Canada, it appears, has avoided the worst of it. Though previous tariffs on autos and steel and aluminum still apply, Canada, along with Mexico, is not on the list of countries hit hard with Donald Trump’s new tariff announcements.
But Liberation Day is still a dark one. With his slew of Liberation Day tariffs set to launch a global trade war, Donald Trump is giving us his front-runner for the title of “Stupidest Decision of My First 100 Days.” It outpaces many other highly qualified contenders, including even the chaos super-spreader’s show of support for Russian tyrant Vladimir Putin against Ukraine.
In how many ways is Mr. Trump’s gratuitous economic warfare logic-defying? Just as the scourge of inflation had been eased, Mr. Trump’s tariffs, as economists attest, are sure to revive it. The Republicans are the party of low taxes; the tariffs constitute a significant tax hike. Mr. Trump wants to reshore jobs; America’s unemployment rate is already at one of its lowest-ever ebbs.
The U.S. economy was left in good condition by Joe Biden’s administration; Mr. Trump’s handiwork is likely to destabilize it and bring on a downturn, if not a recession. Markets have had their worst first quarter in three years. The Trump tariffs threaten global economic stability. They turn American allies into adversaries.
In his first term, the President negotiated what he called the “best trade deal ever” with Canada. He now claims high tariffs have to be imposed on Canada because of unfair trade deals.
The Mad Hatter is calling Wednesday “Liberation Day.” He got the name wrong. As he barricades his country with trade walls, it’s Confinement Day. Combined with the draconian levies that have already been imposed, the new measures will terminate the free trade and globalization era that started more than four decades ago under Ronald Reagan, Brian Mulroney and other leaders.
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Even though Canada a reprieve on new tariffs, the onus will still be on Canadian leaders to find new markets beyond America. To what degree that is necessary is impossible to predict given Mr. Trump’s quixotic, impulsive nature.
But his trade war may not last a long time. Opposition is intensifying at home and abroad. If his tariffs prompt a big economic downturn before the midterm elections next year, he could well come to his senses and pull back on the tariffs. Democrats could take power in both houses of Congress and force his hand. They could win back the presidency in 2028 and restore stability to the bilateral relationship, as happened under Mr. Biden.
Many scenarios are possible. Ontario Premier Doug Ford has suggested that Mark Carney would be open to a zero-tariff deal with the United States.
In a high-profile election for a seat on Wisconsin’s Supreme Court, Mr. Trump’s candidate for judge went down to stinging defeat, even after his bootlicker Elon Musk poured US$25-million into the race. In two congressional races in Florida, Republicans won as expected, but Democrats cut heavily into their previous margins.
U.S. Senators are finding their voices at last, and attacking Mr. Trump for his farcical use of a national-emergency provision, declared over a small amount of fentanyl crossing the U.S.’s northern border, to justify tariffs on Canada. The Senators are trying to force a vote on a bill to block them (though without a majority in both houses, Mr. Trump could veto).
Mr. Trump’s plan, as an expert group of Canadians on bilateral relations warned Tuesday, will return Canada to a pre-Mulroney world. “But it is a world we have lived in and survived before,” the authors said.
Indeed that was the case. Trade volumes with the U.S. before the 1988 Canada-U.S. Free Trade Agreement were still extremely high. Governments opposed to the Americanization of Canada sought to diversify trade away from the United States. But their experience provides a cautionary tale for Mr. Carney, who says new markets can be found to make up for much of the shortfall the new administration is causing.
John Diefenbaker sought to shift 15 per cent of Canada’s trade back to Britain; that went nowhere. Pierre Trudeau’s third-option policy featured expanded trade with Britain and Japan, the establishment of a foreign-investment review agency and the National Energy Program; none of that worked. The preponderant American dependency remained.
None of those PMs made progress on taking down Canada’s internal trade barriers, however. That’s something that seems possible today, given the Canadianization fervour.
What does not seem possible, as the experts’ report makes clear, is a restoration of trust with the megapower neighbour, even if the tariff war is short-lived. This is not just on account of the reckless President. The rude awakening for Canadians has been to find that almost half the American population continually supports him. That denotes a trend that Canadians want no part of.
Going back more than a century, convergence with America has been the prevailing Canadian storyline. Divergence is now the way forward.