A diplomatic mission

Sometimes it’s difficult for Canada to remain best friends with its neighbor to the south.

David MacNaughton, Canada’s ambassador to the U.S. since March 2016, has the delicate task of building relationships between the countries at a time when Canada often has taken the brunt of President Trump’s trade actions.

“At the working level, relationships between the countries are extraordinary,” says MacNaughton, who was visiting Richmond in March to speak at the annual Virginia Governor’s Conference on Agricultural Trade.  “But I will tell you from a domestic political point of view and from a public opinion point of view in Canada, the situation has become quite tense.”

MacNaughton’s Virginia visit came shortly after Trump proposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. At that time, Trump had tweeted that Canada and Mexico would not be excluded from the tariffs until a revised North American Free Trade Agreement (NAFTA) had been signed.

Just a few days later, however, the Trump administration reversed course, saying Canada and Mexico would receive a “temporary” exemption from the tariffs.

After that announcement, Canadian Minister of Foreign Affairs Chrystia Freeland said Canadian provincial premiers, business executives, labor officials, and parliamentarians had worked to secure the exemption. “This has been a true Team Canada effort,” Freeland said. “This work continues and it will continue until the prospect of these duties is fully and permanently lifted. Today is a step forward. There’s more hard work to do, and we will not let up. We are focused on getting a good result for Canadians.”

The U.S. has accused China and other countries of overproducing steel and aluminum and flooding the market with cheaper products, a practice that puts U.S. steel manufacturers at a disadvantage. “We’re somewhat surprised and mystified [by the initial threat of tariffs on Canadian imports] in the sense that we aren’t who the president and others have long cited as being the problem,” MacNaughton said during his Richmond visit.

More steel going north
Canada is the No. 1 steel exporter to the U.S. The ambassador, however, points out that his country actually imports more American steel ($10.6 billion) than it exports to the U.S. ($8.2 billion).

In addition, he notes that Trump is citing Section 232 of the Trade Expansion Act, which allows a president to enact tariffs because of national security threats. “We would agree that Chinese overcapacity of both steel and aluminum is a problem,” MacNaughton said. “We have offered repeatedly to work with the

United States to deal with the problem and to make sure that, if we are excluded from the tariffs, that we would not become a sort of vehicle that they try to get into the United States by transshipping through Canada.”

The recent spat over the steel and aluminum tariffs isn’t the first time Canada has been in Trump’s crosshairs.

In April 2017, Trump announced he would slap tariffs on Canadian softwood lumber. Canada is seeking to overturn the tariffs, which average 21 percent, through the World Trade Organization and dispute settlement mechanisms in NAFTA, a treaty that removes tariff barriers for trade among Canada, the U.S. and Mexico.

In January, Trump put a 30 percent tariff on all solar panels. He failed to exclude Canada from the tariff despite a recommendation to that effect from the U.S. International Trade Commission. The Trump administration also tried to impose a 300 percent tariff on the Canadian Bombardier C-Series Aircraft, a move that was struck down by the International Trade Commission in January.

Trump also has been highly critical of NAFTA, saying it is unfair to the U.S.  In March, trade representatives finished their seventh round of negotiations, with little apparent progress. News reports said the threat of the steel and aluminum tariffs overshadowed the talks.

Canada and the U.S. have had trade disagreements before Trump became president. Disputes over softwood lumber and dairy products, for example, have gone on for decades.

“We have $2 billion in trade a day. It’s inevitable that there are going to be some tensions,” MacNaughton said. “But what we tried to do was to say, ‘All right, well let’s just deal with them pragmatically.’”

Cooperative efforts
Despite tensions in trade, the ambassador is quick to highlight areas where the countries are working well together, particularly in the national security arena. 

The Canadian and U.S. navies, for example, are collaborating on efforts to address drug trafficking and human smuggling in the Caribbean. The two countries also are working together to solve problems in Venezuela, where low oil prices and high inflation have devastated the economy.

MacNaughton also notes that Canada and the U.S. also recently co-hosted a conference on North Korea in Vancouver, and the ambassador adds that he has good relationships with members of the Trump administration.

As he travels around the U.S., MacNaughton has found governors eager to take advantage of business opportunities in Canada.

The ambassador was no stranger to the U.S. before his appointment in 2016. He has relatives in the U.S. and previously traveled frequently to Washington, D.C., for his public relations business.

His grandfather, a Californian, was one of 35,000 Americans who crossed the border between 1914 and 1917 to fight in World War I with the Canadian military before the U.S. joined the war effort. “I had no idea about the whole story,” MacNaughton said. He asked the military to look into his grandfather’s service.

Led public-affairs firms
MacNaughton started a Canadian public affairs firm in the 1980s. After selling his business, he was North American president of the world’s largest public relations firm, Hill+Knowlton Strategies, until 2003.

He served as principal secretary to the premier of Ontario from 2003 to 2005 and then was chairman of StrategyCorp, a public affairs firm, until his appointment as ambassador.

MacNaughton worked on Canadian Prime Minister Justin Trudeau’s 2015 campaign. “It’s an honor and privilege to represent your country anywhere,” says MacNaughton. “But to be able to do that with our largest trading partner, security partner, defense partner, is truly exceptional, and I feel lucky to be here.”

Despite recent difficulties, MacNaughton remains positive about the future of U.S.-Canadian relations. “The relationship between Canada and the United States is stronger than any one prime minister or any one president. They will endure,” MacNaughton said. “There have been lots of times where presidents and prime ministers have had their difference of opinion, but we’ve found ways to work it out.”