In a fit of blatant intimidation, Donald Trump abruptly announced on June 27 that he was suspending trade talks with Canada immediately. The U.S. president also threatened to impose additional tariffs within seven days. In an interview with Fox News, he explained his decision saying, “People don’t realize Canada’s
to deal with … There’s been things going on that we don’t like and things where they took advantage.”
The specific targets for Trump’s outburst were a three per cent
(DST) on revenues above $20 million for big tech companies, due to go into effect on June 30, and what the president claimed were tariffs of “almost 400 per cent” against U.S. dairy exports. Despite Trump’s lament, no U.S. exporter has ever paid a 400 per cent tariff on dairy products, which are limited instead by an explicit quota negotiated in CUSMA (Canada-United States-Mexico Agreement) as a trade-off for similar quota limitations on U.S. imports of sugar and sugar-containing products.
When Prime Minister Mark Carney announced on June 29 that Canada would rescind the DST, it seemed an abject capitulation to Trump’s threats, especially when the White House declared that Carney had
on the tax. Subsequently it was suggested that the about-face was likely in exchange for the Trump administration dropping a “revenge” tax provision from Congress’s “Big Beautiful Bill” — a measure that would have imposed tens of billions of dollars in taxes on profits of Canadian companies investing in the U.S. While little is known about the substance of the trade talks to date, both topics were obviously discussed. Canada is also undoubtedly seeking relief from crippling tariffs unlawfully imposed, notably the 50 per cent tariffs on steel and aluminum, while isolating other issues to a renewal of CUSMA (also known as USMCA) sometime next year.
In his latest tirade, Trump also repeated his “51st state” desire, “because Canada relies entirely on the U.S. We don’t rely on Canada.” Given that perverse attitude, Canada should demonstrate just how false his claim is. We should use the threat of a 25 per cent surcharge on potash, uranium, oil and electricity exports — all of which are vital to America’s economy — as leverage to set the record straight.
Trump’s tariff rhetoric is not always matched by his erratic start/stop deeds, especially on China, causing some to label him as the “TACO (‘Trump Always Chickens Out’ on tariffs) president.” Regardless, by violating both basic World Trade Organization (WTO) principles and agreements that his administration concluded, he is creating huge chaos and uncertainty in markets, for producers, investors and consumers alike. A return to some semblance of normalcy on trade would be welcome.
Canada should be wary about entering into any renewal of CUSMA given that the original agreement has been flagrantly violated by the U.S. The element of mutual trust essential to any international agreement has evaporated.
It is not easy to deal with a leader who acts like a schoolyard bully, believing that “might is right” and justifying any unilateral penalties as necessary because America’s trading partners are “ripping it off.” As if!
Regrettably, we have not seen much pushback from Congress on Trump’s blunderbuss approach to America’s northern neighbour nor from U.S. CEOs having a major stake in Canada’s economy. His actions have shattered many illusions Canadians had about America. The friendship and trust that provided economic and security dividends to both partners for more than a century may weather the Trump storm, but we should prudently “stand on guard,” signalling our intent to hit back where it will hurt America and provoke a more balanced dialogue and agreement. Trump’s antics have ignited an unprecedented outpouring of “Elbows Up” pride and patriotism in Canada. But the decision by Alberta and Saskatchewan to lift the ban on U.S. alcohol sales mocks any notion of a Team Canada approach to U.S. trade.
The Trump administration now claims that it will conclude many trade agreements before Labour Day. So far it has two — Britain and Vietnam. Trump’s tariff pause will expire on July 9, but most trade experts continue to question the efficacy of his obsession with tariffs.
Trump should be relishing the commitment he has gained from NATO allies to increase defence spending to five per cent of GDP. He might bask, too, in the wake of America’s spectacular B-2 bombing raid on Iran’s nuclear facilities, the real damage of which has yet to be corroborated.
The president succeeded in bulldozing his “Big, Beautiful Bill” through Congress delivering on many of his campaign promises — reinstating the 2017 tax cuts along with no taxes on tips, overtime and social security; a stronger border; and massive energy development. The hope is that these will prompt stronger economic growth, discount some increases to the deficit, and bolster Republican prospects for the 2026 midterm elections. He also won verdicts from the Supreme Court that at least partially vindicated his use of executive power. Trump has an unquenchable thirst for praise, which he received on all of these.
His strong position on the border and illegal immigration remain popular but America’s economic performance will ultimately determine his political fate.
Trump’s aggressively unilateral behaviour is partly attributable to the fact that he will not run again for president and has few guardrails constraining his actions. He demands and receives absolute loyalty from his administration and, thus far, from almost all Republicans in Congress. The chaotic state of the Democratic party only encourages his assertions of executive power.
Inexplicably, Trump continues to placate Russian President Vladimir Putin while weakening U.S. military assistance to Ukraine — a position that is morally and strategically dubious. Following his most recent phone call with Putin, Russia launched its largest ever
on Kyiv.
Jake Sullivan, who served as Joe Biden’s national security adviser, recently lamented that Trump’s “America First” foreign policy is undermining U.S. core advantages, specifically the strength of its alliances. Instead of working together to “de-risk” from China, he suggested that many longtime allies in Europe and Asia are now focused on
Trump’s integrity lapses add stress to an already precarious world.
National Post
Derek H. Burney is a former 30-year career diplomat who served as Ambassador to the United States of America from 1989 to 1993.