Layton's Tough Rhetoric

Jack Layton has recently suggested that Canada should retaliate against the American tariffs on Canadian softwood lumber by imposing levies on Canadian exports of oil and gas. I, for one, think that this is a stupid idea.

Here is why Canada should not start a trade war with the United States over softwood lumber:

Reason #1: We would lose.
Exports account for roughly one third of Canada's GDP, with about 85% of exports going to the United States. In 2004, bilateral trade between the two countries (i.e. total imports plus total exports) was equal to 43% of Canada's GDP, compared to 3.8% of America's GDP. Who do you think could hold out longer in a trade stalemate?

Reason #2: Even if we didn't lose, we would still lose.
Suppose that after a long protracted battle, America relented and removed tariffs on softwood. Would the money regained for the softwood lumber industry negate the billions of lost revenue for the oil and gas industry caused by artificially raising prices for those south of the border? That's extremely unlikely. Even if somehow it did make up for it (it won't, but let's say), do we want to risk cutting off Western Canada's prime revenue source? As if they were not alienated enough already...