There are a few things to remember when evaluating what just happened in the trade discussions between America and Canada. Indications are that the dust-up really wasn’t about trade. The current government of Canada considers the country much more closely aligned with Europe than America. Generally speaking, the Canadian government suffers from Trump Derangement Syndrome (TDS). The current leftist government of Canada would love to slow down the American economy and cause inflation if it would give the Democrats a victory in the midterm elections. The sentiments of the government are not necessarily the same as the sentiments of the Canadian people.

On Tuesday, Zero Hedge reported:

Reserve status is helpful, but another thing the US has that most countries do not is (greater) free market access, which generates economic momentum. In other words, even in blue states like California, the US does business more freely and has less socialist regulation than the vast majority of the world and this is why foreign exporters see America as a golden market for their goods.

It’s a bit ironic, but, there are many countries that could, over time, match or surpass the US as a coveted consumer market; “winning” a trade war by becoming more independent and successful. However, none of them will do it because this would mean giving more freedom to their citizens to purchase what they like and operate businesses without constant bureaucratic constraints.

This is why socialism and communism will always lose in an economic war with a country that has free markets. They cannot compete because they restrict their own population’s ability to compete. Without a healthy consumer market the only thing these nations can do is produce and export to more free economies willing to buy.

The article explains the double standard on tariffs:

Tariffs might be viewed as an anathema to this free market flow. They are, after all, a tax on corporations importing foreign goods. This assumes that corporate sourcing can’t adapt. This has proven false as Trump’s tariffs have not led to the inflationary spike that many critics predicted. Tariffs have only added around 0.5% to the CPI and companies are gradually shifting to domestic suppliers.

America is unique because for decades the country has been treated as an “open air market” by foreigners, and America has obliged them. Tariffs against US made goods are common; US tariffs against foreign goods? No so much.

It’s quite revealing that the very moment the Trump Administration took action to enforce even moderate protections on US trade, every other government jumped directly to accusing Trump of “attacking them” and “declaring war”. The double standard is obvious: Everyone else can use tariffs, the US can’t.

The article concludes:

The economic advantages Canada has enjoyed simply through proximity to the US cannot be denied. It seems foolish for Carney to scrap a deal with limited tariffs in favor of a 50% sledgehammer. It appears as if he believes Canada is entitled to limitless US access, as if Canada is another American state.

But let’s say that the socialists get everything they think they want, including the eventual downfall of the US economy. Let’s say they find some way, some Achilles Heal, that brings the US down. Canada and most of the world would only suffer further with the loss of 30% of global consumption. It would not be the grand victory they imagine. Instead of simply accepting moderate tariffs, they would rather blow themselves up.