Mitch Heimpel: We're the PIIGS now

The era of trust is over. We're going to be put on a payment plan and closely watched.

By: Mitch Heimpel

In all the talk and analysis about the deal reached by Canada and the U.S. on Monday, something has gone overlooked. The Americans are done taking our word for it when we say we’ll get better at defence spending and continental defence. They're checking our homework now. And this is not going to be a temporary blip or passing phase. This is the new normal.

Donald Trump is a 78-year-old man and a second-term president. I raise this simply to note that our Trump-specific problems have a natural shelf life and will go away on their own eventually. What worries me as a Canadian, though, is the number of Republicans who were willing to use our lack of attention to national security issues — from the fentanyl crisis to our lacklustre defence spending — as justification for President Trump's actions. Those opinions have the potential to outlive a 78-year-old second-term president.

And to bring this back to where we started, here’s what I noticed on Monday: the deal included words like "enhanced collaboration" and "joint task force." We aren’t going to be trusted to do it ourselves. The Americans are going to insist on being along for the ride.

This has happened before, of course. Though not to us, and not quite in the same context. From 2009 through to the end of the 2010s the PIIGS economies (Portugal, Italy, Ireland, Greece and Spain) found themselves heavily indebted and in need of bailouts from the International Monetary Fund and the European Union — through the European Central Bank and the European Financial Stability Facility. The main result of this was that the economies of southern Europe had their economic policy dictated by bankers in Frankfurt and the Benelux countries. It bred massive resentment among Greeks towards Germans that persists to this day. But, it was ultimately viewed by the European powers-that-be as the price that the profligate southern European countries would have to pay for continuing to have access to their wealthier European neighbours. And the PIIGS, despite all the domestic anger, realized that they had no choice but to comply. The price of maintaining their access to the rest of Europe was having their economic policy dictated to them from afar.

If you take the exact same arrangement and make it about national security and defence instead of sovereign debt, you have the current situation between Canada and the United States. If we want to maintain our market access to the U.S., we’re going to have to largely adopt the U.S. defence policy — and they’re going to carefully watch us to ensure compliance. The era of trust is over. We’re into the performance monitoring stage.

This is where understanding the difference between Trump and the broader MAGA World matters. Trump loves tariffs on their own merits and doesn’t really seem particularly focused on our border. He seems unable to settle on a specific rationale for what he’s doing. The president has repeatedly mentioned his trade deficit with Canada, which almost entirely stems from the favourable arrangement Americans get to buy (and refine) Canadian crude oil. The president — between phone calls with the prime minister on Monday — decided to start ranting about Canadian banking regulations. The president imposed tariffs on us in his first term and has spoken glowingly about tariffs in the past. This isn’t about the border.

Trump isn’t our long-term problem. Our long-term problem is that telling Canada to get its act together on national security spending has become a bipartisan consensus in Washington. Continental defence implies a continental effort, and there is now a widely shared view in U.S. politics, across party lines, that Canada has failed to deliver. So now they’re going to insist, and watch. We’re being put on a payment plan, on pain of economic ruin if we slip up.

None of this, from a Canadian perspective, justifies a broad attack on the Canadian economy of the kind that President Trump seemed ready to inflict at the start of this week. Canadians are peaceable, democratic neighbours. We are not responsible for the immigration or fentanyl problems currently plaguing the United States. But America’s security calculus has changed, and has been changing for years. We had plenty of warning, and ignored it. So now we find ourselves in a place where trading on our good deeds from Falaise and Ortona and Kandahar isn't going to cut it anymore. We’re the PIIGS now: comply with what the more powerful neighbour is demanding, or you’re cut off.

You can view the actions of Donald Trump as an unjustified tantrum, and also express frustration with our own leaders for opening us up to such easy criticism from our biggest trading partner. These positions are not, alas, in conflict. I don’t think that upping border patrols and defence spending makes the tariff threat go away, at least not in the short term. I think Donald Trump views tariffs as leverage and they're going to be the Frank's Red Hot of American negotiations: that shit is going on everything.

I do think that if we would like the tariff threats to stop when Donald Trump leaves office we have to accept certain realities about the new North American power dynamic.

First, the Americans are through asking us to increase defence spending and take our continental security obligations seriously. They're now at the telling phase. They are where the ECB and the Germans got to with the Greeks. You get access to our market, under our conditions. Our conditions include a little more True North strong, if it wants to stay True North free.

Second, if we find the Americans conditions to be untenable or a price that we are unwilling to pay for long-term low-barrier access to the world's richest economy, then we had better diversify our markets fast and shred our internal barriers that inhibit economic growth.

This isn't about Donald Trump. Even Joe Biden got on our case about this. We just liked it when the United States was asking, even cajoling. But they've decided that doesn't work anymore. They’re demanding, now and they are willing to hurt us until we comply.

We have to now decide how we’re going to respond. We should have no illusions that we’re going to pay either way. And if we decide to pay up to stay in, we’ll be watched. Like I said above, the era of trust is over.

Mitch Heimpel has served Conservative cabinet ministers and party leaders at the provincial and federal levels, and is currently the director of campaigns and government relations at Enterprise Canada.

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