Hours after Trump’s latest tariffs on Canadian wine, dairy, and autos took effect, California’s Democratic Governor and likely presidential contender Gavin Newsom posted on X calling Canada America’s “closest ally.” Then a few days after his initial tweet, Newsom did interviews with CBC and CTV, and on CTV he said something very important for Canadians to take note of. When asked if he would remove all of the tariffs Trump has put in place, he waffled for about a minute before eventually coming to say “I can’t guarantee that, but I can guarantee you nothing like this — the level of disrespect, talking about the 51st state.” In the CTV interview, Newsom even explicitly brings up some of the tariffs from Trump’s first term that Biden then kept in place.
This illustrates a crucial point that Canadian voters, policymakers and politicians all need to drill into their heads now: Democrats aren’t coming to save us.
A Democratic president will likely be much nicer to us, end the insults, ratchet down the trade war, try and rebuild and restore some degree of normalcy to a broken relationship. But we aren’t going back to a world in which tariffs in some form don’t exist, and America is not increasingly inward looking and less reliable. Our plan cannot be to just bunker down, wait until 2029 when Donald Trump leaves office and hope everything goes back to normal. This is the new normal now and going forward we have no choice but to adapt. We must reduce our dependence and exposure to the United States no matter who is in the Whitehouse next, or after that.
Let’s start with tariffs. Since the Canada-US Free Trade Agreement in 1989, and NAFTA after that, we’ve had mostly open, tariff-free trade with the Americans. Mostly is the key word here, it’s never been completely tariff free. For example, Canadian softwood lumber has long been the subject of on and off American tariffs since 1982. In 2015, Canada won the right to hit back with more than a billion dollars in tariffs after the Americans passed a law forcing meat sold in the US to be labelled with where the animal was born and raised, which made our beef and pork more trouble to sell there. And there have been others: ongoing fights over dairy, over Bombardier jets, over “Buy American” and so on.
So it could be tempting to read the last year and a half as just more of the same, only louder. That would be a mistake. The old fights could get heated, but they were narrow and focused disputes in which both partners shared the same understanding: that open trade between us was normal and good, mutually beneficial and the fights were about the exceptions.
This is gone now. Washington now treats access to the American market as a privilege others have to pay for, not a mutual arrangement both sides gain from. Trade has been recast on zero sum terms, something you win only if the other guy loses. That’s why the demand isn’t just lower tariffs but that we stop making things Americans would rather make themselves, like cars or steel.
Now perhaps a Democrat comes in and returns to a more traditional understanding of trade as mutually beneficial. That would be great, but for another reason we still should not expect tariffs to go away completely. This reason is more important — money.
In the last full fiscal year in 2025, the Americans collected about $195 billion in tariff revenue, more than two and a half times what it took in the year before (and tariff collection did not begin at the start of the year). This year it has kept climbing: through the first nine months of the current fiscal year the government pulled in roughly $244 billion in gross customs duties, though a Supreme Court ruling in February forced it to refund some US$81 billion of that, leaving around US$163 billion actually banked.
Last year, when Congress and Trump passed a massive tax cut last year, the Congressional Budget Office said tariffs could cover most of the cost, cutting the deficit by up to US$4 trillion over 10 years if they held. The Supreme Court ruling that killed some of Trump’s tariffs has dented that, but even still now that tariff revenue was used to justify tax cuts it becomes much harder for any political party to give that revenue up again.
U.S. total national debt surpassed US$40 trillion this August. Days later the government paid 5.2 per cent just to sell a 30-year bond, the highest rate in a quarter century, and yields kept climbing after that. Interest on the debt is already over a trillion dollars a year, the third biggest thing in the federal budget after Social Security and health care. Every bit those yields rise makes the whole pile more expensive to carry. That means more borrowing, which pushes yields higher again.
The next president, regardless of what party they come from, and many presidents after them, will be dealing with the consequences of this debt. Because of this, giving up revenues, and potentially having to raise other taxes as a result, is a hard political sell. Democrats, even if they want to try and normalize trade relations with countries like Canada, may still end up keeping much of this because they’ve become addicted to the revenue.
And there’s another reason tariffs are hard to kill once they exist, namely rent seeking. Every tariff comes with a list of exemptions and carevouts that benefit some companies and not others. This has created intensive lobbying in Washington. Ordinary Americans pay more, but a small group of well connected insiders benefit from tariffs, which creates motivated constituencies to push to keep them in place. Dispersed costs and concentrated benefits, which makes them sticky once in place no matter who’s in office.
But beyond tariffs, the last year and a half has left real damage that will be hard to fix no matter who succeeds Trump. Even a friendlier president shouldn’t, and won’t likely make us forget the insults, threats, talk of annexation, tearing up of agreements, unprovoked economic attacks that have made us question the reliability of a country we are deeply integrated with and dependent on. When a friend turns on you, even if they say sorry, you can’t always trust them again.
Throughout Trump’s second term, various people from different political perspectives have floated the idea of “Fortress North America,” the idea of a tighter bloc with a shared external wall against other countries, China particularly, in exchange for guaranteed U.S. access. A Democrat, as part of an attempt to mend our relationship, might offer this sort of arrangement to us. But deepening integration in the future returns us to a state of dependency that means if something likes this happens again, we’ll have done nothing to make ourselves less vulnerable to the psychotic breakdowns America seems increasingly prone to.
Carney said it plainly on election night last year: “Our old relationship with the United States, a relationship based on steadily increasing integration, is over.” He said that with Trump in mind. It’s just as true whenever a Democrat takes his place. Tariffs or no tariffs, Republican or Democrat, Canada has no choice other than to reduce its dependency on the United States, which means strengthening ourselves at home and seeking other opportunities abroad. This is a lesson we must remember, no matter how nicely the next president speaks to us.
National Post
