Another weekend, another tariff showdown from Donald Trump. This week, the target was Canada and Mexico, America’s neighbours on both sides. Canada, in particular, is an interesting target because of the turmoil Trump has already created by threatening these tariffs. Trump cost the country a Finance Minister and a Prime Minister before he even took office. As the federal election looms, are Trump’s tariffs Pierre Polievre’s path to Prime Minister?
Tariff Panic
When Trump first floated the idea of placing tariffs on Canadian imports, Ottawa panicked. Prime Minister Justin Trudeau flew to Mar-a-Lago to discuss the matter. Trump rather derisively floated the idea of Canada joining the Union in response. Trudeau’s embarrassment provided cover for his right-hand, Chrystia Freeland, to resign and start distancing herself from his sinking ship. Indeed, a mere few weeks later, Trudeau himself announced his intention to resign and Freeland jumped into the succession race.
Repeated mistakes
Months later, Trudeau appears not to have developed a response to Trump’s tariff plan. Despite the abject failure of Gustavo Petro in Colombia last week, Trudeau employed the same tactic: retaliate with an identical tariff. The US, of course, relies on its largest trading partner significantly more than it does on Colombia. However, the 17.3% of US exports to Canada pales compared to Canada’s 77% export reliance on the US. A tariff from Trudeau will hurt the US, but the tariff from Trump will destroy Canada. Canada and Mexico announced a partnership to resist Trump’s moves. In theory, Trump is fighting a two front war; in reality, one of the fronts will change leadership – and strategy – quite soon. As I’m writing this, the other front broke ranks with a deal. Canada is now standing out in the cold on its own with a Conservative leader waiting in the wings.
Consequences
Trump’s tariff move will have a number of consequences. Domestically, the US will be hurt. Every trade war involves shooting oneself in the foot. However, Trump is starting in a much better position and will outlast Canada. Trump and his new administration is moving at lightning speed – news cycles are lasting for shorter amounts of time as precedents are shattered multiple times per day. Trump is also enjoying record polling. This allows him to make unpopular decisions without much net downside. While he’s not running for election again, his ability to implement his agenda in full does rely on the GOP’s ability to maintain a unity government. Fortunately for Trump, there is almost no way the trade war will last beyond the Canadian federal election (which must happen by October). This leaves plenty of time for recovery – and a characteristic victory lap – before the 2026 midterms get under way.
Morgan Stanley announced this morning that the tariffs would plunge Canada and Mexico into a recession. Not only would this weaken their ability to fight, it will also highlight the difference between the two countries and the US. A slightly weakened US looks measurably better than two neighbours struggling through a recession.
All of this sends a clear message to the rest of the world. This morning, leaders from Finland, Lithuania, and Ireland were all calling for the EU to strategize effectively around the impending EU tariff plan Trump will drop later this week. The fear in Europe is palpable.
Canada
In Canada specifically, the consequences of the tariffs will highlight the country’s dependence on the US. A 25% tariff on 77% of a country’s exports is a disaster that will only further push US statehood into the conversation. As Trudeau’s party dreads the oncoming Federal Election already, the failing economy and a real possibility of losing sovereignty will push even more of the electorate towards Pierre Polievre and the Conservatives. A significantly friendlier party to Trump, a Conservative administration would quickly strike a mutually beneficial deal to preserve Canada. Trump would then focus all his attacks on the Southern Border, knowing he had the backing of a less hostile Canada. In short, starting this two-front attack will necessarily lead to more success in sealing the border in a few months than Trump managed in his entire first term.
Polievre
The tariff plan does not only benefit Trump, but Polievre as well. Already dominant in the polls, Polievre needs chaos to continue until the election to avoid Trudeau’s replacement benefitting from a novelty factor at the polls. As a common sense, patriotic conservative, he is a natural ally to Trump’s MAGA movement. However, he applies the philosophy to Canada. Polievre’s response to tariffs was not retaliation or stepping in line. He released a video calling for Canada to find a new largest trading partner: Canada itself. This clever strategy draws attention to more of the Liberals’ failures in government, compounding the natural effect of the tariff fallout and Trudeau’s resignation. He will ultimately cruise to a convincing victory in the election and strengthen his premiership with a deal with Washington. What better way to start as Prime Minister than dropping export prices, getting Trump onside, and implementing protectionist policies?
This tariff plan is effective for a number of reasons. Primarily, Trump’s objective is to restore the US as the global hegemon. The side benefits, though, are also effective for the US. Trump’s framing is not a typical trade war. He has positioned this move to lead to one of two beneficial outcomes: either Canada moves towards statehood – further strengthening the US in the long-term – or Trump forges a strong alliance between Washington and a Conservative government in Ottawa, weakening the left-wing in both countries.
