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Comment by bawolff | Hacker News Reader

As a canadian, i'm so over this drama. They will either trade with us or they won't. If they don't it will be painful - but im happy with the government reciprocating in kind (so we arent being taken andvantage of), and then moving on as best as possible.

At some point you have to stop worrying about the things you cannot change. If trump wants a lose-lose deal, so be it.

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>so we arent being taken andvantage of

For the last time...that's not how trade works! People who say this in this context mean well, but are committing the exact same category error/misunderstanding of economics that Trump and his supporters are.

It is 100% how trade works. Free trade for both sides = good for both sides. Lopsided deals where one side gets the free flow of trade but the other side gets protectionism = exploitative.

What is the category error here? Where is the misunderstanding?

If you really believed what you wrote, why do you think trade deals exist in the first place? What function do you think they serve?

I'd guess that they're saying is, the point of trade, from a country's perspective, is to get imports. Exports are what you give up to obtain them (comparative advantage). So, when the US puts tariffs on Canadian goods, the main people who eat that cost are American consumers and firms buying those goods...basically, it's a tax Americans pay to Americans. Canada loses some export markets, however, the US isn't "extracting" anything...both sides just get less of a mutually beneficial thing.... So, In that faming, "one side gets free trade, the other gets protectionism" is in theory, a situation where the protectionist country is mostly shooting itself in the foot, not beating its partner. By the same theory, retaliating by taxing your own citizens purchases of American goods doesn't undo the damage... it adds to it. Also fwiw, a trade deal isn't a swap of comparative advantages, it's a bundling where each side concedes in sectors it can politically afford to lose in, inorder to win in sectors it cares more about. For example Canada protects dairy and gives ground on autos.

Protectionism is harmful to both sides though, not just the one being "protected". If Thailand can more efficiently produce socks, and Canada can more efficiently produce lumber, it doesn't make sense to "protect" the Canadian sock industry. It just makes socks more expensive for Canadians. Let those Canadian sock workers go produce lumber instead.

Unfortunately for Canada, you guys have screwed up. Why? Because you're completely dependent on the US for energy exports. All that oil you dig up and turn the landscape into the Moon for goes out via pipes to the US from where it's refined and/or exported. Canada has almost no oil export infrastructure of its own (meaning pipelines going to ports).

In retrospect, (original) Trudeau's national energy program does sound good right about now. Alas you can't change the past.

However, you are overstating the level of dependence. It is significant, but certainly not total. It also cuts both ways to a certain extent.

The Port of Vancouver just did 24.4 million metric tonnes and that’s just going to rise. Thanks for your (fake) concern but we’ll be fine.

Which is just over 10% of Canada's oil exports. How does that invalidate my point?

Also, I explicitly said "energy". That includes electricity (you can't export that anywhere else really) and natural gas (almost all of which is used domestically or exported to the US).

This will catalyze efforts to build more east-west energy infrastructure here in Canada, both oil and electricity. The last time the US made a serious run at Canadian sovereignty we built the Canadian Pacific rail to connect the country end to end. The same thing will happen this time, with pipelines and HVDC grid connections.

Short term the US needs the energy we sell as they don’t have sources to replace it with. Long term the pieces are already moving into place for more O&G exports via the pacific and selling electricity to ourselves with stronger grid connections.

Our reliance on US trade will diminish slowly, then all at once.

Last I've checked Canada had some oil pipelines built + new ones being built to the east coast and west coast. It's something that's been in the works for years before trump.

Also your comment implies that Canada's only export to the US is oil. Canada also exports lumber and agricultural goods, as well as electricity, amongst other things.

And the reason why Canada can't just cave is that Trump will just continue to increase his demands, amongst other reasons. Even in this series of negociations when they finally came close to something the US added demands remove Canada's requirement for French on their packaging (even though French is 1 of Canada's 2 official languages) and separate trade ties with other countries.

Is shit gonna suck for the next while for Canada? Yes, but there is literally nothing they can do to prevent it other than give up their autonomy as a country and become a US puppet, which a vast majority of Canadians are adamently against except for a tiny minority in Alberta.

This is a real pancakes and waffles moment. God, the Internet sucks some times. Where did I say "only"?

As best as I can tell ~40% of Canada's exports to the US are energy, making it the most dominant export sector by far. One estimate I see is ~$160 annual value [1].

By comparison, lumber accounts for ~$6B. That's a rounding error.

Energy is the most significant Canadian export and it's deeply tied to the US (unfortunately).

[1]: https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/ma...

Looks to me that the USA has screwed up, bullying all its allies. The USA will be left in the dust.

May I ask what you think will happen to US gas prices if Canadian oil exports to the US (over 4 million barrels per day) are made more expensive (with tariffs or export restrictions)? In the midst of the Iran war, Ukraine’s attacks against Russian refinery capacity, and the Bab el Mendeb closure, many of these issues are directly caused by the same US administration. In the current context, who do you think has more negotiating leverage?

Product of propaganda

This is true. But it’s more of a pricing power problem. The US can no more rid itself of the dependency on Canadian heavy oil than Canada could on exporting to the US. We’re bound together on that front, and it’s why oil has been exempt from tariffs.

If Canada had the ability to sell that oil on the global market, we’d get a better price for it (if you only have one customer you can sell to, you have little pricing power). Western Canada Select trades at a discount to WTI.

US refineries are built for a mix of heavy and light oil and that’s not practical to change. The US can’t just replace Canada with its own oil or imports from elsewhere.

What about Venezuela? Another potential source of heavy oil? It would take decades of investment and development to bring that up to the point where it produces an extra 4 million barrels a day for export. With the uncertain political environment there, it’s unclear where that would come from.

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