Free-Riding Chickens Coming Home to Roost?

By Dan Middlemiss, 18 January 2025

Here is an article that is certain to generate much vitriol on all sides.

In a (subscriber-only) column for The Globe and Mail, journalist Konrad Yakabuski argues that President-elect Trump’s threatened tariffs are a direct consequence of the United States’ recognition that it has been propping up the free world’s open trading system at the expense of its own national security interests. During his first term in office, President Trump made it very clear that he thought Canada had been free-riding off of US defence protection while Canadian manufacturers and resource companies enjoyed free access to the lucrative US market. Trump saw this as fundamentally unfair.

Yakabuski argues further that Trump’s tariff threats are supported by recent research that challenges the longstanding consensus about the benefits of free and open trade for the United States. A study by Stephen Miran (see link below) indicates that the United States has buttressed the international trading system at considerable costs to its own economy and national security.

Yakabuski further notes that, “Because of its status as the world’s reserve currency, the U.S. dollar has been overvalued, undermining the competitiveness of American manufacturers. To make matters worse, some of the very countries benefitting from an overvalued U.S. currency to flood the U.S. market with their products also shirk their NATO obligations. And Canada leads the pack.”

Yakabuski concludes, “The trade-security paradigm has shifted. Our leaders should have seen it coming.”

See, Konrad Yakabuski, “Trump’s tariffs are the price Canada must pay for freeriding on defence”, Globe and Mail, 15 January 2025. https://www.theglobeandmail.com/opinion/article-trumps-tariffs-are-the-price-canada-must-pay-for-freeriding-on-defence/

Here is the link to the article by Stephen Miran referenced by Yakabuski. https://www.hudsonbaycapital.com/documents/FG/hudsonbay/research/638199_A_Users_Guide_to_Restructuring_the_Global_Trading_System.pdf

If you have access, be sure to read the highly charged ‘Comments’ on the Yakabuski article as well. Shocking ignorance in some cases!

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