Peering over the cliff of lose-lose trade talks

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In the coldest days of the chill between Canada and China sparked by the 2018 arrest of Huawei executive Meng Wanzhou, Beijing’s then-ambassador urged Canadians to drop their testy attitude and choose “win-win” co-operation.

Chinese authorities had arrested two Canadians, Michael Kovrig and Michael Spavor. They imposed restrictions on Canadian canola. The proportion of Canadians that viewed China favourably had plummeted.

In March of 2021, Chinese ambassador Cong Peiwu submitted an op-ed to The Globe and Mail that blamed Canadian politicians for whipping up anti-China sentiment and told Canadians to get over the spat so they could “board the fast train of China’s development.” China would set the terms, and Canada would suffer less punishment. Win-win.

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That wasn’t on. Not then. The Canadian government had to settle for lose-lose. It didn’t have political licence for grand reconciliation. Canadians wouldn’t accept it.

Canadians’ antipathy to Beijing, recorded in Angus Reid Institute polls, only started to subside last year – in time for Prime Minister Mark Carney’s January, 2026, visit to reset relations – because Canadians’ ire shifted to another bully, Donald Trump.

In that sense, the U.S. is the new China. It imposes punishment, demands concessions to alleviate them, and threatens more. In Mr. Trump’s case, there’s no pretense about win-win. He threatens and demands wins. At some point, Canada has to be prepared for lose-lose.

Now, there’s a hint that Mr. Carney’s government might be preparing for just that. The Globe reported this week that Janice Charette, Canada’s chief negotiator, had told U.S. Trade Representative Jamieson Greer that if Mr. Trump acts on his threat to impose 50-per-cent tariffs on a new tranche of Canadian goods, it would be a “cliff” that could halt negotiations. She warned that the reaction of the public and provincial premiers might leave little room for talks.

It’s come to this: Ottawa now suggests it might have to walk away and suffer what comes. Canada’s economy stands to lose a lot, of course, and the U.S. a little. But the government of Canada is contemplating the possibility that the best alternative to a negotiated agreement with the U.S. might be lose-lose. Now, we are peeking over the cliff.

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That’s obviously not Plan A. Ms. Charette was involved in concessions Canada made before it even got to the table for the latest negotiations. Both sides are in Washington exchanging proposals for a deal.

It’s also not the first time Mr. Trump has been warned that inflamed Canadian public sentiment could turn off talks. In Mr. Trump’s first term, advisers to then-prime minister Justin Trudeau warned White House staff that if the President ever publicly repeated his private jibes about Canada being the 51st state it could be the end of talks, according to Mr. Trudeau’s then-principal secretary, Gerald Butts. Second-term Trump smashed through that guardrail before he was even inaugurated.

Still, there’s an inevitable result to playing win-lose over and over. There has to be a red line, or Mr. Trump will accelerate the game. Public anger – the notion that Canadians are willing to take a Thelma-and-Louise drive off that cliff – is one of the few things that give it credibility.

Mr. Carney backed off dollar-for-dollar countertariffs early in his tenure. He kiboshed plans for a digital services tax last year in an effort to make room for talks. It’s hard for a Canadian government to go toe to toe with the U.S. administration because they can hurt our economy more than we can hurt theirs.

But booze bans really stuck in the craw. They weren’t Ottawa’s doing. Provinces pulled U.S. alcohol from the shelves. Premiers imposed the bans because the public wanted them. Economically, it’s not a huge blow – alcohol was less than 0.2 per cent of U.S. exports to Canada in 2024. But they are a pebble in the shoe that’s really bugging Mr. Trump. Travel boycotts probably do, too.

A recent poll suggests Canadians like that. Most don’t want Canada to give in to U.S. demands; a majority want to levy countertariffs.

For all the political support Mr. Carney enjoys, he doesn’t have unlimited room to make a deal. That is one of his biggest negotiating assets.

There’s danger in going over the cliff, of course. Walking away from trade talks with the U.S. is much riskier than keeping relations with China chilly for a few years.

But there has to be a point at which choosing to lose is a better alternative than negotiating at every threat, or Canada will keep on losing anyway.