Carney’s reciprocal tariff retreat might seem like a betrayal, but it makes sense

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“Elbows up” was always a campaign-winning but policy-losing strategy. We have all unfortunately become students of the mercurial menace that is Donald Trump, and we know that the U.S. President is less a serious negotiating partner than an obstinate toddler – and you don’t go “elbows up” against toddlers for the simple reason that they are, in a word, insane. Though you might threaten a “time out,” for example, as punishment for throwing their toys, they will retaliate by taking off their diapers and peeing all over themselves and the rug. They won’t care that they’ve soiled themselves during the ordeal, which is why serious negotiation is next to impossible.

So you don’t fight back against toddlers. You handle them. You act like the adult. You wait them out, and try to distract them out of a tantrum: “Say, is that a squirrel on the windowsill?” Or: “Mr. President, I heard you shot a 69 yesterday.”

But selling that approach at a time when the Canadian public was justifiably seething over Mr. Trump’s threats was hardly the way to win an election campaign. People didn’t want to hear about carrots and sticks; Alberta Premier Danielle Smith, who was one of the few Canadian leaders at the time expressing skepticism about retaliatory tariffs, was called a traitor for suggesting there might be better ways to deal with the Americans. But poll after poll showed that Canadians wanted retaliatory tariffs, so party leaders pledged they would respond with exactly that. Prime Minister Mark Carney had the opportunity to deliver.

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But once the election was over, Mr. Carney relaxed his elbows. He flattered the President during his first official meeting with Mr. Trump at the White House, calling him “transformational.” He paused some counter-tariffs on U.S. products in May. He cancelled the digital services tax in response to an ultimatum from Mr. Trump. And now, he has removed retaliatory tariffs on goods compliant with the U.S.-Mexico-Canada Agreement (USMCA), with the exception of those on steel, aluminum and autos.

Many Canadians will see this latest move as a betrayal of what Mr. Carney promised during the election, and that’s fair. Mr. Carney didn’t campaign on managing Donald Trump; he campaigned on fighting him. But the approach he has since adopted is the smarter one – both from a policy perspective and from a negotiating one.

It never made much sense that we were going to stick it to the Americans by effectively taxing ourselves, particularly on random consumer goods that have no real effect on the American economy. Mr. Trump was arguably going to levy tariffs no matter what we did or didn’t do; his belief in them is dogmatic and decades-long, which is why our focus ought to be diversifying and building up Canada’s economy independent of the Americans.

Mr. Carney was not wrong when he said last week that “Canada currently has the best trade deal with the United States,” which is true only because the U.S. exempted USMCA-compliant goods from tariffs. Canada had not been doing the same, so Mr. Carney was right to eliminate the irritant. The government’s plan appears to be one essentially of delay until USMCA renegotiations, which is probably the right move: If the status quo is tolerable, there’s no point in drafting a deal that will be ripped up in a year.

We still have cards to play in negotiations: access to our dairy market, to our digital spaces, aviation industry and so on, and the diversification of these areas would benefit Canadian consumers as much as American business. We also have our tourism dollars – a grassroots form of retaliation that has been arguably more effective in sending a message than the sum of the retaliatory measures our government has adopted. All of these cards will be useful when comprehensive negotiations resume in earnest with both the U.S. and Mexico.

In the interim, it is to Canada’s benefit that Mr. Trump continues to like and admire Mr. Carney, in contrast to his opinion of former prime minister Justin Trudeau. A toddler in charge of a US$30-trillion economy will absolutely take out his personal animosity toward the leader of another country against an entire nation, even if he destroys the trading and financial system his own country established over the course of decades, and even if he also gets his own pee on his feet. You can’t fight a person like that, but you can try to manage him, which means giving him small wins in some areas and standing firm in others.

That’s what Mr. Carney is doing, and what an honest politician might have campaigned on. That honest politician, however, probably wouldn’t have become Prime Minister.