International Trade Problem

 International Trade Problem

Obviously we al got something very wrong and some of the problem is also obviously wrong.

Essentially understand that all trade is deeply networked with nodes and channels all of which uses human inteligence to mediate.  Those nodes and channels have been beaten into submission over time, and sometimes long spans of time by the unrelenting pressure to minimize costs.  This folks includes labor costs but not just labor costs..

This is why slapping a tariff on alumnium from Canada is literally shooting yourself in the foot with a 12 guage shotgun.  It is actually blindingly stupid and was still not caught by those around Trump as well.  This informs us that we are dealing with economic dunderheads which is sad.

Let us be specific.  Canada does not mine a pound of aluminium.  What it has is a massive surplus of clean hydroelectric power that needs to be used.  There is a reason Quebec supplies most of the power to the USA Northeast.  All that aluminium went straight to USA industry.  Literally putting a tariff on aluminium is putting a surcharge on USA industrial output without costing Canada a dime.  And it has now become plausible to run a subsesa cable to Ireland and supply Europe.

And it is essentially just as bad with Steel.  Our steel output goes straight to the USA auto inndustry as it should.  however our back trade in steel comes from the USA gulf area to supply the Tarsands.  They balance.  Ontario steel producers would love to enter that market full on.  Thus a steel tariff hits detroit and the gulf States while ramping up Canadian steel supply to Alberta.

Those are what i call short term blunders, now in the process of been beaten into submission.

The far larger problem for the USA right now is that the whole network of trade has been disturbed and incentivised to shift North to the Windsor to Montreal trade corridor which was always a threat to the USA Midwest industrial base.  Which, by the way is ocean access equivalent to the seacoast which is steadily been improved upon.  We are talking about 28,000 ton ships which can sail to Rotterdam.  Also known as HandyMax in container jargon.

The industrial base of the Midwest is an accident of the history of rail mostly and the Erie Canal.  The upgraded version happens to be the Seaway and the CNN railroute and of course the 401 to montreal.  So of course long established businesses all through the miswest have an open calculation  monitoring their cross brder options.  

At the same time. Canada is importing ample talent to man those new factories.

The takehome is that this trade conflict has actually also incentivised Canadian long term trade strategy already in place.  Literally it is all built out and the welcome mat is out.