Canada’s relations with China continue to deteriorate. Shortly after Canada arrested Huawei Chief Financial Officer Meng Wanzhou at the United States’ behest in December, China arrested two Canadian nationals, including former diplomat Michael Kovrig, in a tit-for-tat move meant to bully Canada into releasing Meng. When that didn’t work, Beijing tried a new strategy, effectively punishing what it perceived as Canadian intransigence by restricting access to the Chinese market for key Canadian sectors such as canola, peas, soybeans and pork. Those measures are now beginning to hurt the Canadian economy, and with little prospect of resolving the issue bilaterally, Canada is reaching out to the United States for help – but its closest ally has been unwilling to render assistance.

Deteriorating Relations

China’s market-blocking maneuvers have been mostly unofficial thus far. What concrete steps China has taken to block Canadian exports have all been taken under the guise of plausible deniability. China suspended the export permits of two Canadian pork producers last week, ostensibly because of a labeling problem. In February, China banned shipments of canola seed from two Canadian companies, claiming that it discovered pests in the shipments, and in April, it filed a quality complaint against a third Canadian canola exporter. Now, there are reports of Canadian soybeans and peas facing unusual obstacles when reaching China, including lengthy inspection delays far exceeding the norm and intense scrutiny of Canadian products.

(click to enlarge)

Some Canadian officials have tried to put on a brave face despite these developments – Saskatchewan province’s premier recently dismissed the reports on all Canadian exports besides canola as little more than “hearsay,” while Canada’s agriculture minister insisted last week that the reports reflect little more than the routine issues that periodically emerge during routine customs inspections. Perhaps, but that explanation seems doubtful, especially considering that China’s African swine fever epidemic means China needs to secure sources of pork imports, in particular. It’s more likely that China has made an intentional decision to block certain Canadian exports, even if it means China must find alternative sources for those goods.

Whether intentional or not, the Canadian economy is beginning to feel the effects of China’s emergent fastidiousness. Canadian trade statistics for February 2019 show an almost 25 percent decline in monthly exports to China compared to prior months. Canola exports have been hit particularly hard; exports to China declined in February by almost 60 percent compared to November 2018, with canola meal (51 percent) and canola seed (38 percent) registering substantial declines as well. And that data will likely be worse when March and April figures are released. At least some of the decline can be attributed to Chinese New Year celebrations in February, but the drops are too precipitous for that to be the only factor. Indeed, an April 29 Reuters report detailed how Chinese buyers were canceling purchases of Canadian canola on short notice, forcing Canadian companies to resell to buyers in countries like Pakistan and Bangladesh at steep discounts.

(click to enlarge)

With little in the way of leverage to change China’s behavior, Canada has turned to the United States for help. Multiple Canadian government officials have stated publicly that they would welcome U.S. support and that such support could make China more willing to find an accommodation with Canada. No such American assistance has been forthcoming. The U.S. State Department has expressed concern over China’s canola bans, and the U.S. Senate Foreign Relations Committee passed a nicely worded bipartisan resolution in March “commending” Canada for “upholding the rule of law” and arresting Meng. In practice, however, the U.S. has done very little. Thus far, the U.S. has elected not to address the Huawei issue – including Meng’s arrest – in its trade negotiations with China or to make China’s Canada-targeted measures an issue. In addition, according to Canada’s ambassador to the U.S., Washington has not been particularly forthright with the Canadian government about U.S. intentions for Meng.

‘America First’

The United States’ unwillingness to use its influence with China to protect its northern neighbor fits with the broader foreign policy of the Trump administration – namely, “America First.” This is, after all, the same U.S. government that raised tariffs against Canadian steel exports to the United States by citing a “national security threat” and that has used Canadian Prime Minister Justin Trudeau as its favorite rhetorical punching bag. The U.S. is pursuing negotiations with China to secure better trade terms for American companies – not for Canadian ones, even though China’s economic expansion in recent decades has posed similar problems for both countries. The United States is not interested in using the extensive leverage it holds over the Chinese economy to help other countries, even its most stalwart allies – in fact, the U.S. is simultaneously pursuing new trade arrangements with such allies, including Canada and Japan.

It is hard to overstate how radical a departure this is from previous U.S. foreign policy. The U.S. cemented its position as a global power after World War II by doing the exact opposite – by not putting America first. The U.S. did not do this out of generosity or nobility but because it calculated that doing so would give the United States more power. The U.S. was rich and powerful enough that it could afford to pass on the benefits of that power to other countries and, in so doing, build a network of relationships, partnerships and alliances that countries like the Soviet Union then and China now – which has hardly any allies to speak of besides a despotic hermit regime on the Korean peninsula or an eternally fractious Pakistan – can only dream of. By not putting America first in all things, America was first in arguably the most important thing: power.

A country like Canada cannot afford to break with the United States. From a political, economic and security standpoint, Canada is essentially a U.S. province, hardwired into a U.S.-led alliance structure whether it wants to be or not. Certainly, U.S.-Canada relations are not going to crumble because the U.S. is unwilling to use its leverage over the Chinese to protect Canadian companies or because Trudeau and Trump don’t like each other. Still, American power has always been at its most effective not when countries can’t afford to break with the United States but when countries don’t want to. That is exactly why China has singled Canada out. “America First” may mean the U.S. will get what it wants out of trade negotiations with China, but if the U.S. isn’t careful, it might also mean that down the line, its allies will have far less of a reason to put America first themselves.

Jacob L. Shapiro
Jacob L. Shapiro is a geopolitical analyst who explains and predicts global trends. He is the director of analysis for Geopolitical Futures, a position he has held since the company’s founding in 2015. He oversees a team of analysts, the company’s forecasting process and the day-to-day analysis of important geopolitical developments. Mr. Shapiro is a regular speaker at international conferences and has appeared both in print and on television as an expert on international affairs in such places as MSNBC, CNBC, the New York Times and Fox News. Prior to Geopolitical Futures, Mr. Shapiro worked at Stratfor as an analyst and as the director of the operations center. He joined Geopolitical Futures to help found a new company dedicated to publishing excellent analysis and accurate forecasts based on the geopolitical method Dr. Friedman pioneered. Mr. Shapiro holds a master’s degree from Oxford University, where he won an award for his dissertation on the link between philosophy and mysticism in 20th century Jewish thought. He also holds a bachelor’s degree from Cornell University in Near Eastern studies.