Ottawa's answer to Trump's trade war now taxes every Canada goose that wintered south of the border, and the migration curve looks like 2007.
Canada's retaliatory tariffs on US goods now cover Canada geese flying home after wintering in America, taxed at 25 per cent on re-entry. Border officers count them with clickers, short sellers call it Lehman with feathers, and the flocks over Manitoba have inverted. Debbie Downturn sees the end.
The first flock came over the Emerson crossing in Manitoba a little after dawn on Saturday. Three Canada Border Services officers stood in the frozen ditch below, each holding a tally counter and a copy of the tariff schedule. They clicked as the birds passed.
Canada's retaliatory tariffs on about $20 billion of American goods took effect this week, Prime Minister Mark Carney's answer to President Donald Trump's trade war. Buried in Annex C is a line few traders read and none have priced. Canada geese that winter in the United States now count as U.S.-origin goods, and pay 25 per cent on re-entry.
Finance Canada says the logic is simple. The birds leave Canadian, spend three months eating Maryland golf courses, and come back heavier. That added weight is American value-add, the department argues, and value-add is what tariffs are for.
"The rules of origin are clear," said Rosalind Fenwick, director of avian classification at the Canada Border Services Agency. "If a goose took more than half its calories south of the parallel, it has been substantially transformed. We did not start this." (Fenwick spoke from an unheated trailer at the crossing. Every crash begins with someone in a trailer being reasonable.)
Washington was unmoved. "The geese are American until they leave," said Dale Morrow, an acting deputy at the Commerce Department. "Then they are Canada's problem. That has always been our position on geese."
The honk curve
Markets have noticed. Waterfowl, like the yield curve, tend to invert before a downturn, and the flocks over Manitoba on Saturday flew in a downward V. A downward V is, in plain words, a V pointing at the ground. Every serious collapse has been preceded by something pointing at the ground.
Short sellers were already positioned. "We've been betting against migration since the fall," said Garrett Pool, founder of Widowmaker Capital, a fund named for what it does to its own investors. "Honk volume is down, wingbeat speed is up, and the birds are hoarding bread. That is a liquidity crunch, which means nobody will lend anyone bread. That is Lehman with feathers."
"Honk volume is down, wingbeat speed is up, and the birds are hoarding bread. That is Lehman with feathers."
The birds have three options. They can pay the duty, turn back, or fly high enough to be classed as aircraft and taxed by a different department. Ornithologists say some flocks are already routing through Alaska, which is also the United States and does not help.
Bank analysts call the goose line a rounding error, less than three basis points of the total tariff take. They said that about subprime. They said it about tulips. Nobody has ever lost money doubting the analysts, except the people who did, which is most of them.
The last flock over Emerson on Saturday did not pay. It landed in the ditch, looked at the officers, and stayed. When the geese stop moving, so does everything else. History doesn't repeat, but it sure is about to rhyme.
Footnotes.
