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President Donald Trump in the Oval Office on April 23, 2025.
White House claims win on border security but stays mum on tariffs
In response to Trump’s tariff threats, Canada presented a security plan that included drones and helicopters for border patrols. The government began to roll the plan out soon after. In February, it expanded the plan, adopting a “Fentanyl Czar” and listing drug cartels as terrorists under the country’s Criminal Code.
Now, the White House is claiming that there have been “successes” at the border. Press Secretary Karoline Leavitt says “Thanks to President Trump, operational control of the border is becoming a reality, and the administration’s historic measures are yielding huge results,” with apprehensions down 95% from March 2024 levels.
Despite the successes cited by Trump, tariffs on Canada remain in place, including 25% on non-USMCA-compliant goods along with steel and aluminum, and 10% on energy and potash. There’s been no indication from the White House the tariffs are going anywhere, regardless of what happens with the border. That may be a vindication for those who’ve argued that the border was an excuse for tariffs, not a reason. But as the US and Canada face recession risks amid the trade war, it will be of limited comfort at best.
An aerial view shows a truck crossing into the United States over the Cordova of the Americas border bridge, in Ciudad Juarez, Mexico, on April 2, 2025.
Hard Numbers: Border apprehensions plunge, Maplewashing crops up, Fentanyl trickles in, Trump puts “Truth” on the block
7,180: US border authorities apprehended just 7,180 migrants illegally crossing the Southern Border in March, the lowest monthly number on record. The figure marks a twentyfold decline from the monthly average over the past four years as the Trump administration’s sweeping crackdown on undocumented migration continues. A recent poll put popular support for Trump’s immigration approach at 49%, the highest mark of any issue.
6: You may have heard of “pinkwashing,” “greenwashing,” “sanewashing,” or the more conventional “whitewashing.” But now there’s “maplewashing.” As of mid-March, Canadian authorities have busted six companies for fraudulently claiming their products are made in Canada rather than the US. The crackdown comes as the “Buy Canadian” movement, which boycotts American products, continues to grow in response to Donald Trump’s threats against Canada.
0.1: Donald Trump has said fentanyl is “pouring” into the US from Canada. But one man’s “pour” is another man’s “barely perceptible trickle.” Turns out, barely 0.1% of the drug seized along the US northern border last year actually came from Canada, according to government data obtained by the Globe & Mail. The remaining 99.9% came either from Mexico or from elsewhere in the US.
2.3 billion: The truth may be priceless, but Truth Social? That’s a different story. President Donald Trumpsuggested this week that he was open to selling his $2.3 billion stake in the social media company, which is a competitor of X in the microblogging space. The company has lost some 40% of its market value this year amid a wider stock market plunge triggered by uncertainty about Trump’s trade and tariff plans.Air Canada and Westjet aircraft parked at Calgary International Airport, in Calgary, Alberta, Canada.
Cross-border travel down as rhetoric gets harsher
The increasingly intense rhetorical combat between Donald Trump and Canada is taking a growing toll on the American tourism industry, as Canadian snowbirds avoid Florida, day trippers do their shopping at home, and others decide to skip trips to the Big Apple.
In his defiant speech promising to stand up to Trump last month, Justin Trudeau said it was time “to choose Canada.” There are indications that Canadians listened, which is hitting US tour operators and exporters in the pocketbook, as planned.
Not everyone has changed their travel plans, of course, but the numbers are down, flights are getting canceled, and there are worrying signs of increased hostility south of the border, which could further depress cross-border trips.
A touring folk music duo was grilled about their loyalties during a traffic stop, a Canadian who appeared in an “American Pie” video was detained by ICE for 12 days, and the Trump administration has imposed new rules requiring some visitors to register.
Trump’s rhetoric — he called Canadians nasty on Fox News on Tuesday -– and a rising tide of Canadian “elbows up” nationalism — can be expected to reduce typically friendly cross-border interactions, which could harden feelings on both sides of the world’s longest undefended border.
A general view of the Ronald Reagan Building and International Trade Center, in Washington, DC, where the Wilson Center is located.
Canada Institute scrambles to survive
At a moment of historic difficulty in the Canada-US relationship, Donald Trump last week cut the funding of the Wilson Center’s Canada Institute, and he can likely block efforts to save it.
The think tank, which has studied the relationship and hosted events for visiting Canadian politicians since 2001, got a death sentence last week in the same Trump executive order that defunded Voice of America, Radio Free Europe, and Radio Free Asia.
Former American Ambassador to Canada Bruce Heyman, who is co-chair of the institute’s advisory board, is hoping it can be saved.
“It has hosted prime ministers and ministers and leaders of every party in Washington, and it is a platform and a format that I think has been an important component of the bilateral relationships,” he said. “If this doesn't get resolved with the White House, I'm going to work with the Canada Institute to explore alternatives.”
Heyman thinks that the institute, which has relied on US government funding, could find funding from Canadian governments or businesses that want to maintain the link, but that may depend on permission from the US government, which seems uninterested in cooperating with Canada.
Finding funding should be possible, says Laura Dawson, former director, but that doesn’t mean it will be able to continue to occupy the primo real estate off Pennsylvania Ave.
“Lots of organizations would be prepared to step up and support the work of the Canada Institute, but its greatest value is it being situated within the Wilson Center and having such great access to US policymakers being right between the White House And the Capitol Building,” she said. “That is a really premium location and privileged access, and that would be very hard to duplicate.”
For now, the Institute’s many fans will have to wait for the White House to decide whether it wants to finish it off or let it continue its work in another form.
Does Canada need to prepare for a US attack?
Borderline frenemies meet in Quebec for the G7 as Canada begins thinking the unthinkable: how to defend against a US attack.
You know things are going badly when the first thing Secretary of State Marco Rubio has to do on his G7 visit to Canada is deny his intention to invade. “It is not a meeting about how we’re going to take over Canada,” he said, though no one believed him.
Why would they?
President Donald Trump’s mantra includes daily insults, threats, and acts of disrespect toward Canada as he launches his destructive trade war. But for a guy who’s all about high walls and protected borders, he has a very different view of it when it comes to his northern neighbo(u)r, dismissing it as an “artificial line” drawn “with a ruler.” “When you take away that,” he said this week in a moment of empire-building fantasy, “and you look at that beautiful formation of Canada and the United States, there’s no place anywhere in the world that looks like that.”
I have no clue what he means by that whole “beautiful formation” thing, but our hardcore GZERO trivia fans deserve a short backgrounder on the actual formation of the US-Canada border.
Since the Treaty of Ghent (oh yes, I’m going there!) ended the War of 1812, the boundary between Canada and the US has been relatively stable. Sure, some fellow history buffs will point out the border was tested in 1816 by the humiliating construction of a US military battery dubbed “Fort Blunder,” a battery mistakenly built on Canadian soil that had to be moved south, where it is now called Fort Montgomery. But we survived that tiff. Later, in 1842, the Webster-Ashburton Treaty (stay with me here) clarified the border with better surveys, and in 1909, the Boundary Waters Treaty determined how the Great Lakes would be divvied up. Since then, there have been updates and a few disputes, but prime ministers and presidents have happily memorized what might be called the Psalm of the 49th parallel, which starts with the famous line, “This is the longest undefended border in the world.”
So no, these are not artificial lines but ones mutually agreed upon in legally binding treaties. The nub is that President Trump has shown he doesn’t care about treaties, even ones he signed himself, like the USMCA back in 2020. He prefers the law of the jungle, where strong countries take what they want from weaker ones. And Trump wants Canada. He has repeatedly claimed that Canada would not be “viable as a country” without US trade, which is why his stated strategy is to annex Canada by “economic force.”
Trump’s administration regularly amplifies his imperialist sentiments. This week, White House Press Secretary Karoline Leavitt made the case that Canada should become a state to avoid tariffs, while US Commerce Secretary Howard Lutnick went on TV after Ontario Premier Doug Ford threatened to slap a 25% tariff on electricity to three northern US states, saying the best way to get a good trade deal with the United States is to “consider the amazing advantages of being the 51st state.”
It’s no wonder that Prime Minister Justin Trudeau, who leaves office tomorrow, concluded this is about taking over Canada: “What he wants is to see a total collapse of the Canadian economy because that’ll make it easier to annex us.”
When Rubio arrived in Canada for the G7, his Canadian counterpart, Foreign Affairs Minister Mélanie Joly, was not in a joking mood. “If the US can do this to us, their closest friend, then nobody is safe,” she said. Her colleagues in the EU have already absorbed that message, which is why they are talking about a European-run nuclear shield and a massive buildup of their collective defense forces.
It was almost sad to see how the secretary of state tried to spin Trump’s agenda in a bid to lower the temperature. “He says if they became the 51st state, we wouldn’t have to worry about the border and fentanyl coming across because now we would be able to manage that,” Rubio said.
Oh, thanks a bunch.
Annexing Canada is necessary because less than 1% of the illegal fentanyl that enters the US goes across the northern border? By that logic, Canada should annex the US because of the inflow of illegal guns from the US. It is madness, of course, but it’s a madness that is now being measured.
Angus Reid recently conducted a poll on the idea of annexation, and about 60% of Americans oppose it (including 44% of Trump voters), and about 30% would be interested only if Canadians supported the idea. They don’t. In the same poll, 90% of Canadians reject the idea outright, with one interesting exception. “One-in-five would-be CPC voters say they would vote yes, compared to almost zero Liberal (2%), NDP (3%), and Bloc Québécois (1%) voters,” reports Angus Reid.
Still, all this thought about annexation has the defense department in Canada running through scenarios they never imagined possible just months ago: what to do if the US ever attacked.
Trump has questioned the border lines in the Great Lakes, so what if US Coast Guard vessels started to cross that line and test the boundary? What about around the coast or in the Arctic?
Canada suddenly realizes — far too late – that the 2% GDP goal on defense spending is no longer aspirational but urgent. But what kind of military does it need? To find out, I spoke to retired Vice Admiral Mark Norman, the former vice chief of defense staff in Canada and currently a fellow at the Canadian Global Affairs Institute.
I’ve edited the conversation for this article.
GZERO: Some argue the US is still an ally, but others say we have to treat the US as a foe, one that could even potentially attack Canada. How would you describe the situation?
Norman: We’re outside the guardrails. To put it in nautical terms, we’re in completely uncharted territory here. What’s real and what’s not? How do you interpret what we’re hearing? How do we not overreact? There are many Canadians, both in the public domain and in the machinery of government, who I believe are banking on the faint hope clause, if I can put it that way, meaning they think that things will go back to the way they were. I think that is naive and irresponsible going forward. I don’t believe this is sort of a blip in the evolution of geostrategic affairs, specifically as it relates to the Canada-US relationship. I think we’re seeing a significant change — one could argue it’s almost a pivot.
Look at the Ukrainian situation and the public abandonment of European security. Then look at the ongoing threats of annexation as it relates to Canada.
Canadians have grown up far away from the kinds of threats to physical security and other types of security that many of our global neighbors have had to deal with. We have lived under the umbrella of the United States, and we have taken that for granted. There is some substance in the complaints that are being levied against us. The challenge is the nature of both the threats and the ongoing actions, and what that potentially means for us. I am concerned that the nature of Canada-US relations is changing fundamentally.
What could it look like?
There are two scenarios here, and there is risk in oversimplifying this ... One scenario is that this is simply transactional. This is Trump’s attempt to try and get us to do a bunch of things to up our game, our spending – to do more and contribute more. One could argue this transactional approach, this negotiating tactic, will lead to some magic tipping point at which everything falls into place, and we have some sort of agreement. That is scenario A.
Scenario B is the most threatening scenario. We’ll call it annexation. Not sure what that looks like, specifically, but we take this to mean that in some way or form, the United States is exercising a significant degree of control over what we would have traditionally seen as sovereign decisions made by Canada.
From a military perspective, much of what we would need to do is actually independent of those two scenarios. So we either have to step up and satisfy a whole series of unclear expectations on the part of the current administration, everything from border security to Arctic security to all these other things, or we’ve got to up our game, because if we don’t, then we risk the threat of some sort of loss of control.
I have difficulty imagining scenarios whereby Canada would be invaded or that Canada could respond to something like scenario B. I think there will be coercion. I think there are lots of tools left in Trump’s toolbox to coerce us and threaten us and basically put us off-balance and cause us to react. What’s interesting is we’re either on our own, at which point we need to do a hell of a lot more than we’re doing now, or we’re in the process of being shaken down, which also means we need to do a hell of a lot more. Those will be preconditions for what would be even the most benign and benevolent version of events.
So Canada has to rebuild its military one way or another?
Let’s start with national capacity, domestic capacity, and industrial capacity. One of the unintended consequences of the Ukrainian conflict has been the incredible growth in Ukrainian domestic capacity, notwithstanding the fact that they’re waging what many argued was an unwinnable war against a superpower with one of the largest armies in the world. A lot of that has to do with innovation, engineering, and agility, which has now made them a significant player in the European defense industry. It is particularly relevant to the Canadian situation, where a lot of our military capacity is tied to US technology. I think this is a huge vulnerability for us going forward, even if we were to find ourselves in scenario A. We cannot and should not rely on others for a lot of the stuff. Now, we cannot do everything, but there are enormous alternate sources of technology in our European and Asian partners. And we have to do a much better job of leveraging our own industrial capacity. What are we really good at? We’re really good at things related to AI, acoustic processing, and communications. We’re very good at things related to satellite technology. We have a number of emerging capabilities in unmanned systems, be they airborne or surface, and even underwater capabilities. We have enormous advantages in terms of understanding the technical challenges of the Arctic. It is our backyard. In military terms, we are good at combat management systems. So think of the computer architecture that allows you to do what you need to do from a command and control perspective.
Is the point that Canada will have to build a new type of military faster, cheaper, and less dependent on the US and use more innovation?
Canada will definitely need to explore alternative solutions, like drone capacity, to address the challenges of defending vast territories. But it will still need icebreakers, a navy, and tanks. It’s a new world. One other factor here. You need to be able to deploy and sustain your forces. A lot of people don’t think that’s sexy, but the reality is, this is all about logistics, and this is all about sustainment, which means you have to have an industrial base. You look at the kinds of distances that we’re dealing with in Canada — these are massive distances. These are not insignificant challenges, and we’ve never really dealt with them. You need to be able to control what’s going on. Do you just simply want to monitor what’s going on, or do you want to be able to influence what’s going on? This is where you get into the pointy ends, the more kinetic discussions around what are the hard capabilities that you need and don’t need, but you have to have all that other stuff sorted out first. The reason the Ukrainians are so effective in these asymmetric conflicts is because they figured out a lot of that back-end stuff. Canada needs to do that too.
Canada at risk: Janice Stein warns of erosion of sovereignty under Trump
Janice Stein, founding director of the Munk School of Global Affairs and Public Policy at the University of Toronto, is one of Canada’s most important public intellectuals, with decades of experience working at the highest level with policymakers in Canada, the United States, and around the world.
GZERO’s Stephen Maher spoke to her on March 5, the morning after Donald Trump’s address to Congress, to discuss the president’s annexation threats and Canada’s economic, political, and military vulnerability. This interview has been edited for length and clarity.
Maher: It appears that Canada is in a position of great vulnerability because of the new relationship between Washington and Moscow. What do you think?
Stein: Canada faces a challenge of unprecedented proportions. The vulnerability comes because we share a continent with the United States and Mexico, and there are enormous disparities of power between the United States and its two neighbors. We live next door to the most powerful dynamic economy in the world and the strongest military in the world. Geography is not destiny, but it comes very, very close.
You look at the near neighbors of other great powers, and you get a sense of what it’s like to live next to one of these giants in a period where they are looking outward, acquisitively at their neighbors. That’s what we’re seeing now in the Trump administration, and that, more than anything else, is what makes it risky for us. If there were no softening of US attitudes toward Russia, but Trump still talked about Canada and about Mexico the way he does now, we would still be at enormous risk.
I have been talking to experts about Trump and the Canada relationship for a long time, and they have all been wrong, and for good reasons, but they have all been suffering from normalcy bias. Why?
All of us had some normalcy bias, including me. There were boundaries to how far I thought Donald Trump would go, and I was wrong. He’s gone much farther than I thought he would go. So it’s important to think about the worst case.
What would the worst case be for Canada? A version of these 25% tariffs would stay. There would be tariffs on top of the 25% on aluminum, steel, and lumber, and then layer on top of that, whatever this administration means by reciprocal tariffs, and the president was explicit in his address to Congress that that would include and account for non-tariff barriers, such as, for example, the Goods and Services Tax.
Well, if you do the math, you can get up to 50% or 60% without trying very hard. That would deliver a crushing blow to the Canadian economy. And that’s what the prime minister was warning about when he was talking about the use of economic force to make us weak and vulnerable.
I don’t think we can take that kind of catastrophic scenario off the table. We need to think about it, and we need to do our best to make ourselves as resilient as possible against it, although it’s a tough hill to climb.
Do you think we will be forced to accept new limits on our sovereignty in the next four years?
Sovereignty is an evolving concept. There’s mythical sovereignty, where the state has full control over its territory and the population that lives within its territory. But it’s never been absolute, and it waxes and wanes. We signed the auto pact long before we signed the free trade agreement. So sovereignty is always a question of degree. When we had the free trade debate in this country, we debated whether we would be able to retain cultural sovereignty and sovereignty over health care if we agreed to a much deeper trading regime. We’ve managed to do that. Are we as sovereign today as we were in 1980? No, but nor is anybody else. So yes, I can see where we are going to have to partner in different ways — and that word is well chosen on my part — we’re going to have to co-invest in different ways. We’re going to have to co-produce in different ways, because we live next to the most dynamic economy in the world that is led by a president who thinks in regional terms, who thinks big powers make the rules and their near neighbors take the rules.
I keep thinking about Thucydides, who wrote, “The strong do what they can, the weak suffer what they must.” Is that Canada’s position now? Will we have to suffer what we must?
Yes, because we live next door to the United States, which has a president who talks like President McKinley at the end of the 19th century, who is openly aggressive toward near neighbors. I think the prime minister was right when he used the words trade war, and the president said it himself: I will not use military force, but I will use economic force to coerce you.
It is economic warfare. We have to understand that, and that’s what all of us got wrong, including me. We expected a version of this, but what we did not anticipate was that it would be framed within a broader context of economic war, and that became apparent during that first trip to Mar-a-Lago when Trump talked about Canada becoming the 51st state. And he understands it’s not coming through the use of military force and formal annexation. But, again, pay attention to what he said Tuesday night about the Panama Canal and Greenland: We’re going to do it one way or the other.
He is not quite saying that about Canada.
It is not in the same category. And that should be some small comfort to all of us. I listened very carefully to the speech. We are not in the category of Panama and Greenland.
I was impressed by Claudia Sheinbaum, who I thought, in contrast to Trudeau during the first tariff showdown, was able to keep her cool, and she didn’t have regional leaders undercutting her.
Let me talk about the challenges leaders face when they deal with Donald Trump because a courageous leader like Volodymyr Zelensky found himself in an absolutely unprecedented situation in the White House [last Friday]. So let’s talk about the difference between Zelensky and Sheinbaum. Sheinbaum has exercised iron self-discipline. She does not rise to the bait. She’s very deliberate. She makes it absolutely clear that Mexico is going to retaliate, but she always puts some time between when she says — in very deliberate, very controlled language — we are going to retaliate, and the date at which that retaliation is going to take place.
Zelensky was deliberately baited in that meeting, and he, tragically for him, took the bait and argued with the president and with the vice president. And very interestingly, there were two reactions in Canada to that. One was, “I’m really glad that somebody had the courage to stand up to that bully.” That is a very human reaction, and it actually channels the anger that Canadians are feeling toward Trump. The other was, “What a disaster. What a disaster.” He needed to sit there stone-faced and not rise to the bait because there’s a larger picture here.
That’s an object lesson for all Canadian leaders going forward, and it’s going to be very hard on the Canadian public. The outgoing prime minister did that for four years, with one exception, in Donald Trump’s first term. All of us are going to have to watch our leader, whoever it is, sit there stone-faced, not rise to the bait, and think about the longer term and what has to be done for this country, and not provide the emotional satisfaction of arguing back, even though it’s entirely justified.
So, in the election ahead, Canadians are going to have a choice between someone (Pierre Poilievre) who gets MAGA and might be better able to work with the Americans, and someone (Mark Carney) who will likely have more of a focus on maintaining sovereignty. Do you think that that’s the central question?
I think a ballot question is: How worried are you about Donald Trump? If you’re reasonably sanguine, and you have faith in American institutions, and you see this nightmare as a two-year thing, you’re in one world. And I would suspect then you’re going to consider Poilievre on the basis of the campaign on which he ran before Donald Trump. And you’re going to say, “Is this important to the Canadian future?”
But if you’re really worried about what Trump is going to do, if you’re scared, if you’re deeply worried about the future of the economy, you’re going to say, “Well, there’s a candidate who spent his life managing crises in the economy.” I think it’s going to come down to that. I think it’s all about the level of fear and anxiety.
President Donald Trump faces Prime Minister Justin Trudeau, with President Ronald Reagan and Prime Minister Brian Mulroney at the bottom.
Donald Trump is making Canadian nationalism great again
Canadian nationalism is surging as Donald Trump threatens the country with tariffs and annexation through “economic force.” Struggles over free trade and talk about Canada becoming the 51st state aren’t new; in fact, the history of US-Canada trade conflicts and worries about Canadian sovereignty go back more than a century. But this time, things may be different.
To understand the roots of Canadian nationalism and both the parallels and differences between past and present US-Canada battles, GZERO’s David Moscrop spoke with historian Asa McKercher, Steven K. Hudson Research Chair in Canada-US relations at St. Francis Xavier University in Nova Scotia. This interview has been edited for length and clarity.
David Moscrop: Since Donald Trump started talking about making Canada the 51st state and threatening tariffs, there’s been a surge in Canadian nationalism – as if the country became a nation of flag-wavers overnight. Are there other times in Canadian history when an external force or event has produced a nationalist wave?
Asa McKercher: The previous instances where free trade has been an issue have spurred a lot of this kind of nationalism. The 1911 election, very famously, was about free trade. The Wilfrid Laurier government had signed a free trade agreement with President William Howard Taft, and this led to a huge nationalist panic among Canadians – an anti-American nationalist panic driven by worry that the Laurier government was going to sell us out, that they were annexationists. That wasn’t helped by the fact that the incoming speaker of the House of Representatives, a guy named Champ Clark, made a statement after the treaty passed through Congress but got held up in the Canadian Parliament. He basically said he couldn’t wait for the stars and stripes to fly over British North America. That stirred a lot of nationalist, anti-American sentiment. The Laurier liberals were portrayed as sellouts.
Also, the free trade election of 1988 stirred up a lot of passions. Brian Mulroney and the Conservatives were portrayed as American sellouts. There’s a Liberal attack ad that you’ve probably seen of a Canadian and an American diplomat meeting in a shadowy area, and the American diplomat is scratching out the border between Canada and the United States. Prime Minister John Turner talked about Mulroney becoming governor of the 51st state.
So we’ve seen that kind of nationalism during elections before. What’s interesting about this moment is it’s the pro-free-trade side that is full of nationalism in its wings as opposed to the anti-free-trade side of those other two elections.
Why have we seen that inversion? During the 1980s battle over free trade, the concern among many nationalists was that free trade with the US would be the death of Canadian sovereignty, the death of Canadian culture, the death of Canadian economic prosperity — that Canada’s future depended on resisting free trade. Now, most of the nationalist sentiment seems to be spent on preserving free trade.
We took a bet on free trade. We defended free trade against the thickening of the border after 9/11. We defended free trade in the USMCA negotiations. We made ourselves way more dependent on America. In 1988, the US counted for roughly three-quarters, or more depending on the year, of our trade. But the trade volume in 1988 was $100 billion a year across the border. Now it’s almost a trillion. So the extent of dependence makes that inversion happen. So we had a less continentally reliant economy in 1988, and now our economy is totally reliant on continental trade.
Do you think Trump’s aggressive approach will generate another round of deep Canadian introspection and assessments of what makes the country different from the United States?
I think so. We’re already seeing an uptick in nationalism. But people have also long said we are too focused on America. Take health care, for example. We have big problems in our health care system. Maybe we shouldn’t mimic the American health care system, but maybe we should look at other countries with a social welfare system that might have better health care. But we’re so focused on America as our twin that sometimes we look at them as a focal point for comparison to our peril.
Is the wave of Canadian nationalism we’re seeing deep and stable? Will there be a persistent solidarity there that can carry the country through the tough times that may be ahead? Or do you think it’s superficial — or, worse, a potential source of division?
I mean, we couldn’t wear masks for three years without ripping each other apart — not even three years. So I don’t know what will happen if the tariffs go through … and we see real job losses, we see real industries impacted, particularly on a regional basis, and maybe we see some carve-outs. If autoworkers face a 100% tariff, as Trump is talking about, we could see some real anger in Southern Ontario. But if there are exceptions, where Alberta oil only gets a 10% tariff – which I think would bring it mostly up to market prices, since it gets a subsidized price – people in Ontario might say, “Well, maybe we should put an export tax on that. Maybe we should cut off oil exports.” And that may be the makings of some big challenges to national unity.
I would like to think that this rally-around-the-flag effect is real. I think we’re seeing a reflection of that in the reviving Liberal fortunes in the polls federally. But I don’t know, once the rubber hits the road, once the tariffs actually go through, and once we potentially have hundreds of thousands of people thrown out of work or shifts cut or hours cut back, then yikes, I don’t know what will happen.
But I think the smart leader would be the one who can focus that anger, if it happens, on the external person who’s doing this — it’s a single person who’s doing this — in the White House.
Thinking about that single person and the conflict between Donald Trump and Justin Trudeau, who are not fans of one another, we’ve seen clashes between presidents and prime ministers before: Lyndon Johnson and Lester Pearson, Richard Nixon and Pierre Elliot Trudeau, George W. Bush and Jean Chrétien. Does personal or policy conflict between a prime minister and president generate domestic support for a PM?
Certainly in a few of those cases, yes. If we can remember back to 2003, there were a lot of people rallying behind the Liberals and the Chrétien government. There were also people like Wayne Gretzky, Don Cherry, Ontario Premier Ernie Eves, Stephen Harper, and Stockwell Day who blasted Chrétien for not taking part in the Iraq War, but there were also people rallying to his side. But I would think if we were to look, the corporate media was pretty critical of Chrétien for not reigning in those people calling Bush a moron and such. So, there is a desire to support a prime minister, but not always.
For instance, in the 1960s, Progressive Conservative Prime Minister John Diefenbaker fell out with President John F. Kennedy over nuclear weapons and the Cuban Missile Crisis, but the Liberals won the next election. Why did people vote for the Liberals? Well, there were a number of issues. The Diefenbaker government was pretty out of wind by that point, and the Liberals were talking about dealing with Quebec and social programs, but the Americans pushed Diefenbaker around, and Canadian voters had a favorable view of Kennedy.
What makes this time so different is just how mendacious Donald Trump is. It’s not just the tariff issue. It’s not just the border or the 51st state comment. It’s the belittling, the calling Justin Trudeau “governor” incessantly. It would be one thing if Trump and Trudeau simply disagreed, if Trump said, “Let’s have more defense spending or action to combat fentanyl trafficking.” But the fact that he’s trying to bring about the ruination of our country and talking about annexation — it raises national hackles and makes people excuse the prime minister’s pretty bad handling of a lot of files.
Sometimes we look to history for a precedent or perhaps even a playbook, something we can follow to navigate the moment. Does that exist this time around, or is the Trump threat unprecedented?
We haven’t really faced a hostile American president in over a hundred years. Nixon wanted to impose tariffs, but he withdrew them eventually and actually said, “Isn’t this what you guys wanted?” So, we haven’t really faced a hostile president in a long time, and I think that’s what makes this different. And Trump is also hostile to democratic countries around the world, so we’re not on our own in that sense.
In terms of a playbook, we’ll see if the Team Canada approach works. We’ll see if it works when tariffs go through and we place our own tariffs. And we can lobby members of Congress or the state governors and say, “We’re bringing mutual economic ruination upon us. Can you bring pressure on the White House?” Maybe that will work.
But I’m almost tempted to think we should abandon the Team Canada approach and maybe find, I don’t know, whatever diplomats we have dealing with Saudi Arabia or Turkey, diplomats dealing with authoritarian governments. They might be better situated to deal with a Trump administration if we deal with them on the same level that we deal with authoritarian countries. That may be the playbook we need to dust off instead.
Can Canada quit the United States?
On Monday, President Donald Trump promised to hit Canada and other countries with 25% tariffs on steel and aluminum. The tax is set to come into effect on March 12, the same day Trump’s 30-day pause on across-the-board tariffs against Canada lifts.
As the US’ biggest source of aluminum and one of its top sources of steel, Canada stands to be hurt more than any other country by the president’s new metals tariffs. Prime Minister Justin Trudeau and his government are rushing to find ways to wriggle out from under the tariffs, but a national discussion is also underway to find ways to diversify the country’s trade relationships and to protect the economy from what’s seen as an increasingly unreliable partner: the United States.
To get a sense of what Canada could do to fight back against US tariffs, while developing a long-term plan to build economic resilience, GZERO’s David Moscrop spoke to economist Kevin Milligan, director of the Vancouver School of Economics at the University of British Columbia. This interview has been edited for length and clarity.
David Moscrop: How productive would Canadian counter-tariffs be against the US?
Kevin Milligan: The US economy is 10 times the size of ours. I've heard politicians and some others talking about dollar-for-dollar retaliation. The problem with that is our dollars don’t go very far when we put tariffs on their goods. To give an example, imagine we were to do one of the products that Canada loves to think about, like Harley-Davidson motorcycles from Wisconsin. Imagine we put a big tariff on them, and the sales to Canada dropped by half. What share of Harley-Davidson’s business overall comes from sales to Canada? Like 5% or something like that? Maybe, maybe 10%. So they’re losing a couple of percent off of their overall sales. They’re not going to be happy, but it’s not going to devastate them. In contrast, there are many businesses in Canada that sell almost everything they make to the US. When they’re faced with a big tariff, they will lose substantial sales, and it’s not going to be a couple of points off the top. It’s going to be existential to them. So that’s where the magnitude is different.
When we tariff US goods coming into Canada, that means that the cost of those goods coming into Canada goes up for Canadian consumers. And so we will be putting taxes on ourselves to make a small change to Harley-Davidson or whatever we tariff. So that’s where the counter-tariff is not something that I think will be super effective. It’s not to say we don’t do it. We have to strike back. This is an attack on our sovereignty, on our economy, and so we have to strike back and strike back hard. I’m just not sure that broad counter-tariffs are the way to go.
What about something like export controls on critical minerals or energy?
This is most easily understood in the context of oil. I’m not suggesting we do it for oil — there are a lot of political tensions within Canada when it comes to oil — but it is very tangible to think about this. Imagine the oil industry got together with the government and agreed that we’d purposely throttle both production and exports to the US. So, instead of 100 barrels a day, we’re now going to export only 50 barrels a day. If we did that, what happens? There are fewer barrels, and there are lots of people bidding for them, so the price goes up. The government doesn’t get the revenue. The industry keeps the revenue. They’re going to get less than they would’ve if they sold the full 100 barrels, but the revenue goes directly to the producers, which is better than washing it through a government program.
So you don’t have to worry about export taxes or anything else. You just do a curtailment in conjunction with the industry — though the government may have to organize that — but that just keeps the revenue in Canada by shrinking the amount of oil we export.
Trump’s threats have Canada talking about removing barriers that keep goods from flowing east to west within Canada. But breaking down internal trade barriers, primarily regulatory barriers, is tougher than people think. What are those barriers, and why are they so persistent?
There has been a lot of talk now and before, but especially now, on interprovincial barriers to trade. These aren’t like tariffs where if you buy something from Saskatchewan and you’re in Alberta, you have to pay some big tax. These are mostly regulations. And the thing about regulations is it’s kind of hard to tell sometimes which are really important regulations that keep us safe and which ones are designed for feather-bedding for some interest group.
When you dig in, what does it mean to have uniform standards across the country? The thing is that provinces are different. There’s a reason we have different regulations and different provinces. In British Columbia, we have these mountain highways where it really matters if you have snow tires. It really matters if your truck is too long and can’t snake through a mountain pass. In contrast, if you are from Saskatchewan or PEI carting a big load of potatoes, it’s a different set of regulations you need to worry about. Can you clean the truck so the potato worm doesn’t get in or out of a province? That’s a big deal In PEI, but it’s maybe less of a deal in other provinces.
One way to go forward on that is to have a mutual recognition system that if you’re licensed in one province, then other provinces will recognize that. So there’s kind of like a minimum standard that everyone has to meet. And then if a province wants to have special rules for mountain highways or potato bugs, you can do that. The challenge there is defining that minimum standard, which means 10 provincial governments, maybe three territorial governments, and the federal government all sitting around and figuring out what the minimum national standards need to be for tire size and snow chains.
What about external trade diversification? It’s easy to talk about more trade with Europe, South America, or China. It’s harder to do it. Why doesn’t Canada trade more with countries other than the US?
There are a couple of reasons for this. One is that economists have something we call the gravity model of trade, where the geographic distance between countries is a really good predictor of who trades with whom. One aspect of it is transportation costs. Another aspect of it is culture, language, legal similarities, and things like that. Personal ties. It makes it easier to trade when you have kinds of business contacts that are easier to make — when there are cultural, linguistic, and personal ties.
Thinking tangibly, I mean, we are not building a pipeline to Italy for oil, right? We’re building it to Cushing, Oklahoma, where they trade all the oil. That’s a geography constraint. We can ship oil to the coast and put it on the ships, but that gets prohibitively expensive for providing oil to Italians versus wherever they might get it already, so that’s it. The trade costs are going to be a big reason for why our trade is the way it is.
If we want to diversify, I think it’s a good goal. We have an unreliable economic and political partner to the south of us. This is a big deal. This is a hugely important deal. We want to make sure that we decrease our reliance on them. I’m fully on board with that strategy, but we have to be a bit modest in what we think we can get out of that because, at the end of the day, our oil is almost surely going to be going to the US.
Are we so dependent on north-south trade that we just have to find a way to manage this relationship no matter what it might be?
I think that’s the core truth of this. We’re not putting up a big wall at the border and not trading with the US. That would be immiserating for us. What the president says I guess is true: They don’t literally need our oil, our cars, our software, or whatever we might want to trade with them; they can get along without it. But boy, they’d be paying a lot more for it from other sources. We can offer them cheaper stuff they can get elsewhere. At the end of the day, this is about managing what all of this looks like going forward. We have to be extraordinarily wary of signed agreements and giving up stuff for a signature. I’m very wary of that because that signature has shown to be worth zero. This is an amazing choice that the American government is making and giving up all of its international credibility. But even nations at war will trade with each other because there’s just a fundamental economic logic that when something is way cheaper brought in from abroad, that just is better for everyone to allow those trades to happen.
Would a Canada-first industrial strategy be a non-trade measure we could consider?
It definitely could be. You can think about industrial strategy as, say, subsidizing a pipeline. That’s industrial strategy. We’ve had a battery strategy over the past few years for EVs. I’m not quite sure where that sits now, but these are big bets that we could take. I’d be most keen on ones that involve public infrastructure for export. That could be actual tangible infrastructure. It doesn’t necessarily mean pipelines. It might mean improving our ports and things like that. But also intangible infrastructure like our trade missions abroad, like export encouragement for services and electronic services and software and apps and all of those good things that are way easier to trade across borders that don’t really matter as much for geography.
How much, if any, of the Canadian strategy should be waiting Trump out, hoping that Americans feel the pain – like with steel and aluminum tariffs, which are going to be expensive for US consumers — and say, “OK, enough, we need to change this, drop the tariffs”? Or how much of this is about just waiting for someone better the next time around?
You can think of 2016 as an accident. I don’t know that we can think of electing Mr. Trump twice as an accident. I think this is a permanent state of affairs. I think we have to think about it that way. But an important element of your question is: “What strategy should we have?” I think that we should be upfront and ask whether we should do dollar-for-dollar tariffs. For those who support that, we need to ask, what is your strategy of action? What do you expect that to bring us? I don’t think it will bring people what they think. We need to think of strategies that will put pressure on the White House right now. I don’t think that is decreasing Harley-Davidson sales by 1%.
I think there are other measures we should look at. It can be trade measures. There are things that we have that are very rare in the US, that will mess up their production. Aluminum is one of them, and they just self-owned on that. Those are things we should focus on.
We should also be very open to nontariff barriers. What I mean by that is rather than throwing a tariff on US goods, which again could be part of the mix, we could talk about intellectual property reforms. I’ve heard people talk about not allowing US coal to be exported through BC. There are a ton of nontariff measures, regulatory measures, and other things we could do. There could be diplomatic measures. We could expel diplomats. I’ve seen people talk about not allowing the US ambassador to be sworn in. We could shut off electricity to New England for 24 hours.
Maybe some of these would work, and maybe some would not. But being creative and finding things that cause pain to the US is the point, while minimizing pain to us.
An important element of strategy here is to understand we are not in a regular old tit-for-tat trade war. Too many people are thinking of it on that small playing field. This is a much broader thing. Certainly, Mr. Trump thinks about it as a much broader thing, and I’m mystified that so many Canadian pundits — the Canadians themselves, I think, get it — are still thinking, “Oh, what tariffs should we put on them to counter their tariffs?” Tariffs are just a tactic in a broader strategy from Mr. Trump. It should be the same for us.