The Annual APSA Convention
Perspective: Tariffs: A rough road leads to new destination
Tariffs: A rough road leads to new destinations
Authors: Danielle Bochove, Trevin Stratton and Matthew Stewart
The annual American Political Science Association (APSA) Conference was on this week, this year in Boston. And it is my understanding it will be in Washington next year. Great idea. My ‘always’ beef with the annual gathering of political scientists, including many of my international relations colleagues, is that APSA is scheduled too close to Labour Day – for many, right before classes commence, exactly at a moment when many colleagues try to catch the last bit of summer with family and friends – and as a result turnout is always underwhelming.
Still I must say that the Roundtable a number of us put together below was terrific. While we did suffer attrition in this Roundtable, unfortunately, as Chair I was joined happily by Miles Kahler from American University, Pascale Massot from Ottawa University and Arthur Stein from UCLA. Each presentation they gave was terrific and explored critical questions described broadly in the Program below:
Challenges to Global Governance and the Threat of ‘Spheres-of-Influence’
Session Description
The Global Order is under mounting strain as established institutions and practices struggle to adapt to new pressures and rivalries. A world that had become increasingly linked is being politically and economically fractured. Decades of economic integration are being impaired or replaced by tariffs and deglobalization. Aggressive actions by the Trump administration, evidenced by its actions in Venezuela, and threated elsewhere, continuing Russian actions against Ukraine and growing threats by China against Taiwan point to greater conflict. Decades of economic integration are being impaired by current and threatened tariffs.
Meanwhile Middle Powers such as Brazil, India, Indonesia, Korea, Middle Powers of the Global South, and more seem prepared to advance particular global governance initiatives but such niche initiatives may be insufficient to stabilize the global order. Formal international organizations and informal groupings such as the G7 and the G20, both of which had sought to provide some degree of multilateral governance find themselves sidelined, ignored, or attacked.
The Roundtable will address the prospects for global order in the contemporary world of great power friction, growing conflict and possibly emerging ‘spheres of influence’. In what ways and for which issues can collective action and a rules-based order (RBIO) be sustained, or even possibly enhanced? What are the possibilities for institutional initiatives and pluralistic actions and what are requisites for meeting global governance challenges in areas ranging from conflict resolution, climate change, global economic development, financial institutional reform, global health and more?
We sparred over the impact of values as well as interests in the current construction of Middle Power diplomacy called for by Canada’s PM, Mark Carney. We examined the emergence and limits of current ‘spheres of interest’ construction and much more. It was a lively and illuminating discussion of current global order/disorder relations. Much food for future thought. Great thanks to all the colleagues that joined in.
Trade Conflict
Well enough of my good time in Boston, let me turn in this last moment to US-Canada trade. Deloitte has just released a Report, as noted above, on US-Canada trade and the impact of a possible Trump decision to ‘torpedo’ the trilateral US-Canada-Mexico agreement, as one option. I’m afraid such an outcome, given the President, must indeed be take into account. As the Deloitte Report concluded in a piece reviewing it by Lauren Krugel in the Globe and Mail:
““What we wanted to do is to get a better picture around what’s the impact if the worst happens and the (United-States-Mexico-Canada) agreement falls apart, and then how much can we offset of the negative impact?” report co-author Matthew Stewart, a partner at Deloitte Canada, said in an interview.”
“The worst scenario would be the dissolution of the USMCA, which the report’s authors call “a possibility that cannot be dismissed.” The U.S. accounted for about 70 per cent of Canada’s exports in 2025.”
“If that were to happen, Canada’s real gross domestic product would fall by 1.6 per cent, or $402-billion, over the next decade relative to the status quo baseline – U.S. tariff levels as of July 1 of this year and USMCA intact. It projects employment would shrink by 163,000 jobs annually on average, dragging wages and consumer spending along with it.”
““The bottom line is a severe but not cataclysmic impact on Canada’s overall economy, although perhaps cataclysmic for some sectors,” wrote Stewart and co-authors Danielle Bochove and Trevin Stratton.”
“Manufacturing would bear the brunt. Motor vehicles and parts would see a 28-per-cent plunge in real GDP compared to the baseline, while electronics, machinery and equipment would lose 21 per cent, rubber and plastics products 20 per cent and chemicals 13 per cent by 2036.”
It is evident in the Report’s findings that trade diversification, often touted as the solution for Canadian economic development by those looking for a Canadian trade regime less reliant on US-Canada trade that this expanded trade cannot do the trick. As Krugel writes:
““The model suggests that the gains from export diversification, while encouraging, are smaller in scale than the consequences of the breakdown in preferential trade with the U.S. envisioned in Scenario One.””
No big surprise but a successful path forward turns back to economic development in Canada and the necessity for reducing interprovincial barriers:
“The report’s authors argue Canada needs to do more than find new markets for established products.”
““It also needs to lean into policies that enable greater self-sufficiency … by breaking down internal barriers and developing new areas of specialization at home that lay the basis to competitively serve world markets.””
“The report highlighted Ottawa’s massive investments in defence and support for new export infrastructure and critical minerals refining as positive steps.”
“Deloitte research from 2025 suggests that completely phasing out interprovincial trade barriers over five years would generate an additional $881 billion in economic output by 2040 and create 133,000 new jobs.”
““Together with the diversification and more open internal trade, we could offset most of the decline from a worsening situation with the United States.””
Bottom line – Canada must solve, or at least ameliorate, the provincial political tensions that generate barriers to greater economic development and trade throughout Canada. That is why a small fillip for the Carney effort to enlarge foreign investment in Canada. As reported by James Bradshaw, again, in the Globe and Mail in a piece titled, ““Carney’s summit to push Canadian resources, defence and tech to global investors”:
“Prime Minister Mark Carney and top Canadian CEOs plan to showcase energy, critical minerals, defence and advanced technologies as sectors where Canada has untapped potential at a global investment summit in Toronto later this month.”
“The Canada Investment Summit, on Sept. 14 and 15, is drawing a group of about 250 heavyweight financial-sector executives who lead global companies that collectively oversee nearly $120-trillion in assets.”
“The event gives Ottawa and Canada’s companies a brief, high-stakes chance to pitch the country as an increasingly attractive destination for investment capital. They plan to emphasize the country’s stability – even in the midst of a trade war – and frame it as an option to reduce risk in portfolios that are heavily tilted toward the U.S., Europe and Asia.”
“Seven major funds from the Middle East are expected to be there, including the UAE’s Abu Dhabi National Oil Co. (ADNOC) and Saudi Arabia’s Public Investment Fund.”
“Australia’s contingent includes IFM Investors, Macquarie Group and several superannuation funds. Multiple investors from each of France, Germany, Denmark, the Netherlands, Japan and Britain are expected to take part.”
“From Singapore, an emerging investment hub, Temasek is on the guest list but sovereign wealth fund GIC is not.”
“An executive from the Hong Kong Monetary Authority is also expected to attend.”
“Representatives from China will likely include China International Capital Corp. and China Investment Corp.” …
“The guest list includes 26 of Canada’s largest investors, including 11 major pension funds, as well as more than 45 of the country’s most prominent corporations.”
Is this a ‘slam dunk’. No way! But it points to an important effort that might improve Canadian economic development and trade if followed through on, even where the US impairs bilateral trade with Canada. We shall have to see.
Enjoy the ‘long weekend’.