China-U.S. trade war collateral damage intensifying for Canada

Donald Trump and Xi Jinping are on a course of mutual harm, if not destruction, in a trade war gaining fuel. But their nuclear episode’s fallout is in our backyard, and there is no hopeful political sign in the making.

While our two most significant trading partners joust for which one is the moment’s most prevalent superpower, Canadian business is destabilized by uncertainty, certain industries are disabled by tariffs and bans and our trademark diplomatic efforts appear muted – Trumped, one might say – by circumstances that only two years ago seemed unfathomable.

The recent months have been powerful reminders of our diminished place. We can’t get a conversation going with Xi, our foreign minister has been reduced to grabbing her Chinese counterpart for a side chit-chat at a conference to remind him of our grievances and Trump never talks of his country’s strongest and most resilient friend in anything but bellicose tones.

We have long run out of cheeks to turn. We are being ghosted.

Xi and Trump are on the archetypical collision course that comes when large ego mixes with concocted pride in political strongmen who cannot risk the agony of losing face. Straight out of the playbook, their short-sighted economic gestures play well in their countries and rekindle intolerance and incite antipathy about the other. The immediate enthusiasm at home will at some point crest and people will realize their products cost more, their opportunities are fewer and their prosperity is undermined. But the real impact of a trade war can take time. Social media and surly pronouncements are immediate.

Our country’s problem is obvious. We have little chance of operating under the radar when these two titans battle. We are not big traders for China or new traders for America, so we need their attention to mind our relationships and mend our disagreements. Justin Trudeau wisely keeps this quandary out of his daily talking points.

No question, the Meng Wanzhou migraine is unhelpful. The chief financial officer of Huawei Technologies Co. Ltd., apprehended at the Vancouver airport in December at the behest of American authorities, is experiencing what will rank as one of air travel’s most serious layovers in her Shaughnessy lounge. The process to determine if she can fly where she wishes or where the U.S. Department of Justice demands will certainly drag past our election campaign and into the next American one.

In this circumstance, we are dead to China, no matter that we did not instigate the extradition. In this circumstance, too, Canadian business executives worry they could be No. 3 – as in the third Canadian picked off the street and imprisoned in China, the way Michael Spavor and Michael Kovrig appear to have been out of retribution for Meng.

Much of this would be dissipating if we had an ally to the south who was either willing or able to do something about it. In other times a U.S. president would lift the phone and set the record straight about who owns the Huawei episode, whose idea it was and who should ultimately pay for its debris. But Trump can’t seem to stop watching Fox & Friends long enough to focus on Canada & Friends.

If anyone sees this ending well, you are more than welcome to turn to someone now and suggest how it might be so. But you are on anything but solid ground, because before the Huawei matter on a micro level and the U.S.-China spat on a macro level are settled, the world is going to be unsettled. Global prosperity will be curtailed, investment will sputter, consumer prices will be clobbered on the one hand and consumer demand will be clobbered on the other.

The macro story: the hard-working labourers in America who cannot afford a rise in their cost of living will suffer, as will the hard-working labourers in China who need the voracious American consumer for their toil. Those two troubles, played out in tit-for-tat tariffs, will pummel world markets.

The micro story: long before authorities resolve the Meng mess, the Canadian government post-election has to determine if Huawei’s 5G technology will guide Telus and Bell in their internet evolutions. The intelligence services are not so far bullish on the idea. Choose China’s corporate jewel and America might view us as hostile tech; reject it and China will most certainly chill to us. Pick your problem.

Enjoy the summer. Winter will be coming sooner than you think.

Kirk LaPointe is editor-in-chief of Business in Vancouver and vice-president, editorial, at Glacier Media.