President Donald Trump has unwisely declared economic warfare on Canada. In doing so, he is recklessly upending and potentially ruining the United States’ historically cordial and mutually profitable relationship with its closest neighbor and ally.
Trump’s destabilizing policy is causing volatility, chaos, pain, puzzlement and uncertainty in both countries.
True to his threats, he has imposed 25 percent tariffs on a broad range of exports from Canada, roiling American stock markets and leaving Canadian Prime Minister Justin Trudeau no alternative but to slap counter levies to the tune of 25 percent on $30 billion worth of American goods in the first retaliatory round.
If, as feared, Trump imposes “reciprocal” tariffs on April 2, Canada will strike back with a further $125 billion in counter tariffs.
Trump, a dyed-in-the-wool protectionist, is playing with fire, jeopardizing his country’s valuable commercial relations with Canada.
The statistics speak volumes.
Canada is the United States’ largest export market. Last year, the value of Canada’s imports and exports to and from the United States surpassed $1 trillion.
Many of these goods are transported over bridges linking Canada and the United States. One of the most important ones, the Ambassador Bridge, connects the Canadian city of Windsor to the American metropolis of Detroit.
Fearing that a trade war will be devastating for both sides, Trudeau advised Trump to tread carefully. “You’re a very smart guy,” he said a few days ago. “But this is a very dumb thing to do.”
Touche.
Trudeau’s justifiable warning has had an impact. It prompted U.S. Commerce Secretary Howard Lutnick to disclose that further temporary tariff exemptions were in the pipeline if they conformed with the Canada-U.S.-Mexico free trade pact.
On March 6, Trump postponed tariffs for one month on Canada and Mexico, which is equally affected by Trump’s protectionist policy. A day earlier, he temporarily suspended tariffs on cars exported to the United States from Canada and Mexico.
According to Karoline Leavitt, the White House press secretary, Trump delivered this reprieve after speaking with the presidents of three major car manufacturers, General Motors, Ford Motor and Stellantis. They warned him that tariffs would have a terrible effect on the U.S. economy.
Leavitt, however, added that Trump expects these companies to move production from Canada to the United States, where, she noted, “they will pay no tariffs.” Her alarming recommendation suggests that the Trump administration may be hell bent on gutting a vital segment of Canada’s economy.
While Trump’s reprieves are welcomed, they do not solve the immense problem he has created.
Canadian Finance Minister Dominic LeBlanc, who has worked with Lutnick to avoid tariffs, has made it known that he is not impressed with the dribs and drabs of temporary exemptions. Much to his credit, LeBlanc told Lutnick that Canada demands the complete repeal of the tariffs and a return to the 2018 free trade agreement, which Trump signed in apparent good faith.
“We’re not interested in some sort of reduction of the tariffs,” LeBlanc said. “We want the free trade agreement with the United States and Mexico to be respected. We’ll continue to work with the government of the United States on issues once the tariffs are lifted.”
While Trump may now be reconsidering his counter-productive tariff policy, his decision to renege on the free trade agreement is extremely unsettling.
Certainly, Trudeau is under no illusions about Trump’s possible ulterior motives. “What he wants is to see a total collapse of the Canadian economy, because that’ll make it easier to annex us,” Trudeau said in an astonishingly frank admission. “That’s never going to happen. We will never be the 51st state.”
Against his better judgment, Trump continues to call for Canada’s annexation and mocks Trudeau as a U.S. “governor” rather than a Canadian prime minister. Trump’s fixation on Canada as a potential American state is not only insulting, but hostile in intent and in line with his outlandish ambition to buy Greenland, seize the Panama Canal, and take control of the Gaza trip.
By any yardstick, Trump is no friend of Canada, as Pierre Poilievre, the leader of the Conservative party and possibly Canada’s next prime minister, has aptly observed. “President Trump (has) stabbed America’s best friend in the back,” he bluntly told reporters recently.
Beyond Trudeau’s claim that U.S. tariffs are designed to bring Canada to its knee so that it can be annexed, Trump appears to be banking on the idea that levies will be economically beneficial to the United States. As he said in his State of Union address to Congress on March 4, “Tariffs are about making America rich again and making America great again. And it’s happening. And it will happen rather quickly. ”
In Trump’s mind, tariffs can offset future tax breaks to Americans, force manufacturing back to America, and punish countries that have taken mercantile advantage of the United States.
Trump’s facile argument that tariffs are necessary to stop the flow of illegal migrants and the drug fentanyl into the United States from Canada is utterly misleading, yet he constantly trots out this falsehood.
The facts tell a far different story.
Less than one percent of the fentanyl that entered the United States in 2024 originated in Canada, as U.S. customs data shows. And Canada has been increasingly successful in stopping migrants heading to the U.S.
Contrary to Trump’s assumption, the majority of economists believe that tariffs will have a detrimental effect on the U.S. economy in terms of inflation, a contraction in growth, an average annual household loss of about $1,600 in disposable income, and higher electricity bills.
The premier of Ontario, Doug Ford, plans to impose a 25 percent surcharge on electrical power to the northern states of Michigan, Minnesota and New York. Ford has also ordered the removal of all U.S.-made liquor from the province’s alcohol distributor and cancelled a contract with Elon Musk’s Starlink.
In his State of the Union speech, Trump alluded to these upheavals when he said, “There’ll be a little disturbance, but we’re OK with that. It won’t be much.”
Canadian counter tariffs may well be more punishing than Trump even imagines. While this unnecessary and useless trade war will surely wallop Canadians, it will cut into American pocketbooks as well.
Trump would be wise to step back from the brink and cancel his aggressive regimen of tariffs.