It’s exhausting trying to explain the Canada-US Trade standoff to Canadians, so here’s a picture. This is a world map. I know it’s deceiving but the world isn’t actually flat and is much larger than this image.
The green lines are North American trade routes. As you can see, Canada and the United States are connected by land, so that means goods can travel via pipe, truck and train—relatively cheap forms of transportation.
The red lines are Asian and European trade routes. The big blue areas are ocean. That’s water, and water means goods can only travel via boat and plane—much more expensive forms of transportation. Especially now with carbon taxes added to energy like jet fuel.
Canadian products are some of the most expensive in the world due to our regulatory and labor standards. US products are similarly expensive.
Transportation costs are added to the end cost of product. So what that means is Canada’s expensive products will have additional costs attached for the end user. So a Canadian product on a shelf in China will be significantly more expensive than something produced locally or in a nearby nation like Russia where those same products move via the pipe/rail/truck method.
What makes trade between the United States and Canada beneficial is the low cost of transportation. So even with tariffs, Canadian made products are priced competitively against products that have to travel across ocean.
China’s products are cheap because they use slave labor and low grade materials. That’s never going to change. The advantage Canadian and American companies have on the American continent are competitive pricing with a guarantee of higher quality. That’s why people buy homes built with Canadian lumber rather than flimsy synthetic materials produced in China. In certain scenarios, especially when it comes to big purchases, quality exceeds pricing. But the pricing has to stay competitive, and North American trade guarantees affordability.
Mark Carney can make a million deals with nations all over the world. It doesn’t change geography. Nobody wants to buy a $25 carton of milk.
‘Elbows Up’
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