KRUGGEL: Trump suspends Trade Talks but it wasn't because of the Ontario Ad

This is the second time Donald Trump has terminated trade talks with Canada. There's a reason people call him TACO or Trump Always Chickens Out. He says one thing and then reverses himself a few days later. Maybe it'll take a week this time to talk him down or for his medication to kick in.

 

But let's all just keep on thing in mind: Donald Trump didn't suspend the talks due to the ad campaign launched by the Government of Ontario. 

 

Donald Trump suspended those talks because of something Mark Carney said and has been talking about and acting on. 

 

What was that? 

 

Mark Carney stated that he wants to double the amount of trade Canada does with other nations. Today about 80% of Canada's exports go to the United States. Mark Carney wants to make that number about 60%. That's a lofty goal. Normally I'd be among the people saying, good luck with that sir. I've changed my tune and not because of any thing Trump or Carney have said but because of what China and India, well their representatives have said.

 

India's new envoy stated they are open to a full trade agreement with Canada. You may recall Trump hit India with substantial tariffs. China's government has said if we drop our tariffs on Chinese EVs they'll drop theirs on our Canola. 

 

On that latter one, no North American vehicle can compete with a Chinese EV on quality and price. They've got the big three and other Asian manufacturers beat. 

 

Trump wants Canada to be a market for American products but not the vice versa. He wants to keep Canadian products out of the United States.

 

If Canada, and more countries pivot away from the United States and make that work it means fewer markets for American products. 

 

That notion, that very possibility, terrifies American manufacturers. 

 

Donald Trump wants manufacturing brought back home, but manufacturers know that they need foreign markets too. Normally they wouldn't be this bothered but what Donald Trump and Commerce Secretary Lutnick didn't gauge correctly was how resilient the world economy could be. Even with all of Trump's trade wars the world economy is doing far better than anyone expected. While growth is low, most countries still have growing economies. They aren't in the throes of recession like we say in 2007/08.

 

Again, worse for the Americans, is that other countries are adjusting to the trade reality a lot better than economists predicted. Heck, I figured Canada would be in way more trouble than it is. Yes, forestry it getting hit hard. But that aside, this country is pivoting, albeit slowly. 

 

American inflation hit 3% today. Economists know it will go a lot higher. Some predict 12% in 24 months. Maybe that's a bit high, but those tariffs are providing an enormous upward pressure on prices for things the Americans cannot produce like coffee, aluminum and steel in the quantities they need, clothing that is affordable, furniture, and in particular electronics and small appliances. 

 

Donald Trump wants to put Canada under his thumb and the moves the government is making will make that impossible in the long term.

 

And the bad news keeps piling up for Trump. The United States has lost almost 80,000 manufacturing jobs this year. Hiring has fallen every single month until those reports were terminated by his interim secretary. 

 

If I were the Prime Minister right now I'd carry on with business as usual. Trump is undermining the American economy repeating the mistakes of the 1920s tariffs.

 

Wait him out.