Trump has lobbed a trade bomb at Canada. It may just blow up in his face

Washington: Responding to US President Donald Trump’s tariffs in a calm but emphatic late-night speech, Canadian Prime Minister Justin Trudeau took a moment to state the obvious.

“I think Canadians are a little perplexed as to why our closest friends and neighbours are choosing to target us instead of so many other challenging parts of the world,” he said. “I don’t think there’s a lot of Americans who wake up in the morning saying, ‘Damn Canada, we should really go after Canada!’”

Donald Trump’s trade war with Canada is positioned as anti-drugs. It’s really about something else.Credit: Marija Ercegovac

Ostensibly, the tariffs have been levied to punish Canada, Mexico and China for their role in the global supply of fentanyl to the United States, or to coerce them into doing more to stop the drug trade. Trump authorised the taxes using an old piece of emergency powers legislation after declaring immigration and drug emergencies.

While you could make a case for Mexico, given nearly 10,000 kilograms of fentanyl was seized by agents on the southern border last year, it doesn’t make sense for Canada, with just 19 kilograms of the drug seized on the northern border.

In reality, Trump is using tariffs as an economic tool to raise revenue while he cuts corporate and income taxes. In the process, he may boost US demand for some domestically made products, though economists are sceptical that tariffs will revive manufacturing in the country.

And why Canada? Well, why not?

It is among the US’s top three trading partners, alongside Mexico and China. And like the other two, the US runs a consistent trade deficit with Canada, meaning the value of the goods and services it imports from Canada exceeds the value of the goods and services it exports to Canada. In 2023, that deficit ran to $US64.2 billion ($105 billion), US Census Bureau data shows. The trade deficit was $US152 billion with Mexico and $US279 billion with China.

Trump does not like this. As he stated on his Truth Social platform on Sunday, he views these payments to Canada as a subsidy.

“We don’t need anything they have,” he said. “We have unlimited energy, should make our own cars, and have more lumber than we can ever use.”

Michael Strain, of the free-market American Enterprise Institute, pointed to these comments as a demonstration of Trump’s long-standing mercantilism; he believes in maximising exports and minimising imports. This is an economic theory long out of vogue, but Trump believes in bringing it back and using tariffs to offset cuts to corporate and income taxes.

“[Tariffs] should have never ended, in favour of the income tax system, in 1913,” Trump posted on Sunday. Anyone against tariffs must be controlled by China or corporate interests, he added, “including the fake news Wall Street Journal, and hedge funds”.

So Canada shouldn’t take it personally. But the country has certainly taken umbrage to being caught up in this war on trade; Canadians are naturally wondering why their long-standing status as close neighbours, friends, allies and partners seems to count for nothing.

The short answer to that is: well, it’s Donald Trump.

The president is lobbing this tariff bomb into Canada just as the country heads towards an election, which must be held before October, but could come much sooner. Trudeau has vowed to resign ahead of the poll after nearly 10 years in power; his centre-left Liberal Party is choosing a new leader.

Canadian Prime Minister Justin Trudeau: “I don’t think there’s a lot of Americans who wake up in the morning saying, ‘Damn Canada, we should really go after Canada!’ ”Credit: AP

Canadian politicians across the spectrum are singing from the same song sheet; they hate the tariffs and they want to push back hard. With an election looming, the incentive is there to capitalise on patriotic, anti-American sentiment.

US political scientist and Eurasia Group founder Ian Bremmer said in a video on X: “The timing here is strategically horrible for Trump … [it’s] remarkably unifying for the Canadians.”

Already, the tariffs have not been a diplomatic success.

Crowds at weekend hockey games booed during the US national anthem when Canadian teams played American teams. The tradition continued at a basketball match between the Toronto Raptors and LA Clippers on Sunday, with fans reportedly booing The Star-Spangled Banner before breaking into an uproarious cheer for O Canada.

Ontario Premier Doug Ford ordered the state-owned liquor retailer and wholesaler to stop buying American beer, wine and spirits and remove them from shelves and catalogues. The agency is the only alcohol wholesaler in Ontario, selling nearly $C1 billion ($1.1 billion) of US products a year. “Not any more,” Ford said.

British Columbia, Nova Scotia and other Canadian provinces were following suit. Trump was dismissive when interviewed by reporters on the tarmac on Sunday night after jetting to Washington.

“If they want to play the game, I don’t mind, we can play the game all they want,” he said.

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