Trump’s trade goals are becoming clearer. Brace for impact, Canada

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Many conservatives and Conservatives believe that Prime Minister Mark Carney pulled a fast one in the last election. “Elbows up?” The old trade relationship with the United States is “over?” All that talk about rethinking our economy and defending our sovereignty against threats from President Donald Trump? So much gaslighting, eh?

Unfortunately, Mr. Trump continues to prove that he really does mean to break eggs, make omelettes and eviscerate the rules of global trade. That portends a bigger impact on Canada than any other country. Geography means we will always trade heavily with the Americans. But the new realities mean we must be prepared to trade somewhat less, and maybe quite a bit less.

On Monday, Mr. Trump began sending letters to trade partners, informing them of their new tariff rates. Japan’s billet-doux included a 25-per-cent tariff. So did South Korea’s.

It’s the follow-up to the “Liberation Day” of April 2, when Mr. Trump brandished posters with individualized tariffs on nearly 200 countries. (Canada was not included.) He quickly suspended those tariffs for three months, to allow time for everyone else to make concessions. Give the U.S. something it wants, and maybe you’ll get a lower tariff. Don’t, and you’ll get hit with the April 2 rates.

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Japan and South Korea are two of America’s most important trading partners and allies. Whatever. That entitled them to a cut-and-paste form letter. Somewhere between a memecoin pitch and an extortion threat, Mr. Trump’s missive says that “we invite you to participate in the extraordinary Economy of the United States, the Number One Market in the World, by far.” In return, “we will charge [insert name of country here] a Tariff of only 25 per cent.” Plus any additional sectoral tariffs, such as Mr. Trump’s previously announced steel and aluminum tariffs. And any others he dreams up.

The letter adds that if [insert name of country here] were to take steps to reduce its trade surplus with the U.S., then “we will, perhaps, consider an adjustment to this letter.” On the other hand, if [your country’s name goes here] retaliates with tariffs of its own, then Washington will retaliate for the retaliation – “whatever number you choose to raise them by will be added onto the 25 per cent that we charge.”

It ends with the perfect sign-off for a Hallmark card from the “Expressing Disrespect” section: “Thank you for your attention to this matter.”

Canada is paying attention to this matter. It’s the latest signal of how the Trump administration aims to do trade, and relationships.

The first take-away from all this is that Mr. Trump wants higher tariffs. He’s made this clear time and again, and now once more. He may lower them in return for concessions, and he may back down to the extent the stock market revolts, business complains or voters scream. But all else equal, he wants to move from free trade, where the goal is lowering tariffs, to the opposite.

There have been only two sort-of deals concluded under the Liberation Day threat framework. The first is with Britain. It puts a minimum 10-per-cent tariff on British exports to the U.S. – a big shift from a near-zero tariff relationship. Members of the Trump administration often refer to this 10-per-cent levy as a “universal” or “baseline,” implying that it is the minimum tariff floor. But 10 per cent would be a much higher trade barrier than the decades-old status quo between Canada and the U.S.

The second take-away is that Mr. Trump wants not win-win deals, but I-win-you-lose. He wants the opportunity to tell Americans that he won, which requires that the other side bend the knee, kiss the ring and say thank you. Hence the letters telling Japan and South Korea that, as a privilege of trading with the U.S., they must passively accept the 25-per-cent tariffs, or else. We punch you; don’t you dare punch back.

Last week’s deal with Vietnam takes this to another level. Almost nothing is known about the arrangement, but Mr. Trump said on social media that Vietnam had agreed to be hit with a 20-per-cent tariff – while U.S. exports to Vietnam would get in tariff-free.

The chief of the White House Council of Economic Advisers, Stephen Miran, on Sunday celebrated this arrangement as “extremely one-sided.” The goal is not reciprocity.

Or as White House press secretary Karoline Leavitt taunted after Ottawa dropped the digital services tax: “Prime Minister Carney and Canada caved.” No diplomatic language, no gesture of partnership, no win-win. To Make America Great Again, everyone else has to eat it. Eat it, sucker.

Finally, nothing is written in stone in Trump World. There are no binding accords, negotiated over years by experts, spelling out legal obligations in minute detail. Mr. Trump doesn’t want all that. The British sort-of deal even says it’s not a legal agreement. And Japan was threatened with a 24-per-cent tariff in April, but on Monday that became 25 per cent. How? Why?

International trade law is being rewritten with sketches on the back of a wet cocktail napkin.

Nobody can say for sure how far Mr. Trump will go. But there’s no denying which way his compass is pointing.