Despite a looming trade war between the U.S. and all of its major trading partners now seeming almost certain, at a boisterous campaign rally in South Carolina earlier this week, President Trump declared that “It’s all working out great.” Although clearly not quite everything, as he used the occasion to complain again about Canada’s “unfair” trade practices and repeated his latest threat to hit Canadian-made automobiles with punitive tariffs, framing the move as possible retaliation for Canada’s prohibitive over-quota dairy tariffs under its farm supply management system.
Trump’s speech covered an even wider range of topics than usual for one of his rallies, but here is what the president had to say on issue of trade:
I got a bad hand with all these horrible trade deals, NAFTA is a disaster, Mexico is going to make over one hundred billion dollars in the United States this year, Canada, you know, Canada, nice guy, nice guy, Prime Minister Justin, I said, “Justin, what’s your problem, Justin?” So, Canada, “Oh, Canada,” I love their national anthem, “Oh, Canada.” I like ours better, however.
So, you know, Canada is great, I love Canada, but – and we had a wonderful understanding, you know that story, we hugged, we kissed, everybody was happy, I made some changes in this ridiculous thing that everybody agreed to sign, so it was meaningless, but I made some changes. I left everybody was happy, Prime Minister Abe said, “President Trump was right, everybody was in love.” They took the picture with Merkel, but if they showed the picture of like two minutes later, I had a big smile, she had a big smile, we were friendly, everybody.
I get onto Air Force One, and he doesn’t understand that Air Force One has 22 televisions. So, I come on, they have televisions in closets, they have televisions in areas that no place has – unlimited budget, Air Force One, huh?
So I get onto the plane, and I see Justin Trudeau, Prime Minister of Canada saying, Canada will not be bullied by the United States, I said, “So, what are we doing here?” The fact is that Canada has a 275 percent tariff on dairy products, little thing called dairy products. Their lumber is a disaster with us, I say, why aren’t we using our own lumber? Because now we’re actually allowed to take lumber from our fields and regrow it, but take lumber from... under our environmental system. In the old days you couldn’t do that, we had to go to other countries, but we – so lumber is a disaster, energy is a disaster, and, you know, I see Justin saying, "We fought World War I together, fought World War II together," that’s true, we love Canada.
But Canada is charging almost 300 percent tariffs on dairy products and many other things, it’s all working out great. It’s all working out great. But I said, “Look, if you want to do that, we’re going to put a little tariff when your cars are coming in,” you know, cars are the biggie. Cars are the biggie. European Union, we lost $151 billion last year with the European Union. Sounds nice, many of us originally came from somewhere in the European Union. I had two parents, European Union.
So, it sounds wonderful, our country lost 151 billion. They send a Mercedes, they send BMWs, they send everything, we tax them practically nothing, we can’t send our cars, and if we do, they charge many, many times the tax that we stupidly don’t charge. So I told them, “Here’s what we’re going to do, we’re going to charge a tariff on steel, until such time as you straighten out your act and you let us have fair.” They don’t...
They don’t let our farmers into the European Union, it’s very hard. So we have farmers that want to sell, you don’t hear these stories, this is why, with these people, they don’t tell you these stories. The European Union has what they call trade barriers, the European Union doesn’t allow our farmers to go and trade, it’s very hard for them to go to trade. And if they do, it’s very expensive, same like Canada.
Essentially, when you’re paying a 275 percent tax and now I’m understanding it’s higher, but at 275, that’s essentially a trade barrier, you can’t trade. How can we trade? We can’t pay that kind of a tax. So, I want the barriers taken down, I want our farmers to be able to trade, I want to be able to sell cars in there just like they sell cars in here.
And it’s all going to work out, it’s all going to work out. Remember this, remember this, it’s all going to work out, because we’re the piggy bank that they like to take from, whether it’s military protection, you look at NATO, NATO, we’re spending 90 percent of NATO, now it’s all wonderful, and we like to help out, but it helps them, they’re in Europe, it helps them a lot more than it helps us, we’re very far away.
So we have this incredible – Germany, is paying one percent of a much smaller GDP. We’re paying close to four percent of a much larger GDP. Now, that doesn’t work, folks. It doesn’t work. So, I think we should pay the same as Germany, I just think we should pay the same as Germany.
So we’re working all of these things, but the fact is, we were given somewhat of a bad hand, because we came in they had all these problems, but I love it, I’m loving what we’re doing, you people are loving what we’re doing.
We have the great Peter Navarro. I’ll tell you one thing, Peter Navarro does like tariffs, he probably likes them more than I do, there’s Peter Navarro right there, raise your hand, Peter.
So, they’re all calling. They all want to make deals, before I did this, they weren’t calling the Obama administration, but the Obama administration – and in all fairness, the Bush Administration didn’t care, it wasn’t their thing. Last year on trade, our country lost $817 billion with a B, billion dollars, 817. We lost $817 billion, who the hell can do that? I mean, we don’t have to be perfect, we don’t even have to get it down to zero, but we can’t lose 800 – and so, because you feel like sort of stupid, don’t you? Don’t you feel stupid?
And the biggest, of course, was China, China made anywhere depending on the way you count from $375 billion, we built China, and I really like President Xi, but we built China. And they did help us on the border with North Korea, they might not be helping us anymore, and that would be too bad. But, that would be too bad.
And I’ve been as nice as I can as long as I can, but we’ve got to get some balance, and it doesn’t have to be perfect, but there’s got to be some fairness, you know, I’m a believer in free trade, but I’m really a believer in fair trade. This is – this is ridiculous.
And I said to a man in China, how did it get so bad? Because they know the gig is up. How did it get so bad? And remember this, you know, we picked up since I got elected, we picked up tremendous worth, we’ve picked up anywhere from nine to seven, to seven to nine trillion dollars. We’re almost twice the size of China’s economy, nobody knows that. Nobody knows that.
Nobody knows that. So I said, how did it get so bad? He said, well, what happened is we would put on a tax on cars, you know, in China, if you sell a car into China from the United States, they charge you a 25 percent tax, if China sells a car into the United States, we charge them two and a half percent. So it’s two and a half percent versus 25 percent, somehow I’m looking at this rich guy right over here, that doesn’t work too well, do you agree? That’s not a big worker, right? I bet you’re a very successful guy. I could see. I can see the eyes, you know, big success.
But that doesn’t work too well, sir, does it? And we have many, many cases like that. We have many cases like that, so we’re going to straighten it out, and they all want to negotiate, because they have to negotiate, I mean, honestly they have to negotiate.
Ever since Donald Trump began running to be president, a debate has existed over how his remarks should be taken. Billionaire tech investor and PayPal co-founder Peter Thiel, an outspoken Trump backer, famously summed up the dilemma this way: “I think one thing that should be distinguished here is that the media is always taking Trump literally. It never takes him seriously, but it always takes him literally. I think a lot of voters who vote for Trump take Trump seriously but not literally.”
However, as David Rosenberg, Gluskin Sheff chief economist and strategist pointed out yesterday following another turbulent day on Wall Street as markets reacted to the administration’s latest trade actions, that view may need a re-think. “We were supposed to take the president seriously but not literally and now we know that we have to take him literally,” the veteran trader warned.