Trump is picking on my mother’s side of my family. I learned something about my family history on the DeMars side of the family recently that shocked me, though not in bad way. I was presented with genealogy that the DeMars (my mother’s side of the family) were Canadians longer than they have been Americans. They came from Caen, France to New France, Quebec in the 1650’s and my Great-Great Grandfather Joseph DeMars didn’t immigrate to Kankakee, IL from Quebec until the 1850s.
That means that the DeMars were Canadian for two centuries before becoming Americans. We have another 35 years or so to go before the family was American as long as they were Canadian. I had four great-great uncles that fought in the Civil War for the Union that came from Quebec. Three were in the 76th IL Volunteer Infantry from Kankakee who fought with Grant at Vicksburg. Two were wounded, one losing an arm. The other joined the 88th IL Volunteer Infantry which fought at Stone River, Chickamauga, Missionary Ridge and Franklin. Two of these Civil War veterans are buried here in Trimello cemetery in Clay County, IA and I visited their graves on Memorial Day.
I hear it often that new immigrants are criticized for not integrating quickly into American language and culture. That shows a lack of perspective on the history of immigrants. In the old days, French tended to marry French, Germans marry Germans, Danes marry Danes and so on. The DeMars were French catholic and they all stuck with their ethnic and religious background. This went on for generations until my grandfather DeMars married my grandmother who was protestant English. On my wife’s Dane side, her father was the first to marry a non-Dane. My father was the first to marry a non-German on the Kruse side. The Kruse family didn’t show up in America from Mecklenburg Province in Germany until 1865, over 2 centuries behind the DeMars. My son married back into the German heritage but German-Brazilian. Our daughter in law’s family emigrated from Germany about the same time as ours, but went to Brazil instead of America.
Of all the U.S. trading partners that Trump is picking fights with, the one that makes the least sense is Canada. Trump is obsessed with “getting even” with any trade partner that runs a trade surplus with the U.S. That makes it all the more inexplicable that he is going after Canada with which we have a trade surplus. When Trump refers to a trade deficit with Canada he is only referring to the trade deficit on goods. Autos and auto parts are a large portion of the trade deficit on goods that we run with Canada and 25-45 percent of Canadian autos originate in the U.S. before assembly there.
To characterize trade with Canada as unbalanced is absurd. Canada runs a modest trade surplus (U.S. deficit) with the U.S. on goods but a large enough trade deficit (U.S. surplus) on services for the U.S. to have a net trade surplus overall with Canada of $8.3 bln in 2017. Given the huge amount of trade between the U.S. and Canada that is a rounding error. Trump misspoke recently when he said that Canada had a trade surplus with the U.S. He purposely excluded services in order to make it sound bad. Canada is located in very close proximity to the U.S. enabling it to have access to many services that they do not have in Canada. That is an advantage to both countries. Trade can be win-win instead of a net sum as Trump sees it.
U.S. trade with Canada overall is about as balanced as it is likely to ever get. Attempting to justify tariffs on Canadian steel and aluminum on bogus national security reasons was disingenuous as well. There has been no closer ally in every major foreign war that we have ever been in. Our military and intelligence services are integrated. Canada is an aluminum producer because they have access to cheap hydroelectric power so is competitive. We get 43 percent of our aluminum imports from Canada because it makes economic sense. They ship the tar sands crude to U.S. refineries which make as much or more from it than they do.
Yes, Canada does protect its dairy producers by partially limiting access to those markets for U.S. producers yet 30 percent of U.S. dairy exports go to Canada and only a small portion of it pays the tariff. Trump has embellished that too. Canadian trade barriers are not the primary source of stress within the U.S. dairy industry. That is generated by oversupply from industry productivity. Negotiation typically has to be two-sided and so far, Canadian concessions in NAFTA talks have not been reciprocated. That is why the Canadians feel “bullied.” Trump takes a thread of truth that the Canadian dairy market is unfairly closed and spins it into a cloth of a much larger false narrative.
The WSJ got it right, “NAFTA is already in jeopardy due to excessive U.S. demands that include a wage mandate on autos and a five-year sunset. Canadian Prime Minister Justin Trudeau recently said that he offered to visit the White House to close a NAFTA deal. But Vice President Mike Pence told him he’d have to accept a five-year NAFTA sunset. Mr. Trudeau rightly said no Canadian leader would agree to such a self-defeating provision.” The U.S. Chamber of Commerce agrees with him.
White House Economic Advisor Larry Kudlow has the terrible job of spinning the administration’s protectionist policies. He struggles with it because his heart is not in it. His description of tariffs on Canada as being a family squabble misses the mark as Trump doesn’t treat his family the way he is treating mine.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.
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