In both the Nixon and Trump cases, the American president rebuffed Canadian pleas for special treatment based on the 'special relationship' that presidents and prime ministers had celebrated for decades. President Donald Trump signs a document in the Oval Office at the White House, on Jan. 30.Evan Vucci/The Associated Press
U.S. President Donald Trump’s decision to begin tariffs against Canada, Mexico and China on Tuesday represents the most significant unilateral and intentional economic disruption any global leader has prompted in more than a half-century.
Not since Richard Nixon removed the United States from the gold standard in 1971 and imposed an import surcharge has the unbridled power of an American president – indeed, of any top official anywhere – set in motion a transformation of global economics, trading patterns, international relations and potential consumer impact that remotely approaches the effect of Mr. Trump’s imposition of tariffs against the three top trading partners of the biggest consumer economy in human history.
In both the Nixon and Trump cases, the efforts of Canadian prime ministers – then Pierre Trudeau, now Justin Trudeau – to win concessions were flicked away.
Indeed, those affected by the policies were consulted glancingly, if at all, even though they made their appeals to the administration. Mr. Nixon made his decision during a three-day August retreat at Camp David. Mr. Trump made his during his 2024 presidential campaign. Canada pleaded for exemptions in both cases. The country’s biggest trading partner (Canada purchased US$365.5-billion in American goods in 2022) was rebuffed both times by the leader of the country with which it shares a nearly 9,000-kilometre undefended border.
From blueberries to crankshafts, here’s how tariffs could hit Canada in unexpected ways
To be sure, leaders of the world’s dominant country have an outsized impact on the global economy.
A century ago, Great Britain was the world’s most powerful country, and Winston Churchill’s 1925 decision to repeg the pound at the pre-First World War exchange rate of US$4.86 produced similar shock waves. Though Churchill (who was Chancellor of the Exchequer at the time) acted to restore the old order and preserve monetary discipline, and Mr. Nixon acted to break from the old order and escape discipline, each unilateral action unleashed important consequences.
One of the explanations for why these deliberate economic convulsions are so rare – three major ones in 100 years – is that leaders of powerful countries seldom have the moment in history, or even the inclination, to launch a massive transformation of the global economy, if for no other reason that dominant countries are by definition the beneficiaries of the structure of the financial status quo. That is why the Trump decision is so remarkable – and so historically significant.
“The U.S. economy is doing quite well,” said Mark Sniderman, former executive vice-president of the Federal Reserve Bank of Cleveland. “Unemployment is low, inflation is near its long-term goal. We don’t need much now.”
Like Canada, Mexico (with US$324.3-billion in purchases of American goods in 2022) faces a 25-per-cent tariff on most goods, while China (US$150.4-billion) faces a 10-per-cent duty. Canada and Mexico both plan retaliatory tariffs, with uncertain implications for their own economies.
“There are doubts whether tariff retaliation is the way to go, but it’s hard to come up with an economic weapon that punishes one side and not the other,” said Christopher Ragan, a McGill University economist. “It’s not as if there is some deep economically coherent reason behind the Trump decision. This may simply be a case of someone who wants this because he wants it. He’s wrong on almost everything he says about economics, but that’s not the point.”
Mr. Ragan said that the 1971 American departure from the gold standard may not have been a mistake in the long run, but it was disruptive and the global transition to the new economic world order was slow and painful. It immediately remade global trade patterns and transformed global monetary policy – unilaterally and, as Jeffrey Garten, author of a book on the so-called “Nixon Shock” and the dean emeritus of the Yale School of Management, put it, “with enormous force.” Some economists argue that it led to the stagflation – a combination of stagnant growth and inflation – that beset Mr. Nixon’s country for the entire decade.
But in both the Nixon and Trump cases, the American president rebuffed Canadian pleas for special treatment based on the “special relationship” that presidents and prime ministers had celebrated for decades. (Mr. Trump has made no such declarations. Mr. Nixon did deliver an encomium for warm Canadian-American relations but in his 1972 address to Parliament he slipped in 10 ominous words: “Each nation must define the nature of its own interests.” Unknowingly but implicitly, Mr. Trump made good on that warning this month.)
In a 2018 essay in the journal Policy Options, the Canadian historian Jennifer Levin Bonder, now of Western Washington University, speculated why Canada – the only major country that had spent most of the postwar period with a floating exchange rate – was unable to win an exemption to the Nixon import surcharge.
“Possibly because Nixon viewed Canada as unco-operative and a contributor to America’s woes,” she wrote. “Possibly because Canada did not support the Vietnam War. The attitude of Secretary of the Treasury John Connally was that ‘Foreigners are out to screw us. Our job is to screw them first.’ ”