Donald Trump temporarily reversed his initial 25 per cent tariff threat against Canada and Mexico when both countries offered tangible examples of measures to tighten the border, most of which had been announced in December. As the Wall Street Journal observed, “President Trump never admits a mistake, but he often changes his mind. That is the best way to read his decision to pause his tariffs.” But yesterday, Trump doubled down, announcing 25 per cent tariffs on steel and aluminum “affecting everybody,” but with a particularly negative impact on Canada. He promised further “reciprocal” tariffs would follow thereby risking an all-out global trade war.
Trump’s actions are reckless, unwarranted and a flagrant violation of the USMCA he signed seven years ago. Can his administration be trusted to live up to any agreement it concludes? Once broken, that trust will be hard to repair, especially among erstwhile allies.
Trump’s “might is right” approach runs roughshod over the rules-based order of international relations and undermines the U.S.’ role as “leader of the Free World.” He is using bogus complaints against Canada to cavalierly trash the existing trade agreement between us.
Comparing Canada to Mexico on the flow of undocumented migrants and fentanyl across the borders to justify his initial tariff threat is simply ludicrous. According to U.S. Customs and Border Protection (CBP), the number “land border encounters,” in 2024 from Mexico into the U.S. was 2.1 million versus 190,000 from Canada. A more substantial influx of Canadians is the steady flow of “snowbirds” spending money in Florida, Arizona and Hawaii every winter.
Shipments of fentanyl from Canada to the U.S. in the same year was 43 pounds versus 24,148 pounds from Mexico to the U.S. These numbers do not make Canada a “National Emergency” problem for America?
Along with the tariff actions, insults about Canada becoming the “51st state” are unseemly from any U.S. official — especially the president. Robert Bothwell, a professor of History at the University of Toronto told the Associated Press last week, “The Americans won’t be trusted anymore. The 51st state stuff is just contemptuous. It treats Canada as if we don’t even exist.” Trump’s tariff moves crassly betray decades of mutual economic benefit. They ignited unprecedented anger and virulent anti-American sentiments across the entire country, while eliciting an outburst of unity that even gave new life to our beleaguered prime minister.
Trump declared obtusely that America needs nothing from Canada — not our oil nor uranium, nor lumber and critical minerals. Really?
Trump has a uniquely warped view about the value of tariffs. His historical references are the McKinley period in the 1890s and the Coolidge presidency in the 1920s, but he neatly sidesteps the Smoot-Hawley tariffs under Hoover in 1930 which ignited a world-wide depression.
Larry Summers, a former Treasury Secretary, said on X that the tariffs on Canada and Mexico were “inexplicable and dangerous.” They stand to “raise the prices that Americans pay for many things including cars and gas, make U.S. firms less competitive, stymie job creation, increase unemployment, and trigger uncertainties from other countries that harm the U.S. economy.” He added pointedly that “bullying doesn’t win over time on the playground or in the international arena.”
Trump’s acolytes in his administration and in Congress, including unfortunately his Secretary of State, Marco Rubio, parroted the hogwash about the U.S. being unfairly “ripped off” and “subsidizing” Canada with trade deficits — allegations that reflect an incoherent analysis of economic reality. The U.S. trade deficit with Canada was $60 billion (US$41 billion) in 2023 though Trump indicated without evidence that it was US$200 billion. The official figure does not include services, and the financial support Canada and others render purchasing financial instruments, e.g. treasury bills, that help keep the U.S. government functioning despite its spiralling debt. Nevermind the fact that exchanging money for goods isn’t exactly a “subsidy.”
Republicans were once the champions of liberalized trade, as compared to protectionist Democrats. In Trump’s MAGA world, that is no longer the case. They and senior U.S. business executives who know better, were remarkably silent during the tariff kerfuffle. They had better come to their senses soon.
Canada’s initial retaliation list was a measured response — $30 million upfront, followed by $125 million three weeks later targeting selective states with Republican Senators — e.g. orange juice from Florida, whiskey from Kentucky, plus beer, wine, vegetables, perfume, clothing, shoes, household appliances, furniture and more. The action against steel and aluminum raises the stakes and necessitates recalibration, preferably in concert with others like the European Union.
Canada has leverage at its disposal. We could use spare capacity on the Trans Mountain pipeline to divert tariff-free oil exports to Asia obliging California refineries to import more from the Middle East and even Venezuela. We could also sell LNG and critical rare minerals to Europe.
Mostly, Canada must act independently to jolt our economic growth prospects — deciding deliberately to reduce uncompetitive regulatory and tax burdens, and to expedite project approvals. An idle parliament does not help.
Market uncertainty will certainly deepen and inflict untold damage on global trade. Regrettably, Trump’s advisors are not inclined to check his irrational impulses. His goal may be to gain the upper hand in a re-negotiation of the USMCA in 2026 or earlier.
As the “Disrupter in Chief,” Trump is hitting Washington with a thunderstorm of executive orders meant to deliver on his campaign promises. Many already face multiple court challenges. Serious political obstacles lie ahead, notably on fiscal and budget reconciliations needed with Congress to fund the government and deliver promised tax cuts. The Republican margin for error, particularly in the House, is extremely tight. One can only hope Trump’s effort to cajole consensus will dilute his narcissistic fixation on tariffs.
Speaking to Canada’s Parliament in May,1961 president John Kennedy declared: “Geography has made us neighbours. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder.” Donald Trump should be mindful of that counsel, particularly the last phrase.
Derek H. Burney is a former, 30 year career diplomat who served as Ambassador to the United States of America from 1989-1993.