Canadian Taco

"He loves me. He loves me not."

The U.S. Ambassador to Canada tries to smooth relations between the two countries.

It comes at a tough time for an ambassador. President Trump persists in talking about disaggregating the tightly interconnected U.S.-Canadian auto assembly industry. He just upped a proposed tariff on steel from 25 percent to 50 percent. The U.S. imports steel from Canada. And Trump just announced he was prohibiting Harvard from enrolling foreign students. As luck would have it, Canada's Prime Minister Mark Carney's daughter is an undergraduate there.

This is a classic opportunity for the on-again off-again tariff bluster. Perhaps Canadian steelmaker Algoma Steel (Nasdaq $5.31 this morning) is a good candidate for the Trump Always Chickens Out "taco trade" I described yesterday. But beware: Now that people have identified a profitable trade, the trade likely no longer works because other investors also see the taco trade opportunity and the price already reflects the expected future reversal by Trump. Stock investing -- like governing -- is harder in the execution than in the promising. 

Sandford Borins is a college classmate. He is Canadian. Borins is an emeritus professor at the University of Toronto, where he taught public management. He maintains his own website, https://sandfordborins.com, where this commentary appeared this morning. 

Borins, diplomas and awards behind  him, as he appeared in a tee shirt designed by 1971 class alumni

 

Guest Post by Sandford Borins


Ambassador Pete Hoekstra: Do You Trust his Message?

In what was billed as his first “major” address to the Canadian business community, U.S. Ambassador Pete Hoekstra spoke extemporaneously for ten minutes and answered a moderator’s questions for another twenty at Toronto’s Empire Club. By way of background, Hoekstra served in Congress as a Republican representing Michigan’s second district from 1993 to 2011, then ran unsuccessfully for Governor and U.S. Senator, and was Ambassador to the Netherlands in Trump’s first administration. Hoekstra has solid right-wing credentials, having worked on Newt Gingrich’s Contract with America, having been a founding member of the House Tea Party Caucus, and having contributed to Project 2025.

The Pitch

Hoekstra was in Toronto to “make America’s case to you,” essentially to market the Trump Administration. So he was telling the audience what he thinks they want to hear. Trump’s agenda for Americans is prosperity, security, and safety and that what is good for America is good for America’s neighbours to the north. Trump has a team of transformational people who recognize that the leaders of other countries want prosperity, security, and safety for their people. If smart negotiators work together, mutually beneficial outcomes will result.

Hoekstra believes that the U.S.’s relationship with Canada is so important to Trump that he will work quickly to determine the broad parameters of that relationship. Asked specifically about the auto sector, Hoekstra said that the chief competitor is China and that the U.S. and Canada should work together to beat China, not each other. As for Trump’s rhetoric about Canada becoming the 51st state, that only represented two minutes of a 30-minute Oval Office media availability, and in the ensuing closed-door luncheon Trump and Carney had a serious substantive discussion, which is what really matters.

Credible or Not?

Hoekstra’s moderator was Lisa Raitt, a former minister in the Harper Government. Though she wasn’t exactly asking softball questions, she was raising contentious issues gently, with no hard-hitting follow-up questions. I was not among the 800 attending in person: I didn’t hear any guffaws on the webcast, but I couldn’t see whether there was much eye-rolling.

That said, it is hard not to indulge in eye-rolling. Donald Trump talks continuously of a long list of strategic industries, and the necessity of bringing production in those industries within the borders of the U.S. His repeated example of something that needs to change is the auto production in Canada for the U.S. market. Reshoring would create no mutual benefits for the Canadian automobile, steel, or aluminum industries. And Trump’s imposition of 50 percent tariffs on steel and aluminum today speaks more loudly than Hoekstra’s words yesterday.

And whatever Donald Trump says behind closed doors with Canadian leaders, he continues to question Canadian sovereignty in his comments for public consumption. In contexts such as trade and security (“Golden Dome”), he continues to offer Canadians a better deal if Canada were part of the U.S.

Donald Trump’s record as a businessman is not one of mutually beneficial deals, but rather of stiffed creditors, bankruptcies, and litigation. As a politician, in his second term he is compiling a record of breaking treaties, even ones, like USMCA, that he himself signed and enthusiastically hyped when he did.

Finally, it must be said that Pete Hoekstra himself has a bit of a record, including being the last politician to disavow the claim that Saddam Hussain had weapons of mass destruction; a 2015 claim that the radical Islamists had created “no go” zones in the Netherlands, which he disavowed upon becoming Ambassador; and cozying up to a radical right-wing Dutch political party during has term as Ambassador.

It would be nice to think – as does Ambassador Hoekstra – that the result of the ongoing discussions between U.S. and Canadian politicians will be a win-win agreement. The Trump Administration’s actions, as well as Donald Trump’s record, make me skeptical. If there is anyone who has poisoned the relationship between the U.S. and Canada it is Trump himself, and Pete Hoekstra’s diplomatic marketing campaign can do little to correct it.

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