“One of the messages that I’d like to get out tonight is: everybody, sit back, take a deep breath. Don’t immediately retaliate. Let’s see where this goes. Because if you retaliate, that’s how we get escalation.” So said Treasury Secretary Scott Bessent on Wednesday amid the global upheaval caused by Donald Trump’s sweeping tariff rollout. Bessent’s call for serenity is landing on deaf ears, but for panicked allies in North America, his advice may be worth heeding.
Writing in Responsible Statecraft, Quincy Institute analyst Kathik Sankaran pointed out that Trump’s “slightly different treatment” of USMCA partners may be a sign of his plans to not just reshore entirely within the US — but to nearshore with neighbours north and south of the border too. This could be why, as Reuters noted, Canada and Mexico may have “avoided the worst-case scenario”.
Geography appears to have played an important role in Trump’s thinking, with Latin American countries also being, relatively, spared. But it should come as no surprise to those who have followed the MAGA movement over the years. Once Trump signalled the GOP’s permanent break from free trade orthodoxy, intellectual architects of the MAGA agenda started calling for “nearshoring”. The post-Trump Right saw this strategy as an essential part of countering China, which was detailed in a 2023 Heritage Foundation report called “Winning the New Cold War”. “Establish[ing] and lead[ing] coalitions with like-minded partners to protect the free and open commons,” it wrote, “and the U.S. must expand ‘reshoring,’ ‘nearshoring,’ and ‘friendshoring’ to move sensitive manufacturing industries out of China and back to the U.S., to countries in the Western Hemisphere, and to partner or allied nations”.
American Compass, a top policy shop for the New Right, also recommended that officials working on Latin America should pursue a “new strategy for engaging the region, focused on providing investment and trade preferences to support the massive near-shoring that a hard break with China would trigger”.
These reports, along with international trade lawyer Nicholas Phillips’s belief that the tariffs will have a binding effect on the Western Hemisphere, speak to the underlying strategy behind the tariff policy. By focusing on North America as a whole, America could develop strong local relations while reducing dependence on China. While the immediate impact of tariffs on Canada and Mexico might be alarming, there is a longer-term logic at play.
For Canada and Mexico, the nearshoring push could translate into greater investment, especially in manufacturing sectors where the US has historically depended on low-cost overseas labour. As Phillips notes, the mutual economic dependence between the US and its neighbours is a source of stability amidst this unprecedented protectionism. By tying them closer to the US economy through preferential trade deals and incentivised investment, Trump may be positioning them to be key pillars in a regional supply chain that counters Chinese dominance.
Bessent’s subtle assurance that those who take a “deep breath” will avoid the rates rolled out yesterday, especially considered alongside the general politics of the Trump-negotiated USMCA, suggests the administration may genuinely be pursuing a robust nearshoring strategy. If handled deftly, that, in turn, could be hugely significant for Canada and Mexico while China and the EU suffer.
For anxious observers in Canada and Mexico, “Liberation Day” in this context may not be so worrying after all.
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