Canada’s counter-tariffs came into effect on Tuesday as the trade war entered its third week. In the meantime, the federal Liberals swept three by-elections, and there was hope that the temperature might diminish. In actuality, the situation is only more tense and it seems like Canada is digging in its heels.
There is a useful lens through which to examine this conflict: in his 2015 book Prisoners of Geography, Tim Marshall argued that no amount of political will or technological progress erases the physical constraints of where a country sits on a map. Canada borders just one country, the United States of America. The limits of time and space mean that Canada has to manage the American relationship differently than overseas countries do. When we start examining the trade war through that lens, we can think a little more rationally about the circumstances we find ourselves in.
Canadians are seeing red, and justifiably so. The Americans did start this conflict, after all. But to cut through the noise and see the full landscape is vitally important. Here are some hard truths that Canadians need to know:
Canada is Not the 51st State
First and foremost, we have to remember that we aren’t America. Of course, that’s the whole point of the trade war. But too many people seem to skip out on the fundamentals. The fact that a free trade deal is necessary in the first place exists because we aren’t the same country. That’s a good thing. But it means that there are some key differences around “Free Trade”.
American states have free trade with each other, which means that if there’s bourbon distilled in Kentucky, Americans can buy and sell it anywhere in the US without any extra taxation. Because Canada is a different country, that bourbon cannot cross the border without someone paying a tax, referred to as a duty. If you’ve ever wondered why beer and cigarettes are cheaper when you cross the border or take a plane in from another country, this is why. The difference in price is the duty tax.
So this very fundamental note is the first big misunderstanding: the free trade deal that we have is a misnomer. It’s never actually been “free” in the way that the vast majority of Canadians understand it to be. It never has been. It would be better categorized as a “mostly free” trade agreement. So when Donald Trump says Canada wants all the benefits of being a state without being a state, this is what he is talking about.
This is so vital because Canadians have it in their minds that we have some kind of carte blanche with the Americans. Intuitively, free trade implies that we are able to move all of our goods in and out across the border, the way that we can move ourselves across the border, and that that is our right. But the truth is that it’s never actually been that way. We just feel like it’s that way because we’ve had such a great relationship in the past.
It is even more vital to understand that the Canada-US relationship is an exception on the global scale. The vast majority of countries do not have as liberal a trade agreement as Canada and the Americans do. That’s what Mark Carney was talking about when he said that “Canada has the best deal in the world with the United States”.
Of course it is frustrating, the “mostly” free trade deal that Canada has had has been extremely beneficial for Canada. But we are a different country. The Americans are essentially saying “We have the biggest and best market in the world, and we don’t want to give access to that market away for free”. Canadians are well within their rights to be bothered by this change in stance from the other side and to push back on this notion. But it is not Canada’s God-given right to trade with the United States, and the Americans do not get to trade with Canada for free. To look at another global example, the whole reason the European Union exists is to simplify and reduce trade barriers.
There is much aversion to this idea of “fortress North America,” but that is what CUSMA essentially is. Lowering of barriers between three neighbouring countries to promote (mostly) free trade across their borders.
These things do change over time as well. The United Kingdom was a part of the European Union and they voted to leave it. A huge consequence of that is that they needed to establish new free trade rules. The EU, by the way, already tariffs Canadian goods like steel.
The thing with rules and agreements is that parties can walk away. If Rogers raises the price on a customer’s phone bill, they can walk or not. These things happen all the time. Deals are not binding forever. Organizations and people change their minds. It is not in Canada’s interest to be precious about this fact.
International agreements ought to be upheld, of course, but there’s no judge, jury, or police force to call when another country says they want to charge you more. Governments change, tastes change, circumstances change. It is frustrating, but it is not completely offside.
Canadians are right to be upset. We have to be sober about the reality of the world we are living in. “Fair” is subjective.
Mark Carney, Master of Rhetoric
If you really pay attention to his rhetoric, Mark Carney is extremely deliberate in the words he has used to describe this dispute. Weeks on, there is still no evidence, either for or against Mr. Carney’s claims about who changed what aspects of the phantom trade deal.
The prime minister is effectively using inflammatory language to ignite the passions of Canadians and to drum up their patriotism. It is working very well, but he has still provided no evidence that what he is saying is credible. Now, most Canadians are rightfully inclined to trust the prime minister and his trade negotiators over those of a foreign entity.
However, it is neither unreasonable nor unpatriotic to be demanding specifics before accepting the casus belli for a global conflict. If Canada is at war, then we should be unabashed and specific about socializing exactly why. The best evidence to trust the government’s position is that the United States hasn’t produced a trade document either.
There is a common rebuttal that prudent negotiators will not share unsigned trade deal documents in order to preserve the credibility of negotiating positions. However, this does not really apply here. While the public is uncertain on specifics, surely the other country at play here — the United States — already knows what was in the document, so there is no secret to keep.
Most conveniently and alarmingly has been the pushback against any wartime dissenters. There are very few Ameriphiles in the Canadian polity at this moment.
But it is a scandal that any kind of dissent or questioning is being treated as a crime. Andrew Coyne put out a frankly offensive opinion article in the Globe & Mail this week insinuating that anyone who does not fully endorse this government’s handling of the trade dispute is disloyal to Canada.
To be clear, in 99% of cases, these are not people who are disavowing Canada or accusing the government of manufacturing a crisis — they are simply asking for the evidence that Canada was attacked. When politicos like Sean Speer write about a path forward, this is not treason — it is steps ahead of the fever pitch we are in. Eventually, someone has to make a deal. If you can’t trust Trump, fine — but Trump is democratically elected. He represents some critical mass of the American population. Why does Canada assume that things will change when he is gone? Trump has dominated US politics for twelve years. Are Canadians still so naive that we think that this is an accident?
Now, there is an irrefutable fact that must be acknowledged here. The trade war has been political rocket fuel for the federal Liberal party. The Liberals were elected in 2025 with 43% of the popular vote. They were given a mandate as a minority government.
That has changed, primarily via floor crossings, and there are now some seven by-elections happening this fall, three of which the Liberals have already won.
Although they were elected as a minority, the Liberals have absolute power to make decisions on Canada-US relations without any accountability from the opposition.
It is undeniable that this trade war has been extremely positive for the prime minister’s domestic political standing, and that fact cannot be discounted when examining the circumstances. That is not to say the government’s actions are not necessarily justified on this matter — but to point these obvious facts out is not treasonous. It is necessary perspective.
Once we accept the reality of domestic politics, it is reasonable to ask for some verification and evidence if Canada is going to war.
To accuse your fellow Canadians of being traitors for not supporting the prime minister is not right, and it ruins our own internal credibility. Sunlight is the best disinfectant. Coyne wrote an entire book about how dangerous it was that Canadian power is so centralized. Clearly, that isn’t an issue in circumstances where Coyne agrees with the PMO.
It is not controversial to think that it would be best for Canada if the government was more transparent. Nor is it offside to be demanding that parliament be sitting if the country is at war. To deny Canadians these requests and label them traitors over requests for information and democratic debates is just as authoritarian as anything the Americans or Donald Trump has ever done.
Leverage, Proportionality, and the US Midterms
Beyond taxes and duties, there are tariffs. Fundamentally we must acknowledge that for 99% of the Canadian population, they could not describe the difference between the three. A tariff is a duty that governments impose on imported goods to disincentivize consumers and businesses from purchasing foreign products over domestic ones. The importer pays the tariff, though the cost is almost always passed on to the consumer through higher prices. In other words, Canadian counter tariffs are taxes on Canadians.
With regards to leverage and proportionality, Canada needs to sober up a bit about its circumstances. If Canada is to match the American tariffs dollar for dollar, that will be disastrous for Canadians.
It is easy to forget that the USA is ten times the size of Canada. It has a completely different climate, far more industry and agriculture, and yes, it is the biggest and most valuable market in the world. Consider the size of these countries when it comes to going shot-for-shot with the Americans: Canada does seventy percent of its trade with the United States. The US, on the other hand, does less than twenty percent of its trade with us.
This is what it looks like to be a smaller country sharing a border with a much larger one. The math around leverage was never going to be close.
Culturally, Americans do not think about Canada at all. In Canada, it is impossible not to think about the United States. The US is culturally dominant over Canada.
Every Canadian has an opinion on Donald Trump. Canadians all had opinions on Kamala Harris. Americans do not know who Mark Carney is. They certainly do not know who Pierre Poilievre is.
The trade war is massive news in Canada. It is practically uncovered in the United States. Americans simply don’t think about Canada at all. They do not care.
This is the essential context that the Canadian public seems to be ignoring. The leverage we are implying — that we are somehow hurting the American economy by implementing counter tariffs, which again, are taxes on Canadians, not on Americans — does not exist. At least not nearly to the extent Canadian opinion makers are insinuating.
It is unlikely that the trade war will move the needle on American politics for the foreseeable future. The American electorate is uninterested in Canada. What voter was supporting Trump but has now determined that this issue is the final straw?
Let’s steel-man the argument, however, and accept momentarily that Canada does have current leverage over the president. The primary theory in Canadian media is that Canada’s leverage is currently at its high-water mark because the US midterms are less than two months away.
To explore potential outcomes, we can fast-forward two months, and imagine the two scenarios once the US midterms are over.
If the Democrats are successful, and he lost in part because of Canada’s decisions, why exactly is Donald Trump going to reverse these tariffs? A more logical response given what we know about the president is that he would likely be enraged. If nothing else, he would be scorned and looking for someone to blame. It would be simple for him to go even further into anti-Canadian positions if he believes he lost an election because of Canada.
Now, imagine the other scenario, where Trump wins the midterms — despite Canadian politicians antagonizing him, calling names, and poking the bear. It is not likely that suddenly the president becomes enlightened, humble, and modest. It is far more likely again that this continues, except now Trump is emboldened further.
If this seems like a lose-lose scenario, it is because it is. This means that Canada needs to be deft and deliberate. There is no guarantee that once Trump is gone in 2030, circumstances will change for the better either.
All that said, if Canada does have leverage now, then now is the best time to get the best terms for a trade deal. If the US midterms are a factor at all, once those elections have passed, we are weaker. Canadians should not like any of this, it is unfortunately the reality however.
Escalation
Finally, we can look at the idea of counter tariffs and, beyond those, escalation. Federal NDP leader Avi Lewis recently said: let’s go even further. Let’s really stick it to the Americans. “When you’re in a war, you use your strongest weapons. And our power in this trade war comes from resources we have that the US needs — like oil, gas, potash, and other critical minerals.”
The argument here is essentially: let’s escalate — and let’s charge the Americans even more for the energy and the lumber and all the essential things we currently ship to the United States.
Well, saying “When you’re in a war, you use your strongest weapons” is an outdated and disastrous way of thinking.
The big nations never use their biggest weapons in wars. The Americans and the Russians and the Israelis have nuclear weapons. They never use them. Why? First, it is because the deterrence provided by those weapons is highly effective. More importantly, however, there is the concept of mutual destruction and annihilation that comes with escalations.
So if our “nuclear option” is to start withholding or taxing the essential goods going to the States — the energy, the potash, etc. — well, what would the American nuclear option be in that case?
Canada, we must remember, is a cold place. Canada relies on other countries for its essentials too. Essentials like food. In fact, roughly half of Canada’s imported food comes from the United States. So if Canada withheld energy, what is to stop the Americans from withholding or taxing our food?
This is just one drastic example, but it is demonstrative of the actual leverage we have given the size and location of our country. Canada is on an international trade front, still an extremely small fish compared to the United States. The US is the biggest economy in the world, and it’s the only country Canada shares a border with.
If the giant to the south has completely lost its way, Canada has to deal with that. No one outside Canada really cares if Canada gets trampled on or suffers in any kind of prolonged dispute. Diversification is an excellent future state. But it is not nearly as simple as it is portrayed. If it was easy and beneficial for Canada to trade with other places, they would be doing so. Canada does not have a close relationship with the US out of the goodness of Canadians’ hearts. It has been a highly advantageous market to access.
You cannot change geography. Canada is bound by its own physical position in the world. The border is vast, and almost all of the major Canadian population centres are a stone’s throw to the USA.
Canada is a prisoner of geography and that will never change. This is just the way of the world. Globalization is great, but you still need to physically move goods around. You still need to live beside other nations, no matter who they are electing.
There are simple hurdles raised by the basic realities of time and space that need to be overcome. You cannot relocate Canada. This means knowing your neighbour intimately and knowing how to deal with them when they are acting up.
These are hard truths, but they are truths. So if Canada wants to move towards prosperity, the sabre rattling, the inflaming of passions, and the internal accusations need to subside.
It is being felt gradually, but there is more pain coming. Canada needs to tread carefully and meet reality where it is.
Sorry. False premise. This is not a trade negotiation.