Welcome to the 2025 trade wars. United States President Donald Trump’s tariffs threaten to upend Canada’s economy, and those of the world at large. Millions of Canadians could lose their jobs and businesses. The hour demands leadership like never before. So what should Ottawa do, and not do? I’ve got a few ideas, but I will start with the most radical: form a national unity government.
Canada has had unity governments before, made up of both Liberals and Conservatives, in times of war. Prime Minister Robert Borden established one during the First World War, which lasted from 1917 to 1920. The 2025 version wouldn’t need to last that long. Instead of holding an immediate election, the next Liberal leader and prime minister, likely Mark Carney, should offer cabinet positions to opposition leaders Pierre Poilievre, Jagmeet Singh and Yves-François Blanchet, as well as some of their MPs. In exchange, the opposition parties would pledge not to topple the government until October to see the country through the crisis.
That would show true leadership by all concerned. It would also be smart politics for the Liberals, by putting the ball in the opposition parties’ court. If they didn’t accept the deal, an election would be on, and the House of Commons’ dissolution would be their fault. If they did accept the deal, they would avoid an election that, right now, could actually be the Liberals’ to win.
What could this national unity government do? A lot. First up: eliminate internal trade barriers. Ottawa already announced it will be dropping half of the federal barriers currently in place, and it should encourage the provinces to do the same. Eliminating internal trade barriers could increase Canada’s real GDP per capita by up to 3.8 per cent — and drop consumer prices by up to 15 per cent.
Next up, a unity government could eliminate tariffs on imports from all countries, other than the U.S., for products Canadians cannot make or grow, such as tropical fruits and vegetables. A study published Monday by the Montreal Economic Institute recommends this approach, and companies are acting too: Swiss chocolate maker Lindt & Sprüngli is already routing products to Canada from Europe instead of from the U.S.
Third, Ottawa should cut corporate and personal taxes. We know Trump’s going to do it, and we need to remain competitive, even more so now. Ottawa could remove the GST on Canadian-made goods, to incentivize consumers to buy Canadian.
Some goods, of course, will not find a purchaser — unless the government gets creative. An out-of-the-box idea would be to implement a national homebuilding and military equipment strategy to use aluminum, steel and wood products that would otherwise have been sold to the U.S. Already, one aluminum factory has closed shop in Quebec. Instead, Ottawa could buy up and divert some of their production to Canadian homebuilders and manufacturers of military equipment.
Finally, start ramping up the trade delegations. In the current situation, Prime Minister Justin Trudeau, ironically, is right: diversity is our strength. Millions of Canadians have relationships with other nations. Let’s mine those connections to create new export opportunities, particularly for goods now coming from the U.S.
Now, what should our leaders not do? Two things: First, don’t lose your cool. Yes, Ontario Premier Doug Ford, I’m talking to you. Blustering on American TV about cutting off the power is a dumb idea. You want to give Donald “51st State” Trump an excuse to send in the National Guard? The American public would turn on us in a dime, and so would their president. Don’t give them the opportunity.
Second, don’t throw money at the problem without thinking it through. Some industries will need support, like the automotive sector. Some will not. Don’t make the same mistake as the pandemic, where the cheques rolled out the door to too many people and for far too long. Canada is already heavily in debt — don’t make it worse.
So there’s my laundry list for a dream unity government. Could federal parties today put their bitterness aside and present a one-Canada approach? Maybe, maybe not. But whoever’s in the chair, there are a lot of things they can do to fight for Canada — and win this war.
National Post
Tasha Kheiriddin is Postmedia’s national politics columnist.