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Don’t Panic: 4 Rules for Responding to Trump Threats
Amid all the geopolitical chaos, the best advice of the year: Don’t panic.
As they dined at Mar-a-Lago on a main course of tough, over-cooked tariff talk, President-elect Donald Trump suggested to Canadian Prime Minister Justin Trudeau — in what the Canadians present later called a joking manner — that Canada might make a good 51st state. Naturally, people freaked out. First, Trump threatens to destroy the Canadian economy with 25% tariffs on everything, and now this? An invasion?
As the breathless coverage spilled over the international media, my colleague Gerry Butts went on Bluesky with a message: “Trump used this 51st state line all the time with Trudeau in his first term. He’s doing it to rattle Canadian cages. When someone wants you to freak out, don’t.”
It is sound advice. Don’t freak out.
Canada is no more going to become the 51st state in the next four years than California, British Columbia, and Oregon are going to break away and become Cascadia. Jokes are not policy.
So what’s up?
Trump is a zero-sum negotiator. He uses the powerful leverage he has to create “I win, you lose” deals. Threats give him a real negotiation advantage before the actual negotiations happen. That is the prerogative of the Big Dog countries, especially those run by strongmen, mercantilist leaders like Trump. Trump threats are simply the expected prelude to any deal. But what is real and what is rhetoric? And how to respond?
Invasion: Rhetoric. Dismiss.
Tariffs: Real. Discuss.
Rule One: Stick With Facts. Don’t get caught up in the torrent of tweets and taunts. Don’t give anything away until the actual negotiations start. Facts are your best friends.
Facts? Really? You might think that since Trump has ushered in the post-fact world, facts are a diminishing currency. That is a dangerous bet. For example, at the root of the 51st state jab are the much more dangerous Trump threats to slap 25% tariffs on all goods coming in from Canada and Mexico. Trump based this threat on what he says is the heavy flow of fentanyl and illegal migrants across the border.
Initially, that threat caused panic. Alberta Premier Danielle Smith immediately went into appeasement mode, telling the CBC’s Power and Politics, “It’s incumbent, I believe, on the federal government, along with all of the provinces, to work together to address those concerns if we want to be able to avoid these devastating tariffs that’ll hurt all of us.”
She’s not wrong that the Trump rhetoric needs to be addressed, which is why Trudeau immediately got on a plane and took his team for a strategic schmooze fest at Mar-a-Lago. Trump prizes personal relationships above all else, so a connection matters.
Rule Two: Don’t Take It Personally. Even though Trump has a long-standing sour relationship with Trudeau — he’s even called the Canadian PM “two-faced” — in Trumplandia, that doesn’t matter. His relationships with people change like the weather in the Rocky Mountains: If you don’t like what is happening, wait five minutes. It will change.
Trump is quick to anger and quick to forget. Can he get over his past irritations with Trudeau? Well, he got over JD Vance comparing him to … that guy who ran Germany in the war. He nominated former rival Marco Rubio, whom he used to mock as “Little Marco,” for secretary of state. Trump doesn’t hold the very grudges he creates, and the best way to get over that is to find a way to make nice, show loyalty, and suck up. That’s what the Trudeau visit was all about. Feelings first. Facts second.
That doesn’t mean giving anything away. And that’s where the facts come in. On fentanyl and border security, the reality is far different than the rhetoric. Canada is hardly a major threat to the US on either issue.
“The facts are hard to deny,” Kirsten Hillman, Canada’s whip-smart ambassador to the US, pointed out on X. “Last year, 0.6% of illegal crossings and 0.2% of fentanyl seizures by US authorities were at the northern border.”
That’s right. Only .2% of fentanyl seizures happened at the Canadian border. If you want to go deeper, check out the latest stats from the US Customs and Border Protection agency, which shows that the problem of fentanyl is largely at the Mexican border, not the Canadian one.
In fact, the CBP’s top official, Troy Miller, has an extensive interview on the US government website about fentanyl coming over the US border. Guess what? He mentions the southwest border 21 times and Mexico specifically seven times. Canada? Not a word. Canada and the northern border are not mentioned a single time. Why? It is simply not a major issue.
Rule Three: Know What Actually Needs Work. On the other hand, illegal migration is a real issue, both internationally and domestically. There is a key section along the US-Canadian border called the Swanton Sector (which covers parts of New York, Vermont, and New Hampshire), and illegal immigration rates there have spiked according to stats from the CBP. But how bad is it? 23,000 arrests were made at the northern border between October 2023 and September 2024. That is up from 10,000 in 2023. Compared to Mexico, where over 47,000 arrests were made in November of this year alone, it’s a trickle (700 were arrested in November in Canada). Still, politically it is an issue Canadians will have to deal with if they want to avoid tariff punishments. Doing nothing is not an option.
Illegal migration is now driving election outcomes in France, Ireland, Germany, and many other places, so this ain’t a surprise. But proportionality matters, and the facts that prove that point can get lost in the storm of threats. It is critical this doesn’t happen.
Rule 4: Follow the Money. There is a high probability that a tariff-driven trade war — or skirmish — is coming very soon, and the facts here will be crucial. After all, high tariffs will hurt the very people Trump represents — namely, American workers. High US tariffs on Canadian goods will raise prices for US consumers and make life for them more miserable. That is a political loss for Trump.
Over 34 US states rely on Canada as their major trading partner, so expect state governors to pressure the White House to ease up on the tariff talk so as not to jeopardize the bilateral trading relationship that sees over US$2.7 billion worth of goods and services crossing the border each day.
To protect that, Canadian leaders will have to think hard about decoupling their trade relationship with Mexico, especially when the new US-Mexico-Canada trade deal gets renegotiated in 2026. The politics of the southern border have always cross-infected the northern one, but if the infection threatens to be economically fatal, there will be a change. The famed three amigos might be reduced to two.
But that is not for right now. Trade deals are not made on social media; they are negotiated face to face, when genuine swaps and deals can happen. Better to build relationships now over dinner, and serve up facts for dessert.
And don’t panic.
It hasn’t even started yet.
Is Mélanie Joly the potential Trudeau successor to watch?
The return of Trump is set to upend US-Canada relations, throwing all kinds of policy futures into doubt, including trade – with Trump threatening a 25% across-the-board tariff – border security, defense spending, and even freshwater management.
Joly will be directly or indirectly a part of it all, largely because of her ministerial portfolio, but also because of her place on Trudeau’s Cabinet Committee on Canada-U.S. relations, which has a full plate. Joly will be busy working with US contacts at the state and federal levels, in the White House and on Capitol Hill, as part of a strategy Canada deployed with Trump during his first term – an approach that more or less worked.
Beyond the immediate challenge of managing that relationship is the prospect of a potential leadership run in which Joly could be up against other heavyweights, including former Bank of Canada and Bank of England Governor Mark Carney, Finance Minister Chrystia Freeland, and Public Safety Minister Dominic LeBlanc.
Trudeau says he will stay on to fight the next election, but he’s down roughly 20 points in the polls, with the federal campaign due to launch no later than next fall. If Trudeau loses that election, he’ll almost certainly resign as leader of the Liberal Party, which could mean Joly would queue up to take on a new challenge – becoming the first woman to lead the Liberals.United States North? Surely, you’re joking
Donald Trump was just joking when he told Prime Minister Justin Trudeau that if Canada’s economy can’t function in the face of US tariffs, it should just become the 51st state. At least that’s what Canadian politicians on the government side are rushing to clarify.
Trump made the comment over dinner with Trudeau at Mar-a-Lago after the Canadian PM went stateside in the hopes of establishing a smooth – or smoother – working relationship with the incoming president.
Canada is desperate to avoid the 25% across-the-board tariffs Trump has promised to introduce. The tariffs would hit Canada – and the US – hard, particularly if Trudeau decides to retaliate, which he almost surely will. Cross-border trade between the two countries is worth roughly $1 trillion a year.
On LinkedIn, former Trudeau principal secretary and current Eurasia Group Vice Chairman Gerald Butts noted that this wasn’t the first time Trump had made the 51st state joke.
“Trump used this ‘51st State’ line with Trudeau a lot during his first term. He’s doing it to rattle Canadian cages,” Butts posted before offering a bit of advice.
“When someone is trying to get you to freak out, don’t. #protip”
Good advice.
Liberals face two showdowns to Trump-proof Canada
As if Justin Trudeau isn’t dealing with enough. His Liberal Party is down in the polls and struggling amid a House of Commons shutdown led by the Conservatives. Now it has to manage an incoming Trump administration intent on extracting as much as it can from Canada.
After nearly 10 years in power, the Liberals are politically weak, and they’re staring down another potential parliamentary showdown over what to do about Donald Trump. Last time, it was overTrump’s 2018 tariffs on Canadian steel and aluminum imports. This time, it’s likely to be about the president-elect's latest tariff threat and border security politics.
What the tariff man wants vs. Canada’s choices
Trumprecentlyannounced an intended tariff policy that made Canadian leaders blanch: 25% across the board — levies that would cripple Canada’s economy. The tariff hike wasn’t a surprise, considering Trump campaigned on it, but the 25% rate was a shock, and the inclusion of Canada disabused optimistic Canadians of any hope that a long, close trade and security relationship between the countries would mean preferential treatment.
The president-elect has said Canada would pay the high tariffs “until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” So Trump has laid out his ground rules, but responding to his demands will be tough.
For one thing, the US Drug Enforcement Agency says that while Canada’s border was a fentanyl threat a decade ago, it’s no longer a core part of the drug-poisoning crisis. Mexico poses a bigger threat — almost 500 times more fentanyl was seized by US Border Patrol coming from Mexico than Canada in 2023.
Still, border crossings are up. Encounters between irregular migrants and authorities along the US-Canadian border in 2023 account for just a fraction of the 1.5 million along the US-Mexico border, but the Canadian numbers are higher than ever. Along the northern land border — the world’s longest at 5,525 miles — border patrol reported 189,000 encounters last year, a 73% uptick from the year before — and nearly 600% higher than in 2021.
The Liberal government has promised to be “very visible” on border policy in response to Trump, adding more staff and equipment, including additional helicopters and drones to monitor the frontier. It is also pledging additional resources for the Royal Canadian Mounted Police aimed at curbing human smuggling across the border. They’ve also launched an online ad campaign — in 11 languages — to dissuade refugees from making asylum claims in Canada.
The Mounties, in turn, plan to send more police to the border if necessary, largely in response to Trump’s plan for mass deportations, which it expects will lead to a surge in illegal crossings. The exact number of pledged Mounties is unclear, though the increase could involve sending cadets to the border. The Canada Border Services Agency says it would need up to 3,000 more officers to manage its share of increased border activity.
Border security poses domestic challenges for Trudeau
Any new Canadian border security plan will cost money the government must come up with as part of its budget in early spring. Since the Liberals rely on support in a minority parliament, they require support from opposition parties to pass legislation.
At least one province isn’t waiting around for Trudeau. Alberta is working on its own border plan, which may include a special sheriff unit to patrol the crossing between it and Montana. But the bulk of any plan will come from Ottawa.
While he can’t implement policy, Conservative Leader Pierre Poilievre — whose side leads the Liberals by 20 points in the polls — can cajole and pile more political pressure on Trudeau. Poilievre’s podium sign during a recent speech read: “Fix the broken border,” and he’s calling for a plan to be presented to Parliament by the Liberals that includes more border patrols, stricter visa rules, a cap on how many asylum-seekers the country accepts, and more.
Trudeau met with opposition leaders on Tuesday to discuss border security and the tariff threat, but Poilievre has political reasons to keep calling it “Trudeau's broken border.” After all, the Conservatives, if their polling holds, are set to replace the Liberals, and the country is due to vote by October 2025.
To pass legislation in the meantime — including the crucial budget Trudeau needs to tighten border controls and keep Trump’s tariffs at bay — the Liberals must win the support of another party in the House of Commons, most likely the NDP, if anyone.
In theory, Poilievre might back a robust Liberal border plan, which Conservatives would claim as their own. But it may be more likely that they’ll reject whatever the Liberals come up with as insufficient and wait to present their own plan if they form a government after the next election.
The Conservatives won’t hand Trudeau a win, says Graeme Thompson, a senior analyst with Eurasia Group’s global macro-geopolitics practice, and will likely respond to the Liberals’ border plan with: “Great, but it’s too late and not enough.” So they’d “vote against it for being too spendthrift and for not doing enough on security and defense.”
That would leave Trudeau with two choices for a partner: the Bloc Quebecois, who are also set on defeating the Liberal government, or the New Democratic Party, who are taking things one day — and one vote — at a time. So far, on the border, the NDP is calling on the government to hire 1,100 new border agents and to expand the agency’s powers.
Thompson says the left-wing Bloc and NDP “might not be the most excited about okaying massive expenditures on border security.”
For the NDP to vote against the Liberals, they’d likely have “to find the budget insufficiently generous when it comes to economic and social supports for Canadians,” Thompson says. But if they simply say the Liberals have gone too far on border and defense spending? “Then suddenly you’re in a situation where the Liberals have lost both flanks, and that could be a trigger for an election,” he adds.
Such a border security showdown could lead to an early election, says Thompson, as the Liberals try to navigate competing demands from Trump and opposition parties at home.
Could a new government fare better?
Should the Conservatives replace the Liberals in 2025, the changing of the guard may give Canada a stronger negotiating position vis-à-vis Trump. Poilievre’s Conservatives, for example, could scrap Liberal policies such as the Online Streaming Act and the digital services tax that irk the US, giving them leverage in negotiations with Trump.
Meanwhile, Trudeau’s ability to navigate tense US-Canada relations could determine his political fate and Canada’s economic future.
Three amigos, or two?
Ford called on Mexico to match Canadian and American tariffs on Chinese imports to stop it being a “backdoor for Chinese cars, auto parts, and other products."
Ford’s province depends on the CA$11.6 billion auto industry, with integrated supply chains across the border. Any threat to that could cause an economic meltdown.
During the negotiations of the new NAFTA — the United States-Mexico-Canada Agreement — in 2019, some Conservative critics of Justin Trudeau’s government faulted the Canadians for making common cause with Mexico in resisting US demands. They are getting an early start this time ahead of the deal’s review in 2026.
“If Mexico won’t fight transshipment by, at the very least, matching Canadian and American tariffs on Chinese imports, they shouldn’t have a seat at the table or enjoy access to the largest economy in the world,” Ford said.
Deputy Prime Minister Chrystia Freeland, who played the pivotal role in negotiating USMCA withUS Trade Representative Robert Lighthizer, has repeatedly emphasized that Canada and the United States are in lockstep on tariffs on China.
Graeme Thompson, a senior analyst with Eurasia Group's global macro-geopolitics practice, says it is hard to know if they will remain in lockstep if Donald Trump’s tariffs on China get too high.
“Given Canada’s dependence on the US market, I think Ottawa will be tempted to do things that only a few years ago would have seemed impossible – including imposing significant new tariffs on China and abandoning Mexico if necessary to preserve its trade and security relationships with Washington.”
Lighthizer, who is expected to return to his job under Trump 2.0, is laying the groundwork for a new tariff policy that would include a 20% tariff on all goods coming into the US.
If there is no exemption for Canada, the policy would also lead to a sudden and dramatic slowdown in the Canadian economy.
Expect the Canadians to remind the Americans that Canada exported $124 billion of oil to the United States last year. Any new tariffs on that trade would increase prices at the pump for Americans, which Trump’s party would pay for in the 2026 midterms.
Trump picks Trudeau critics for Cabinet
President Donald Trump’s credulity-straining Cabinet picks (Matt Gaetz and Tulsi Gabbard, for example) are getting all the attention, but anyone interested in the relationship between Canada and the United States will want to know that two of his lower-profile nominees are no fans of the Canadian prime minister.
Trump’s next national security advisor, Rep. Michael Waltz, has a long track record of critical public comments about Justin Trudeau, suggesting he is weak on China and that Canadians should get rid of him.
Waltz represents Florida’s 6th District in the House of Representatives, which includes Daytona Beach, a frequent destination for Canadian sunseekers, which may explain his interest in Canadian politics.
In May, Waltz shared a post from Conservative leader Pierre Poilievre: “This guy is going to send Trudeau packing in 2025 (finally) and start digging Canada out of the progressive mess it’s in.”
Waltz’s dim view of the Trudeau government may strain security cooperation between the two countries, but Trump’s border czar, Tom Homan, is more likely to be front and center at the conflict point.
Homan, the former acting director of Immigration and Customs Enforcement, or ICE, will be in charge of implementing Trump’s plan to deport millions of undocumented foreigners. Homan is from West Carthage, NY, just south of the northern border, which he sees as a threat because of irregular crossings.
On Monday, he told a local TV station there that he intends to make it harder for illegal immigrants to get into the United States, promising to arrest any who try.
“We’re gonna lock you up,” he said. “So more agents, we’ll end catch and release, and President Trump will need to work with Prime MinisterJustin Trudeau and say, ‘look, you need to enforce the immigration laws you have because this is a gateway to the US.’”
Homan is not a Trudeau fan. “Find a better man,” he said in February. “He’s terrible."
Trump’s chosen deputy chief of staff, Stephen Miller, meanwhile, has called Canada “increasingly authoritarian and despotic” and referred to the PM as “far-left Trudeau.”
The Canadians are bracing for the impact of Trump, beefing up surveillance aimed at preventing crossings in the other direction. The likely result is a more heavily policed frontier, which could slow the trade that both sides rely on.
Trudeau’s former right-hand man thinks Trump 2.0 ‘will be harder’
When Donald Trump shocked the world by getting himself elected in 2016, Gerald Butts was the principal secretary to Canadian Prime Minister Justin Trudeau. He was also a key member of the Canadian team that managed the tumultuous but ultimately successful negotiation of the USMCA, sitting across the table from Trump, Peter Navarro, Steve Bannon, and Robert Lighthizer. He is now vice chairman and a senior advisor at Eurasia Group, which is the parent company of GZERO Media.
This interview has been edited for length and clarity.
You were in the Office of the Prime Minister the last time Trump was elected. How is this different?
Butts: On the positive side, it’s not as much of a shock. The most salient fact of the first Trump presidency was that it happened. So everybody had to have a plan for it happening again. That’s the upside. The downside is you’re going to be dealing with a much more emboldened Trump who’s got a broader electoral mandate and whose ambitions on the economy are much more comprehensive than they were the first go-round. He campaigned in 2016 basically saying to the Great Lakes blue-collar worker that he was going to bring their jobs back from Mexico, the jobs that the Clintons sold to Mexico. And this time he’s got a much more ambitious agenda. It’s rebalancing global trade and a mass deportation plan that will make labor more expensive in the United States.
If you add those two things together, along with probably increased defense spending on an already large deficit, it’s hard to see how those things don’t cause inflation.
It seems odd that inflation is what eroded Biden’s brand, but Trump’s two key promises are both inflationary.
They don’t see it that way, of course. I think that that’s the conventional economic view. And I do think that what will inevitably be an inflated defense budget beyond the PBO’s 3% estimate is also going to be part of this, part of the inflationary pressure that Trump brings to bear.
As policymakers have learned over the past couple of years, because most of them had never had to deal with it before, inflation is a government killer. It’s the grim reaper for incumbents, and it’s mowed down governments of all political stripes all over the world.
Speaking of which, the Trudeau government generally gets good marks for handling Trump the first time, which you had something to do with. A lot of people are worried that it’s going to be a little harder this time, in part because of the relationship between the president and the prime minister. Do you think that that’s important?
Its importance is overblown. I think you’re right that it will be harder. I think that has more to do with the relative political standing of the government and the time of the mandate. If you’re dealing with Trump at the end of your first year, when you’re in the 40s in the polls, with almost a 50% approval rating, that’s one thing, because those two things add up to political capital that you have to invest.
If you’re dealing with it in year 10, when you don’t enjoy those polling numbers, that means you have less political capital to invest. And by definition, Trump is a problem that requires political capital to solve.
They have a very difficult task ahead of them, don’t they?
They really do. I never like to tell my former colleagues how to do their job, because the truth is, when you don’t have all the information they have, it’s hard to make judicious calls. Only they know how prepared they are to deal with undocumented people showing up at a Canadian border point. I don’t know that. Unless you do, it’s hard to say how you would deal with that issue either in the public or in bilateral negotiations with the Trump administration.
I do think that’s potentially the biggest problem they’re going to have to deal with because I wouldn’t say the cross-partisan consensus on immigration in Canada is gone, but it has been weakened by recent events.
On trade, what’s the best guess on whether Trump is going to exempt Canada from a new tariff policy?
I think if the best predictor of future behavior is past behavior, then he will only grant exemptions in return for something. The question is, what can the government offer that he wants that will get that exemption? And I have no idea.
Cross-border trade is high frequency and very large. We’d feel the impact of tariffs sooner, and they’d cover more of our economy than any country except maybe Mexico.
Traditionally in Canada, all governments are afraid — because of the strength of our dairy lobby — to do much about the supply-managed dairy industry. (Canada’s politically powerful dairy farmers have long exerted political pressure to protect their industry from American imports.) In this situation, do you think that that’s the kind of thing the politicians may have to think about in a new way?
That’s definitely possible. I mean, my view is if you’re going to take that kind of risk, get some bigger economic reward for it. We’ve been simultaneously having this conversation yet again about Canadian productivity. And one of the big problems with Canadian productivity is that our firms and sectors like digital services face no competition. So the companies are big, bloated bureaucracies that deliver some of the most expensive services in the world. I’d be tempted to use the crisis presented by the Trump administration to fix some things about the structure of the Canadian economy that badly need fixing.
On the energy transition, all of these big bets on battery plants in the United States are legislated tax credits that Trump cannot get rid of, but the whole managed auto manufacturing sector is losing an enthusiastic ally for EVs in Biden. What does that do to the enormous subsidies Trudeau and Champagne have put on the table for EV manufacturers?
I think that may be literally a trillion-dollar question. That’s going to be a super-challenging file to manage with Trump. It’s coming at a time where the global industry is electrifying, and that process is being led by the Chinese. The Americans think the proper response to that is to create large tariffs that will keep the Chinese out of the American market because they’re kind of running the 1970s playbook. I think the response from the Chinese is going to be: “We don’t need to be in the American market. China is twice the size of the United States auto market, and we’ll take the rest of the world while you guys double down on inferior technology that the rest of the world is turning away from.”
It’s a very complicated situation. They’re already losing out to Chinese and Korean producers, and this could just accelerate that process.
So I’d be very worried if I were working on this part of industrial policy in North America because the companies have a weaker hand to deal with than the government seems to think they do.
And for Canada, there’s an extra challenge in that the Canadian economy is so integrated with the American economy that it may not be possible to set a different course.
That’s right. It may be that the American automotive market, like the American economy itself, is so large that subnational economies like California and New York — which together are larger than Canada — can keep going the way they’ve been going, and the Canadian industry basically follows them. But I think that’s challenging. It’s super challenging for a small but important producer like Canada, especially on the parts side.
Let’s close with a little optimism. What do you see as an upside of this election for Canada?
I think it’s the persistent structural problems in the Canadian economy that are not going to be solved in the absence of a crisis. Maybe Trump is the crisis that the Canadian economy needs to solve those problems.
Trump 2.0 is set to upend US-Canada relations
Donald Trump is returning to the White House. Winning the presidency, along with control of the Senate and possibly the House of Representatives, means Republicans have a long runway for policy reform — which is making Canada nervous as the Trudeau government stares down possible challenges from the next administration on trade, defense, immigration, and more.
Trump’s tariff threat looms large
Sitting atop Canada’s pile of worries is Trump’s threat to impose a minimum 10% tariff — and possibly as high as 20% — across the board on US imports, which would drive consumer prices higher in the US and could cost Canadian trade partners billions. Canada will try to finagle an exemption, but there is no guarantee it’ll succeed.
If slapped with tariffs, Canada may be forced to retaliate with its own protectionist measures, ensuring a trade war. Roughly CA$3.6 billion in goods move across the border daily, and nearly 80% of Canada’s exports go stateside.
But tariffs aren’t the only trade concern. Trump, who views trade agreements through the lens of zero-sum power politics, says he will (once again) negotiate the US-Mexico-Canada free trade agreement, which comes up for review in 2026. During his first term, the Republican leader replaced the North American Free Trade Agreement with USMCA, which caused considerable headaches for the Trudeau government. Canada made concessions during the renegotiation, including increased market access for the US to Canadian dairy and stricter rules of origin for automobiles — criteria to determine if enough North American production has gone into a vehicle to grant it preferential tariff treatment. During the process, Trump called Justin Trudeau “two-faced” and a “far-left lunatic.”
Pressure to spend, border woes, freshwater demands — oh my!
Canada will also face growing pressure from the Trump administration to increase its defense spending and NATO commitments.
Days ago, former US Ambassador to Canada Kelly Craft gave a sense of just how urgent the spending boost might have to be. This summer, Canada released a plan to grow its share of defense spending to the NATO target of 2% of GDP by 2032. Craft says that’s not fast enough. But to hit that target, Canada would have to doubleits defense spending in the next seven to eight years, which might be tricky if the country is hurting from a trade war with its biggest trading partner.
During the election, Trump also said he would begin a program of mass deportations. The costly idea is a stretch, but as the CBC’s Evan Dyer argued in July, even the notion of such a program could cause problems for Canada, with concerned migrants in the US moving north ahead of a possible deportation blitz.
During the first Trump administration, and into the Biden administration, a growing number of irregular crossings were a challenge, leading to a renegotiated border deal in 2023, which tightened border security.
Trump has also talked about going after Canadian freshwater to solve US water shortages. Canada is one of the world’s largest sources of freshwater — with roughly 20% of the global total. Trump has floated the idea of diverting Canadian water to the US, particularly to drought-prone California.
The president-elect recently touted the idea on Joe Rogan’s podcast, and in September, he said British Columbia has “essentially a very large faucet” that could be turned on “one day” to divert water flows south to California. But there isn’t that much spare water to divert, and the flows are already governed by the Columbia River Treaty — another deal that might be up for (further) review.
All public smiles and reassurances, for now
The first Trump administration was rough for Canada, and the Trump-Trudeau relationship was … not warm. In January, Trudeau warned that a second Trump presidency would be “a step back” for Canada. “It wasn’t easy the first time, and if there is a second time, it won’t be easy either,” the prime minister said.
Indeed it won’t. Some in Canada may be hoping the pain won’t arrive until the 2026 free trade renegotiations, but that’s probably wishful thinking.
“The headaches may come much sooner than the USMCA negotiations," says Gerry Butts, vice chairman and senior adviser at Eurasia Group. “Trump’s immigration and tariff policies will put pressure on an already strained Canadian consensus about immigration and cause swift damage to the economy.”
Nonetheless, Trudeau was quick to congratulate Trump on his second win, emphasizing that the relationship between the US and Canada is “the envy of the world,” and saying, perhaps more in hope than in anticipation, that he knows he and Trump “will work together to create more opportunity, prosperity, and security for both of our nations.”
Canadian Foreign Minister Mélanie Joly noted that Canada has been preparing for either a Democrat or Republican “for months” through networks in the US and globally. She was joined by several Cabinet ministers who at least feigned hope that things would work out given the deep ties between the two countries.
Graeme Thompson, a senior analyst with Eurasia Group’s global macro-geopolitics practice, isn’t convinced the rosy picture the Canadian government is painting reflects reality. “Trump doesn’t care about historic ties; he couldn’t care less.”
Thompson says the relationship between the US and Canada is now as fraught as it has been in a century. But, he notes, Canada is still better off vis-à-vis the US than every other country in the world, which is something at least.
How to manage a forever crisis
The challenge for Canada now is navigating the second Trump administration, particularly as the Trudeau government, down in the polls, faces its own election a year from now — if not sooner.
Canadians prefer the Conservative Party leader over Trudeau when it comes to handling Trump, but for now, the job is Trudeau’s. The plan this time seems to be similar to last time: Rather than going all-in on the White House itself, Canada will work with the Trump administration by lobbying statehouses and governors, especially along the border states, along with Capitol Hill and industry. The government has also reestablished its Cabinet committee on US-Canada relations, chaired by Finance Minister Chrystia Freeland.
Thompson says Canada has an advantage in managing the Trump administration because of the country’s deep familiarity with the US and close connections nationally and at the state level. But history and expertise aside, there’s no guarantee there won’t be challenges and pain for Canada — especially on trade and defense — despite the rhetoric.
“It’s really hard to see how this is not more challenging than at any other time,” Thompson says. “I think that for the next four years, we can expect that any grievance or opportunity to take a hard line to gain something that presents itself, that’s the line the Trump administration will take.”