Sounds like a lot.
Retaliatory tariffs totalling $155 billion — $30 billion right away and, if they have no effect, an additional $125 billion in three weeks’ time. Sprinkle in some additional pain — barring Teslas from being sold here, buy Canadian campaigns, slowly cutting off electrical power to some American states — and it will be substantial enough to persuade Donald Trump to pull back from the brink, right?
Probably not.
Even before Trump’s 25% tariffs were imposed on all Canadian imports at midnight Tuesday, the markets were reacting. The S&P 500, which tracks the performance of the 500 biggest publicly traded companies in the United States, was down 1.76% at the end of day. The Dow Jones, which tracks 30 prominent companies active on stock exchanges, was down 1.4%. The Nasdaq, which follows a lot of technology-related companies, was down 2.6%.
A few percentage points: Are they really that much? Well, on Monday, before the tariffs even came into effect, whatever gains the market achieved in 2025 were completely wiped out. There was a massive selloff — $1.3 trillion in just a matter of hours.
There are a thousand billion in a trillion, of course. That means that Monday’s stock market selloff did ten times more damage to Trump’s economy than Canada plans to.
As Justin Trudeau, Pierre Poilievre, Mark Carney, Doug Ford and every other Canadian leader has said, over and over, whenever an American news outlet points a microphone their way: The American people are going to experience pain, too. And it is going to be significant.
We can only assume that Trump still has a few plucky advisors who are unafraid to tell him that truth: That in trade war, everyone loses. But Trump (obviously) has been unmoved.
Why? There are lots of theories making the rounds: He’s using economic violence to get what he wants — in our case, making us the 51st state. Or, he’s simply a modern-day Nero, fiddling while his economy burns.
There is another possibility, one that Trump himself referred to in January, and which few took seriously at the time. Here is what the U.S. president posted:
“For far too long, we have relied on taxing our Great People using the Internal Revenue Service (IRS). Through soft and pathetically weak Trade agreements, the American Economy has delivered growth and prosperity to the world, while taxing ourselves. It is time for that to change. I am today announcing that I will create the EXTERNAL REVENUE SERVICE to collect our Tariffs, Duties, and all Revenue that come from Foreign sources. We will begin charging those that make money off of us with Trade, and they will start paying, FINALLY, their fair share.”
Forget about the use of all-caps, which is a style favoured by the tinfoil hat brigade. Forget all the “pathetically weak trade agreement,” which he himself signed. Forget about the fact that Trump already has an agency collecting tariffs and duties — U.S. Customs and Border Protection. So what is his objective?
To eliminate income taxes.
The U.S. raises about $3 trillion annually with income taxes. That’s the around the same value of goods it imports annually. Trump wants Canada, Mexico, China — and, soon enough, Europe and the rest of the world — to pay for the cost of his radically slimmed-down government. Trump’s rebarbative Commerce Secretary Howard Lutnick admits as much: He says that Trump’s “goal is very simple: To abolish the Internal Revenue Service and let all the outsiders pay.”
One problem with that plan, which the likes of Trump and Lutnick would be expected to understand, but apparently don’t: In a capitalist economy, when prices go up, demand goes down. And, already Tuesday morning — on the first day of the Trump tariff madness — stock markets plummeted even further, around the world. Tariffs won’t replace income taxes if people are buying dramatically less goods.
There is a historical precedent for what Trump is doing: It’s the 1930 Smoot-Hawley Tariff Act (which, weirdly, is a funny moment in John Hughes’ movie Ferris Bueller’s Day Off). Smoot-Hawley jacked import duties in the U.S. by as much as 60% — which Trump has threatened, as well.
The result? A global trade decline, widespread hunger and poverty — and the United States was plunged into a longer and more severe Great Depression.
Those who don’t learn from history, as they say, are damned to repeat it.
We’re about to repeat it.