It’s nice to see our Canadian politicians working so hard to point out to Mr. Trump that his threat of higher tariffs on Canada will hurt American consumers. If his threats come true, U.S. consumers will be forced to buy made-in-America products instead of the best product at the best price that won customers in open competition. But if this is true for the U.S., isn’t this also true for us?
Why am I not allowed to buy American fresh milk, eggs, chicken, butter or cheese at my local grocery store? If our politicians can acknowledge that U.S. trade barriers hurt Americans, why can’t they admit that our own Canadian trade barriers hurt us? How embarrassing to see some of our politicians’ rake our grocery store magnates over the coals recently for their mark-ups while the ones sitting on the other side of the table are the ones responsible for our own self-imposed higher costs of many foods.
To see the full extent of how our government keeps our food prices purposefully expensive, you can access the full extent of Canadian tariffs in a 1,425 page document here: 01-99-2025-eng.pdf. Notice in Chapter 2 the 238% tariff on chicken meat above “access commitment” (exporters from certain countries are allowed entry of a limited amount of certain products at a lower tariff) or in Chapter 4 the 241% tariff on milk, 250.5% on Yogurt, 298.5% on butter or 245.5% on certain cheeses (all above “access commitment”).
Does being Canadian have to mean that I am not allowed to discover whether I am buying the best product at the best price? Wouldn’t I be a prouder Canadian if I knew our producers were able to win in open competition rather than being protected by small-mindedness? Two of the most successful economies of that last 50 years (Hong Kong and Singapore) protect nothing. Yet somehow their citizens have succeeded when freed from protection to find in which sectors they are world-beaters and as a result have become among the most prosperous people in the world. Are their peoples so much superior to us to be able to succeed where Canadians can’t?
Canada ranks a distant 33 (of 165 jurisdictions) in the category of “Freedom to trade internationally” in the Fraser Institute’s latest Economic Freedom of World (2022). U.S. ranks 53rd, far behind Hong Kong (#1) and Singapore (#2), Netherlands (#3), Ireland (#5), etc. In the weighted mean tariff rate on all products calculated by the World Bank, Canada ranks only 68th lowest out of 188 jurisdictions.
Economic theory suggests that smaller countries are unlikely to contain within them all the different skills and talents to be able to produce the best of everything. That means smaller countries can gain more from freer trade—specializing in only certain areas and buying from the best in other areas. It also means that smaller countries are likely to be injured more by trade barriers.
And who should pick what we should specialize in? Hong Kong and Singapore have succeeded by letting international customers make this choice. Governments frequently boast about their ability to create winning industries, but there really aren’t that many good examples of this. Most governments have proven to be rotten pickers and wasted oodles of taxpayers’ hard-won earnings.
Imagine a more prosperous Canada where any airline is free to pick up passengers from any Canadian airport and deliver them to any other. Where aficionados can buy their favourite cheeses (without 300% tariffs) and our restaurants are allowed to stock whatever world-wide tipple they think their customers might enjoy. Where any cell phone company in the world can establish networks here. Where large international banks are free to buy Canadian banks if they feel they run them better. Already, technology has freed us from many CRTC regulations and many Canadian performers and artists have proven themselves adept at being able to compete in the world. Why are we holding our farmers and industrialists back?
In the 1988 election campaign (the one in which Margaret Atwood and Ed Broadbent were channelling Mr. Trump’s views in Canada) one of the potential losers was thought to be Canadian wine producers. But surprise, surprise, stripped of many protections this sector stopped producing lowest-common-denominator plonk and learned to specialize in higher-value output – and prosper. Are other farmers less capable? Australian and New Zealand milk producers burdened with Canada-like marketing boards, threw them out at the turn of the century and turned these industries into world beaters. Isn’t it time for us to do the same?
We can’t control Mr. Trump with his lack of economic nous. If his tariffs come, it will be devastating for us. But why add ammunition to the fire? Any retaliatory tariffs are likely to hurt us (a small economy) more that it will hurt them (a large economy with lots of choices). How would he react if instead of ramping up the ire, we did a Hong Kong, giving our consumers a tariff holiday and our economy a great boost by freeing our entrepreneurs from our own self-imposed trade barriers?
One other side-benefit of such a change would be the disappearance of those smarmy Canadian Dairy Farmer’s advertisements. Many might see them as innocuous heart-warming vignettes of our farmers hard-at-work. But what is the purpose of such an ad, when I am not even being allowed a choice between their product and something else? Aren’t these ads just being used to rub our faces in their political power?
Mr. Trump has been in power for only a few weeks. He has threatened economic upheaval all over the world. It’s a sad commentary on Canada’s political class that it might take his threats to get our politicians to do some right things. Are our premiers finally going to get serious at removing many of our silly and innervating inter-provincial trade barriers that restrict mutual recognition of professions or sales of alcoholic beverages?
Perhaps we can turn Mr. Trumps tariff threats into a win-win if we answer his wrath with a soft answer. Trying to out-blast him certainly isn’t working. Opening our economy to more internationally competitive products might stop him in his tracks and it’s something we should have done long ago anyway for our own benefit. Does it have to take an external threat to concentrate minds enough to say NO! to special production interests to enhance the general consumer interest of lower domestic prices?
Paul Geddes, Economics Instructor, Columbia College, Vancouver
President, BC Libertarian Party