Trade Talks a Game of Duck, Duck, Canada Goose
The U.S. and Canada account for an awful lot of trade, so it’s in the best interest of both nations to iron out a better trade deal than the status quo.
In happier times, mere months ago, the United States was beating Canada in Winter Olympics hockey. Now, we’re tussling with our northern neighbors over trade, and it’s not going nearly as well.
Bilateral trade talks collapsed over the weekend. According to The Washington Post, “Canadian Prime Minister Mark Carney quit the negotiations rather than accept a lengthening list of U.S. demands.” That meant President Donald Trump’s 50% tariffs on various Canadian goods took effect on Saturday. Those tariffs were imposed under Section 338 of the 1930 Tariff Act — which no president has used to impose tariffs before — and came in response to Canada’s own retaliatory tariffs. Carney not only refused to rescind Canada’s tariffs but also promised further retaliation beginning in two weeks.
So did Trump, posting on Truth Social, “Canada has been ripping off the United States of America for years. … NOT ANYMORE! On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%. Build in the U.S. and there are ZERO TARIFFS.”
More than 70% of Canadian exports go to the U.S., and the two nations do nearly $900 billion in trade annually, so tariffs hurt. In January, our Douglas Andrews noted, “As a trading partner, Canada needs the U.S. a lot more than the U.S. needs Canada. And Carney knows it.” So does Trump, who says it’s “foolish” for Canada to ramp up a trade war.
Yet recall that Carney was elected specifically to challenge Trump. Weary of the president’s repeated jokes about Canada becoming the 51st state, Canadian voters erased the Conservative Party’s 20-point lead, choosing Carney and the Liberal Party instead. That’s also likely a factor in these negotiations.
Trump must think so, too, because he made the dig again after talks fell apart. Taking to Truth Social, he said, “Canada wants the benefits of being a State, without being one!!!”
Carney also knows that Trump’s negotiating style is essentially to exhaust his “opponents” with demands and retractions. Instead of becoming weary, Carney called Trump’s bluff. “We’ve recognized from the start that America has changed,” Carney said. “We recognize that sometimes, its signature is written in pencil.”
The two nations are trading blame at the moment, with each accusing the other of unreasonable late demands that blew up the talks. “Last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal,” Carney alleged. U.S. Trade Representative Jamieson Greer’s office countered that Canada was the party making “new demands and walkbacks,” which “upended the careful balance reached in the past days.”
One problematic American request concerned mineral mining. “Carney could have enlisted Canada as a no-limits partner in the U.S. race to secure supply lines of critical minerals and rare earth elements,” reports The Wall Street Journal. “China is the biggest producer of rare earths and has a near-monopoly on their refinement. The U.S. now has bilateral agreements on critical minerals with the European Union and Japan, as well as nations including the U.K., the U.A.E. and Argentina. But not with Canada. The Trump administration’s demand for first dibs on Canada’s critical minerals exports was a key reason for the collapse of negotiations.”
However, the Journal adds, “Critical minerals are too important to the U.S. to be left to Canada, and Canada is too important to critical mineral mining to ignore.” Some sort of agreement is in the best interests of both nations.
Part of the reason for talks is a mandatory review of the trilateral USMCA, which Trump negotiated and signed to replace NAFTA with Canada and Mexico during his first term. Consumers in both nations would benefit greatly if our differences can be resolved and fair but free trade practices can be implemented and followed.
I chose those words advisedly. Trump has some legitimate complaints about Canada’s unfair practices tilting the playing field. That’s true in many other cases. Yet it’s also true that Trump’s tariffs largely cost American consumers money, and that comes after a half-decade of persistent inflation. The more stories like this dominate the headlines leading up to November’s midterm elections, the worse the outcome could be for the president’s party.
That’s especially true after Treasury Secretary Scott Bessent wrote on Sunday, “At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary.” That would be Iran. “President Trump has decimated Iran’s economy to a point where the rial has never been weaker and inflation has rarely been higher,” Bessent said. “The regime’s final refuge now lies in the self-deception of fearful nations that still believe accommodating aggression can secure a durable peace.”
Five years of inflation and economic war with Iran. Now Canada. No one much cares to hear from Mike Pence anymore, but also on Sunday, Donald Trump’s first vice president said, “The last thing we need right now, as our economy is getting back on its feet, is a trade war with Canada.”
