Good morning. In this age of tariffs, Canada is gearing up for a new kind of asymmetric trade warfare.
The United States has long been a trusted friend, ally and provider, the lifeblood of our economy and the sun that warms us. Now the providing hand has formed a fist, threatening economic salvos every other Tuesday.
Ottawa must prepare not for a fair fight, but for a lopsided battle where strategy, narrative and leverage matter more than size. More on that below. Let’s take a look at today’s news first:
In the news
Trade: Donald Trump’s tariffs are reinstated by U.S. appeals court just one day after surprise block, as the legal battle reframes the trade war
Analysis: For the Canadian economy, the U.S. trade court ruling on tariffs brings hope, but also uncertainty
In the know
Exclusive: The plan that could have saved Hudson’s Bay as we know it
- The latest: As of this weekend, the country’s oldest retailer will cease to exist as Canadians know it.
- The outline: A team of veteran senior HBC executives created a plan to preserve part of the chain, led by well-known former Bay president and chief executive Bonnie Brooks and with backing from a Canadian investor. It would have kept at least two dozen stores open, and saved more than 1,000 jobs.
- The fall through: The plan fell short of submitting a formal bid in the court-supervised sales process for the company’s assets.
U.S. President Donald Trump (R) meets with Prime Minister Mark Carney in the Oval Office at the White House on May 6.Anna Moneymaker/Getty Images
In focus
Canada, Trump and a delicate dance in asymmetric warfare
I’m Ethan Lou, the opinion editor in The Globe and Mail’s Report on Business. This weekend, we’ve pulled together a package on what might be the defining economic question of this country: How do you win a trade war with the world’s most powerful and least predictable man?
During his first term, U.S. President Donald Trump made a classic tweet: “Trade wars are good, and easy to win.” That tweet aged like Wisconsin cheese in the summer sun, if Wednesday’s court ruling from the U.S Court of International Trade is any indication. The decision found that Trump overstepped his authority to impose tariffs.
But make no mistake, Trumpism remains on the menu.
Like him or not, Trump is a juggernaut. He is winter thunder on a wild wind. Two impeachments and a criminal conviction have not stopped him. Neither will Wednesday’s court ruling: It has already been stayed, pending an appeal by the administration. Even if ruling is eventually upheld, as trade lawyer Lawrence Herman writes in my section, “it won’t deter Trump from continuing his tariff wars using whatever alternative routes can be found.” Canada remains in the crosshairs.
Mark Carney, our central-banker-turned-Prime-Minister, has promised to reset our relationship with the U.S. and stand up for Canadian interests with sharper elbows. The throne speech delivered Tuesday by King Charles III made it official: The days of polite tut-tutting are over.
But talk is cheap. What would it actually take to come out ahead in a one-sided economic brawl with America?
We asked six experts to sketch out real – and interesting – strategies for Canada to use in this new era of performative protectionism.
Western University’s Andreas Schotter says the key to negotiating with Trump is to offer symbolic wins – trade theatre, essentially – while quietly securing the outcomes we want. Want to save our auto sector? Give Trump a press-conference victory on milk quotas.
Oil executive Adam Waterous argues we should use energy as a bargaining chip, offering a revived Keystone XL pipeline in exchange for the total elimination of tariffs. Jack Mintz, an economist, and Munir Sheikh, former chief statistician of Canada, want to play defence: propose corporate tax reform to mitigate the damage of the trade war, to keep Canadian business investment from fleeing south.
Tom MacDonald, a former negotiator for the North American Free Trade Agreement (remember that?), wants to weaponize Canada’s car market as leverage – we are among the top 10 global markets. And Ian Robertson, partner with The Jefferson Hawthorne Group, has a strategy straight from The Art of War: guile, deception and “controlled chaos” – I shan’t spoil it.
The package doesn’t offer a silver bullet. That’s not how trade works, and such shiny projectiles don’t exist.
But these solutions do broaden our minds on the matter and spur us to more creativity. They show that Canada has more leverage than it thinks, if it’s willing to play a little harder and think a little more outside the box.
And if you’ve made it this far, and you’re wondering how you, too, can write for The Globe, it’s simple: e-mail me.
Charted
What housing slowdown?
While average home prices in Ontario and B.C. have returned to early 2021 levels, at least one of the average or benchmark prices in five other provinces has reached an all-time high – with Quebec and Nova Scotia setting new records in both metrics.
Bookmarked
On our reading list
Technical challenge: This Quebec startup shows progress toward practical quantum computing.
Technical difficulties: Washington Capitals say no decision has been made on Alex Ovechkin’s NHL future after e-mail mistake.
Typical compensation: CEO pay jumped nearly 10 per cent in 2024, as S&P 500 stocks soared.
Morning update
Global stocks were mixed as investors considered an appeals court decision to keep President Donald Trump’s tariffs in effect, a day after markets rallied on a ruling to block most of them. Wall Street futures were in the red, while TSX futures edged higher.
Overseas, the pan-European STOXX 600 was up 0.54 per cent in morning trading. Britain’s FTSE 100 rose 0.71 per cent, Germany’s DAX gained 0.89 per cent and France’s CAC 40 advanced 0.24 per cent.
In Asia, Japan’s Nikkei closed 1.22 per cent lower, while Hong Kong’s Hang Seng slid 1.2 per cent.
The Canadian dollar traded at 72.41 U.S. cents.