The Chinese will exchange them for an iPhone. Americans will even exchange them for other, virtual, pieces of paper known as stocks and coupon-bearing bonds. That’s the splendour of having the world reserve currency; and, even more wonderful, is that, if America runs short of these pieces of paper for her own domestic needs, she can always print more of them on the presses in basement of the Federal Reserve building.
To reduce the trade imbalance, Trump introduced tariffs. From the founding of the Republic to the introduction of the income tax in 1913, the U.S. Federal government earned most of its revenue from tariffs. They’re easy to collect. The era of the greatest expansion in economy, population, and power of the United States was from 1870 to 1910, and this is the period that Trump looks to for inspiration. With tariffs, Trump can reduce income taxes without loss of revenue to the Treasury.
What can Canada do to deal with Trump? One smart thing the Canadian government can negotiate is to buy American made military equipment: that satisfies simultaneously a number of Trump’s demands: to take active measures to reduce the trade deficit; to increase military spending, and it’s an endorsement that American made military equipment is the best in the world.
So, what to buy: the F-15EX, the F-16 Viper, or (okay) the F-35? In WWJD (What would Jacky Do, EdC Vol 28, No. 5.), I showed that small were the differences in dimensions between a Type 26 Frigate and an Arleigh Burke class destroyer, and the American made ship costs less than half the projected cost of the frigate -- with exchange. Canada needs more helicopters, drones, the latest in mobile artillery; Canada could use Abrams tanks, and there are plenty of innovative small arms from Knight Armaments that could be purchased for trial in lots of 500 to 1000.
How can Canada pay for all of this? By
completing the Keystone XL pipeline, which will enable America to ship American
produced oil and LNG to Europe by substituting Alberta production for American for
consumption.
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