00:00Eventually, the United States and Canada ended up in a trade war.
00:03But the countries that were once the closest allies have now become adversaries.
00:06On August 22, 2020, the United States and Canada were in the middle of trade negotiations.
00:09At that time, Canada became furious at the excessive demands from the United States
00:12and ended up walking out of the trade talks altogether.
00:15As a result, the negotiations ultimately broke down.
00:17First, let's take a look at what the United States was demanding.
00:20Although the exact details haven't been released, according to various media reports,
00:24the United States first demanded trade rights from Canada.
00:26So, the United States demanded that Canada would need American approval whenever it entered into trade agreements with other countries.
00:31In addition, the U.S. interfered in cultural policies related to French-speaking regions of Canada,
00:35such as demanding the discontinuation of French labeling, the protection of Canadian beer,
00:38and the cessation of subsidies for French culture.
00:40They also demanded joint management of the mining and export of critical minerals,
00:44or even that the United States should have complete control over them.
00:46They also demanded that the minimum threshold for duty-free purchases from the United States be lowered.
00:51As you can see, these were demands that essentially infringed on Canada's sovereignty.
00:54Of course, we need to wait and see for more accurate details.
00:57But considering that Canada was so angry that they walked out of the negotiations,
01:01I think the demands from the United States must have been very similar to what we've discussed.
01:05Especially when the United States demanded Canada's sovereignty.
01:08Canada decided that further negotiations were meaningless and ultimately chose to enter a trade war with the United States.
01:13In fact, many people felt that the United States was making excessive demands,
01:16and there was also the opinion that this is no longer the age of imperialism.
01:19There were also many opinions like that.
01:21If Canada were to accept this, it would essentially become a colony subordinate to the U.S. economy,
01:26unable to escape that fate.
01:27In fact, it would be worse than just becoming the 51st state.
01:30Some even say that Canada is being forced into an economically subordinate position.
01:34Because of this, a trade war eventually broke out between the United States and Canada.
01:38The Canadian government decided to impose retaliatory tariffs of up to 50% on U.S. products worth $20 billion,
01:44or about $27 trillion, one starting from August 25.
01:46They decided to impose retaliatory tariffs of 15%, 25%, and 50% on about 700 different items.
01:53These tariff measures have been applied since September 8th.
01:56This is a countermeasure against the United States,
01:58which imposed a 50% tariff on Canadian products worth $20 billion, starting from August 22.
02:04The Canadian government explained that the purpose of this measure is not so much to increase tariff revenue,
02:08but rather to protect Canadian businesses and reduce imports of American products.
02:12Francois-Philippe Champagne of Canada,
02:13The finance minister said that we did not choose this conflict,
02:16but when economic integration is used as a weapon,
02:18rather than as the foundation of a mutually beneficial partnership,
02:21we must stand up to it.
02:22He also said that Canada,
02:23The government even used strong language,
02:25calling the policy to defend sovereignty a war after seeing this conflict.
02:28In particular, Canada is taking measures targeting products that can affect certain U.S. states.
02:33Soon, there will be midterm elections in the United States.
02:35At this time, they are trying their best to target the Trump administration.
02:38They are aiming at processed cheese from Wisconsin,
02:40seafood from Maine,
02:41and washing machines and dryers from Kentucky,
02:43in an effort to put pressure on the Trump administration.
02:45Especially, Maine is a place where the Republican Party is particularly sensitive.
02:50In fact, Susan Collins, a Republican senator who is seeking re-election,
02:53criticized the Trump administration's tariffs on Canadian products as a mistake
02:57after Canada implemented its own tariff policy.
03:00Especially, products like blueberries, potatoes, lobsters, and lumber produced in Maine
03:03are often processed in Canada and then brought back into the United States.
03:07If Canada imposes tariffs during this process,
03:09Maine is bound to suffer severe damage.
03:11Canada is also being mentioned as possibly restricting the export of electricity and critical minerals.
03:16Doug Ford, the Premier of Ontario,
03:17warned that they could cut off the export of electricity and key minerals supplied to the United States.
03:22If this happens,
03:23American cities near the Canadian border are bound to suffer.
03:26However, it doesn't seem like this trade war will end easily.
03:29President Trump has already announced that starting in January 2027,
03:32a 50% tariff will be imposed on Canadian cars and parts.
03:34Of course, we should also take a look at the White House's position.
03:37The White House stated that Canada has exploited the United States for decades,
03:40and President Trump will no longer tolerate this.
03:42Last week, the White House said that the United States has been more generous to Canada
03:45than to any other country on Earth.
03:47They proposed and announced significant tariff reductions on steel,
03:50aluminum, automobiles, and lumber,
03:52while restricting preferential market access.
03:54Canada, instead of a partnership, chose unreasonable demands,
03:57flip-flopping, and outright rejection, according to the statement.
04:00They also pointed out that over the past 10 years,
04:02the United States has seen an average annual goods trade deficit of about $50 billion with Canada.
04:07Without the United States, Canada cannot survive.
04:09Canada sends three-quarters of its total goods exports to the United States
04:12and gets the overwhelming majority of its money and economic oxygen from the U.S. market.
04:16President Trump emphasized this while talking about the United States and Canada.
04:19He also claimed that they are considering changing Lake Ontario,
04:21which lies between the United States and Canada, to Lake America.
04:24This is being interpreted as a kind of provocative measure.
04:26However, it seems that Canada does not intend to just sit back and take it.
04:29With this incident as a turning point,
04:31there is a high possibility that efforts to reduce economic dependence on the United States
04:34will become even stronger.
04:35From Canada's perspective, the most important task is not to cut off trade with the U.S.,
04:38but to create a structure that allows exports to be redirected to other markets
04:42if problems arise in the American market.
04:43This has been Canada's approach so far.
04:45Canadian companies found it easy to access the U.S. market,
04:48and cross-border supply chains had been established over a long period,
04:50so there was relatively little need to actively develop markets outside the United States.
04:54However, through this trade conflict,
04:55it has become clear that if exports are overly concentrated in a particular country,
04:59a single political decision can affect entire companies and industries.
05:03Therefore, the Canadian government is likely to pursue market diversification in the future,
05:07choosing to expand into regions such as Europe, Asia, and Central and South America.
05:11Just as Korea expanded into various markets like Southeast Asia and India
05:14when China imposed economic sanctions on it,
05:16Canada can make a similar choice.
05:18Canada already has the institutional foundation
05:20to expand trade relations with countries other than the United States.
05:23Especially since the EU is actively trying to help Canada,
05:26things may proceed more smoothly than expected.
05:28The issue is how quickly the actual trade volume can be increased.
05:31The United States is geographically adjacent to Canada
05:33and has lower transportation costs,
05:34so exporting to other regions is much less convenient.
05:37Therefore, rather than looking for a single market to replace the United States,
05:40it is more likely that Canada will move in the direction of expanding trade
05:43with multiple countries at the same time to spread out the risk.
05:46The supply chains of companies may also change.
05:48Canada, which currently sources necessary parts or raw materials from the United States,
05:52companies may try to secure new suppliers outside the United States,
05:55and those that send Canadian products to the U.S.
05:57may also review their production and logistics systems
06:00to target European or Asian markets.
06:02This process requires considerable time and cost.
06:04They need to secure new business partners,
06:05establish transportation networks,
06:07and adapt to each country's standards, certifications, and tariff systems.
06:10Therefore, the process of Canada reducing its dependence on the United States
06:13is unlikely to be completed in a short period of time.
06:15It is likely to take place over several years.
06:17What is important here is that Canada is not trying to abandon its relationship with the United States.
06:21The U.S. is still Canada's most important trading partner,
06:23and considering the geographical conditions and these factors,
06:26it is realistically difficult to completely replace the United States.
06:28However, while maintaining its relationship with the United States,
06:31Canada is trying to increase its trade with other countries
06:33to reduce the risk of its entire economy being shaken by policy changes in a single country.
06:37If these changes become more pronounced,
06:39results that the Trump administration did not intend could occur.
06:42The more the United States puts pressure on Canada through tariffs,
06:44the more Canadian businesses and the government may feel the need
06:47to reduce their dependence on the U.S. market.
06:49If the economic ties that the United States and Canada have built over a long period
06:53start to become more dispersed due to this conflict,
06:55even if the U.S. lowers tariffs again,
06:57it remains to be seen whether Canada will rely on the U.S. market to the same extent as before.
07:02And this situation is being closely watched by America's allies.
07:05The Trump administration is showing a very soft stance toward China and Russia,
07:09but is taking a tough stance toward the allies aligned with the United States.
07:13Of course, some people sometimes say
07:15that the allies haven't really helped the United States properly.
07:18However, saying that this amounts to cooperating with rival or hostile countries is a bit misleading.
07:22Above all,
07:24Canada has cooperated with the United States for a long time
07:26and has participated in almost every war that the U.S. has been involved in.
07:29However, this situation has shown that even between such countries,
07:32trade conflicts can shake security and diplomatic relations.
07:35So, in the future, some countries may maintain security cooperation with the United States
07:39while also pursuing policies to reduce their economic dependence on certain countries.
07:43Militarily, they may move together with the U.S.,
07:45but when it comes to key minerals, energy, and semiconductors.
07:49Strategic industries like batteries,
07:50they are building supply chains with multiple countries.
07:52This doesn't mean they want to cut ties with the U.S.,
07:54but they've realized they can't survive by relying solely on America.
07:57From the U.S. perspective,
07:58this situation is also bound to become a burden.
08:00The decisive reason the United States was able to grow this much
08:04is because its allies continue to support it.
08:06But now that this trust has been broken,
08:08even after the Trump administration ends,
08:10the biggest challenge for the next administration
08:12will be how to restore this trust.
08:14This is a clear example that shows trust built up over decades
08:18can be broken overnight.
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