Trade WAR BLUNDER Empowers the ALLIANCE

 

Trade WAR BLUNDER

We need to put some historic perspective under all this because it all looks way too timely otherwise.  Back in the day, and by that. i mean post WWII,  The USA was the only standing modern manufacturing country left standing and undamaged. Canada participated in this but at a level commersurate with its relative size.  what Canada had was a massive relative advantage in raw materials and hydro power and a limited market.

All this was converted to support expanding USA industry driven by its huge internal market.  Canadians had scant reason to complain and American industry was secure in tertms of supply.  Canadian agriculture always faced direct competition with USA agriculture for the same products which limited their markets, but usually behind gentlemens agreements.

This was wonderfully stable and fair enough when that was the status quo.  However we are now 75 year on and two things have happened.  First , the EU now matches the USA in manufacturing output. Secondly developed Asia and China also matches or surpasses the USA in manufactuing output.  Then there is India rising strongly and able to soon surpass China.  I am not trying to be precise here.

Australia is in position to supply both india and Asia with raw matertials rather well.

Shipping cost Chicago to Shanghai     - $3000 to $6000

Shipping cost Chicago to Rottetrdam  - $3500 to $7000

Shipping cost Toronto to LA or anywhere USA  $2500 to $10,000 by truck.

Canada now has free access to both these markets without punishing tariffs.

The immediate take home here is that all tariffed goods produced in Canada can be readily redirected to europe or Asia.  Canada sits astride a natural best trade route that includes the Seaway to Chicago even and direct flatland rail access to Prince rupert two days closer to Asia as well.  This massive transportation advantage will continue to improve as well as Canada actively expands its internal rail system..  This is now a national priority because it obviously allows fastest access for Asian goods to both Europe and the continantal USA.

Understand that Canada does not have to accept 'fair' USA pricing on anything at all and can access global pricing in all thre major global markets.

Now this was all going to happen anyway.  Trumps trade war made it all happen now and also overturned decades long gentlemens agreements.  After all ,just why are all the alunimum manufacturies in the Midwest in the first place?  By moving over the border now. they eliminate all tariff risk and have open access to a global market under working agreements.  Expect Wall Street to jump on this now that moving factories to china does not work anymore.

What has happened is that the USA has overturned a hidden Canadian subsidy and thrown itself on the mercy of global markets.  Tis will sort itself out, but that subsidy edge will disappear.

It is obvious that no one thought this out as doing nothing is a way better plan.  which is why we hear so much gnashing of teeth.  Understand that this trade war has given Canada license to revisit all prior agreements and particularly all defense agreements which had obviously become egregious.  For the USA, how can this become worse?

The Grippen is an obviously superior choice for Canadian needs, while the F-35 comes seriously short.  The Grippen fleet will include the Ukraine and other nordic nations providing ample defense coverage for the Arctic for which it was designed.  long term Russia has to join NATO and become NATO compliant now easy with their arsenal blown up.  This will surely be a Grippen environment.

long term, a rising global manufacturing ecosphere is marginalizing USA  manufacturing while placing CANADA as the resourse belt buckle of a Natural Alliance.  The actual impact is far from been detetrmined and subject to vigorous competition.  how about tractors from India, John Deere/  just saying.

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