The Art of the Transit Deal: Canada Holds Trump Card on Great Lakes Trade

US President Donald Trump has imposed a 25% tariff on Canadian Goods entering the USA. Canada holds a trump card in that the economy of several American states benefit from trade carried aboard ships that sail through Canada, between the Atlantic Ocean.

Introduction

Prior to taking the oath of office, then president-elect Donald Trump commented on the trade imbalance between the United States and both Canada and Mexico. He seeks to remedy the situation by imposing a 25% tariff on imports that enter the USA from both Mexico and Canada, America’s largest foreign supplier of oil. He has also suggested that Canada and Greenland become American states and has even proposed to take back the Panama Canal due to high transit tariffs. Trump’s tariffs will reduce the volume of freight that moves from Canada into the USA.

The tariffs would likely reduce the value of the Canadian dollar against the American dollar, raising the price of American goods in Canadian markets. Canadian markets would likely seek identical goods from alternative overseas suppliers, in turn reducing the volume of freight that would move north from the USA into Canada. During an earlier era, international cross-border cooperation between the USA and Canada resulted in the construction of the St. Lawrence Seaway and an international hydroelectric power dam. Ocean-going ships gained access to the Upper Great Lakes and the power dam provided electricity to both nations.

Canadian Energy Exports

 Canada is America’s largest foreign supplier of oil and natural gas, both of which migh…