There are plenty of politicians claiming to stand up for Canada against the current threats but still few with coherent answers to the country’s big new political question: What will Canada’s wave of economic nationalism become? Nova Scotia Liquor Corporation employee, Justin Burkey, removes wine made in the U.S. off the shelves as part of the province's response to U.S. President Donald Trump's tariff threats in Halifax, on Feb. 3.Ingrid Bulmer/Reuters
Charlie Angus was driving down Northern Ontario’s Highway 11 and his signal kept dropping. But he was still on a roll.
The New Democratic MP was on CNN the night before comparing U.S. President Donald Trump to “Al Capone in his syphilitic period.” He’d been on social media urging Canadians to boycott U.S. products. The response was emphatic.
“That’s a very hopeful sign because it means Canadians are willing to shift buying patterns,” Mr. Angus said from his car. “But the bigger picture is, what are we going to do as a nation to make our economy more resilient? We’re probably going back to pre-1980s standard in terms of having more of a nationalist view of our economy.”
The veteran MP and former punk rocker was always the kind of politician you’d expect to rouse Canadians to rebel against Mr. Trump. But everyone seems to be an economic nationalist now.
Prime Minister Justin Trudeau encouraged Canadians to check labels. Quebec Premier François Legault might reconsider a gas pipeline. Everyone wants to reduce internal trade barriers. Canadians are calling for boycotts of Netflix and Teslas.
There is a return of economic nationalism that Canada has not seen for decades. But will it be a short-term show of defiance aimed at fending off Mr. Trump’s threat of 25-per-cent tariffs? Or a longer-term movement designed to make Canada less dependent on the U.S.?
The impulse isn’t new. Canada has embraced economic nationalism many times, going all the way back to Sir John A. Macdonald’s steep tariffs in 1878 – but later pulled back.
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In 1972, Pierre Trudeau’s government, dismayed by the brief imposition of U.S. tariffs in 1971 and faltering in an election campaign, issued an Options Paper for Canada-U.S. relations. It outlined three choices: the status quo, greater integration and free trade, or diversification and economic nationalism to reduce vulnerability.
Mr. Trudeau’s Liberals favoured the third option, and later brought in a Foreign Investment Review Act and National Energy Program. But that didn’t make Canada’s economy an unshakable fortress.
The tide turned decisively when Brian Mulroney won the 1988 election on free trade with persuasive arguments that competitiveness would bring prosperity. But there had been warnings that the deal would increase dependence on the U.S. and eventually allow the bigger country to demand better terms and undermine Canada’s sovereignty.
“Hawaii first started out with a trade agreement with the United States and ended up as the 50th state,” then-Liberal MP Lloyd Axworthy noted in the Commons in 1988.
Now, Mr. Trump is demanding better trade terms, and having paused his first tariff threat, he nevertheless says he’s announcing tariffs Monday on steel and aluminum. But he is also demanding new border enforcement and threatening “economic force” to make Canada the 51st state.
There are plenty of politicians claiming to stand up for Canada against the current threats but still few with coherent answers to the country’s big new political question. What will Canada’s wave of economic nationalism become?
In fact, all kinds of new questions are being raised. Mr. Angus now wonders about a US$20-million grant the U.S. military provided last year to a cobalt refinery in nearby Temiskaming Shores.
“Would we let China do that now? Or Russia? I don’t know if we should be allowing the American military to be investing in the development of our resources,” he said. “I wouldn’t have said that a few years ago. People would have thought I was an outrageous anarchist.”
Certainly, it would be best to avoid reliving some of the past. Canadian economic nationalism of the 1960s and ‘70s, fanned by Vietnam War-era antipathy to the U.S., centred on fears American ownership of companies would “lead to less control over our own destiny,” said Carleton University historian Stephen Azzi.
But chasing away foreign investment would be madness now.
January’s scramble for ways to retaliate against U.S. tariffs underlined the difficulties of insulating the economy. The idea that Canada might cut off or tax oil exports to the U.S. didn’t only bump into Alberta’s objections; Central Canada’s oil supply is pumped through a U.S. pipeline, Line 5, and back into Canada, so the U.S. could conceivably cut off Canada, too.
On Thursday, Natural Resources Minister Jonathan Wilkinson noted that Line 5 “creates some degree of uncertainty” and suggested Canada might rethink its infrastructure. But that would mean a decision on building a 1,400-kilometre pipeline driven not by export profits so much as shoring up a trade-war vulnerability.
There seems to be a nascent national consensus on building more pipelines to ports, but reducing dependence would also mean passing on proposals to build pipelines to the U.S.
Politicians have treated resources, notably critical minerals, as Canada’s key bargaining chip, but future prosperity depends on more. Economic nationalism in 2025 would have to include technology and a national effort to develop intellectual property.
“That’s where all the money, and power, and security is – in intangibles,” said former BlackBerry co-CEO Jim Balsillie.
The world’s economy is now divided between intellectual-property owners and renters who pay to use it, he argued. Canada is a nation of renters that has failed to fight trade rules that raise the rents while effectively giving intangible assets away, funding research without ensuring Canadians retain ownership.
Still, the front line in trade wars remains manufacturing, and calls for diversifying markets or buying Canadian don’t offer much to an auto sector integrated with U.S. supply chains.
Retaliatory tariffs are a tactic, but the lesson of lasting tariffs left by Macdonald is that they cultivated inefficient industries that were called “miniature replicas” of U.S. counterparts.
And there is a more recent lesson of economic nationalism: preparation. Facing Mr. Trump’s now-delayed Feb. 1 deadline, Mr. Trudeau’s government proposed $155-billion in retaliatory tariffs but said most would wait for 21 days of consultations with industry.
In 2025, those weapons must be ready and the consultation constant in a country now on a trade-war footing at all times.