What’s Trump’s price for averting tariffs? He didn’t tell Trudeau

Will Canada Escape the Potentially Economy-Smashing Tariffs Threatened by Donald Trump?

The looming threat of a 25 per cent tariff on products entering from Canada and Mexico by Donald Trump has left many questioning whether Canada will be able to avoid the potentially devastating economic consequences. With the uncertainty surrounding what specific actions or concessions would satisfy Trump and prevent a trade war, even those closely connected to the issue are struggling to find answers.

Trump’s demand for changes at the border to address issues like migration and fentanyl has left Canada in a state of confusion. The lack of clarity on what exactly Team Trump wants and what would constitute success has made negotiations challenging for Canadian officials. The recent phone call between Trump and Prime Minister Justin Trudeau shed little light on the matter, with Trump offering no specifics on his demands.

The interconnectedness of national security and economic security has never been more apparent, with the U.S. using the threat of tariffs to bolster its own national interests. This tactic was previously employed by Trump in his dealings with Mexico and is now being directed towards Canada. The focus on border security and defence spending reflects a shift in the approach to trade negotiations under the Trump administration.

While the Biden administration has taken a more diplomatic approach to addressing concerns with Canada, Trump’s willingness to use tariffs as a bargaining tool has created a sense of urgency in Ottawa. The need to ramp up military capacity and mineral production to appease U.S. demands has become a top priority for Canadian officials.

The potential economic impact of Trump’s tariffs on Canadian oil, auto parts, and food cannot be understated. Estimates suggest that Canada’s GDP could contract significantly, leading to widespread economic repercussions. The uncertainty surrounding Trump’s intentions leaves Canada with a difficult decision on how to proceed.

While some believe that a deal can be reached if Trump truly desires one, the risk of tariffs being implemented remains. The possibility of lawsuits, trade challenges, and retaliatory tariffs looms large, threatening further economic harm. The potential end of the USMCA agreement would mark a significant shift in North American trade relations, with far-reaching implications for the economies of all involved parties.

As Canada navigates the uncertain waters of trade negotiations with the U.S., the stakes are high. The ability to secure an exemption from tariffs will require skillful negotiation and a deep understanding of Trump’s motivations. The outcome of these negotiations will shape the future of trade relations between Canada and its largest trading partner.