March 10, 2025 - 8:15pm
“America is not Canada and Canada will never, ever be part of America in any way shape or form,” declared Canada’s new Prime Minister Mark Carney yesterday. “In trade — as in hockey — Canada will win”.
It’s certainly true that the blunt force trauma that Trump has threatened via tariffs and other forms of economic pressure has turned Canadians into “Canada Firsters”. Even the Leader of the Official Opposition, Pierre Poilievre, who has been hurt by a perception that he is ideologically aligned with the US president, is now saying the country will “bear any burden” to sustain its sovereignty.
So how far will this very un-Canadian outbreak of nationalism go? Beyond booing the Star-Spangled Banner at sporting events, there are profound risks in responding tit-for-tat to every tariff introduced by Trump. The US economy has substantially greater industrial capacity, and higher rates of productivity. A trade war could well lead to the erosion of what’s left of Canada’s industrial base. On the auto side, for example, there wasn’t much of an auto industry to speak of outside of Detroit and several Canadian cities. But over the last 30 years, US companies have reshored manufacturing capacity to the South, which has made the Great White North a less appealing destination.
Likewise, while a substantial number of US refineries are set up for Canadian oil, blocking exports of oil to a country that has created one of the world’s largest shale oil industries in less than two decades could have severe economic repercussions if Canada doesn’t quickly find new markets in both Europe and Asia. That might entail some kind of broader economic association with the European Union, but it may take years to develop.
The truth is that Canada is closer to being a 51st state than many would like to admit. In fact, it’s a problem Canada has faced for decades. As Finance Minister from 1963 to 1965, Walter Gordon attempted to reduce the economic domination of Canada by the US. His 1963 budget proposal to place a 30% tax on the shares acquired by foreign companies involved in takeovers of Canadian-owned companies created huge concerns (especially in the US) and probably marked the last gasp of fully-fledged Canadian economic nationalism. The budget was rejected and little came of it thereafter.
In the years following Gordon’s ill-fated budget, the Canadian and US economies became increasingly intertwined, especially following the 1988 Free Trade Agreement between the two countries (attempts had been made to secure such a deal for over 100 years), ultimately superseded by Nafta in the 1990s and then the 2018 USMCA agreement, (which then President Trump called “the most important” ever agreed by the US).
But these moves toward a North American common market came with a political cost, with Canada’s economic independence severely limited. Through the exercise of soft power, the US has generally pretended to treat Canada like a sovereign power, but whenever Canadians dare contemplate doing something that Washington doesn’t like, there are consequences. Even when international courts have ruled in Canada’s favour in trade disputes with the US, Washington has simply ignored the rulings and sustained protectionist measures (including under Joe Biden).
In that sense, Canadians should be grateful to Trump for breaking the illusion that Canada is a genuinely independent polity. Ironically, the President’s outright embrace of protectionism affords Canada one final chance to re-establish genuine political independence, albeit with a considerable economic cost attached, as Ottawa is forced to reorient its trade flows away from its largest economic partner by far (almost three-quarters of all Canadian exports go to the US). It’s doubtful that Canadians will be erecting statues of Trump in front of our national parliament, but he might yet become the father of a new kind of independent Canada.
Marshall Auerback is a market commentator and a research associate for the Levy Institute at Bard College.
Mauerback
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SubscribeFor that to happen the Canadians would have to seriously change course and make some tough decisions with no easy answers. All I have heard so far from the north is chest beating and no practical substance or plan other than hoping Trump backs down after a little bit of pressure.
You’re right about that. So here’s one idea for Carney: he can immediately offer PhD candidates all across the United States the opportunity to pursue their work at Canadian universities, with generous support from the Canadian government in the form of housing subsidies, scholarships, stipends, etc. He can immediately offer to underwrite the scientific grant programs and research projects that the United States has put on hold if those researchers move to Canada and pursue their work at Canadian universities. He can also approach every major private university in the United States and offer them whatever they need to build out “satellite campuses” in Canada. MIT might tie up with the University of Toronto, Harvard might tie up with McGill.
Stripped down, the opportunity is this: (1) Entice the smartest “young” people in America (PhD candidates) to move to Canada, and underwrite their work if they do, (2) Entice America’s greatest educational institutions to set up shop in Canada and (3) Make it very attractive for the smartest “young” people in America and for its leading academic institutions to stay in Canada; to become, literally or metaphorically, citizens of Canada.Steal their smartest people.
We got plenty already.
Bwahahaha!!!
You’re kidding, right?
A very Trumpian response.
I know you probably think that is a compliment. Here’s clue – its not…
We have no housing to offer, our currency is in the toilet, as is our GDP. No bright mind would look at the moribund offerings in Canada and say YES let’s set up shop after we graduate into an economy that has been decimated. Carney’s economic model for Canada will not bring prosperity. He’s being planning it for the last five years anyway to terrible effect. I see the UK is doing just great after his tenure there. How much more latitude do these people deserve? Utter madness to think this installed banker will do anything but further destroy the country.
to what end if Canada does’nt have the companies to employ them.Canada would effectively be paying for PhD’s candidates to do it in Canada and once they done move straight back to the US
Technically, no nation or person is truly independent of any other. “No man is an island”, after all ….
Major correction needed here. Alberta exports heavy oil to American refineries, which have been specially designed for the oil sands. America has zero deposits of heavy oil. These refineries are dependent on heavy oil from either Alberta or Venezuela. There is no domestic alternative for the U.S. These oil exports are by far the single biggest industry in Canada, accounting for nearly 25% of all exports to the U.S.
The auto sector is the next biggest exporter to the U.S. The American and Canadian industries are extremely integrated. Vehicles can sometimes cross the border four times before they produce the finished product. Although the U.S. can theoretically onshore this production, it would take years to untangle the supply chain.
The Canadian response to the Trump tariffs has been pathetic IMO. Lots of chest pounding from the Liberals and Ontario Premier Doug Ford, but virtually no discussion about actually diversifying the economy away from the U.S. Although I reluctantly support counter vailing tariffs, it’s not an actual solution. It’s nothing more than a performative demonstration of sovereignty – albeit one that may be necessary.
In fairness reorientation of your trade policy isn’t something that can happen overnight, although you’d hope their ministers are frantically on the phone to Britain, Europe, Asia and the Antipodes to try and open new markets for its products.
America is exceedingly unpopular at the moment, so they’ll never have a better opportunity to get these deals over the line and reduce their reliance on the States
It’s early days of course, but most politicians in Canada aren’t even talking about anything other than tariffs. There’s been some muted conversation about building more pipelines, but even this seems like a distant reality.
It takes a lot to unmute Canadians. I think it’s those long winters indoors.
…the Canadian commentary here elsewhere seems oblivious to the fact that the US is actually pointing at the existing very high tariffs Canada has on non-industrial US exports to Canada. That’s where resolution partly lies, along with border security and defence expenditure uplift. It will all be over by lunchtime. Mostly the jab at Ottawa is pour encourager les autres.
If Carney were to become Prime Minister he would do so by being elected essentially by Ontario and Quebec. His party has virtually no seats west of Ontario and Quebec until you get to Vancouver. Given the deep deep loathing many western Canadians have for the Liberal Party this will weaken Canadian unity even further. If you searched the entire world you could probably not find anyone who has the characteristics despised by the MAGA movement more than Carney. An effete Net Zero pro immigration Eurocentric Davos man. So all those Canadian “Patriots” should think very carefully about who they elect. Trump will not tolerate a northern Venezuela to the north. Trudeau has seriously weakened Canada financially through debt, strategically by blocking pipelines to the coast, through insane over immigration (10 times the US per capita) and through his never ending assault on our history and national identity. Trump can destroy Canada economically if he wants to – so our leaders should be careful about what fights they want to pick. For example – what would happen if Trump created a special offer for Canada’s best young people to be fast-tracked to US citizenship? Most of them would take it.
Canada is only tolerable when it is dull and out of the news. Justin Trudeau, the flyweight love child of Fidel Castro and Pierre Trudeau’s bi-polar rock-and-roll groupie wife (she had Pierre’s permission) made the mistake of becoming newsworthy enough to be noticed in the US.
Trump certainly noticed his “wife” and his daughter (the one he wants to date) making eyes at JT a few years back.
Let’s not pretend that there is any other reason for Trump’s idiotic trade war with his friendly northern neighbour.
It does seem strange: Trump – the father of Canadian independence. Putin – the father of NATO expansion.
Make America great again by naffing off all your Allies and getting them to look elsewhere just when you had them all sleepy and in your lap. Genius
He’s a stunner isn’t he old Don J. Went bankrupt 4 times didn’t he. Not proving a surprise that is it.
Strange times indeed JW. I’m starting to find myself increasingly in agreement with you. I’m not sure if Trump actually understands what a friend or an ally is or why they might be useful. He just seems to assume that everything can be bought. While he’s certainly doing some good stuff, I can’t feel sure that the side effects and unintended consequences aren’t going to outweigh them. Nor that he’ll create a new, lasting equilibrium.
Trump is getting shit done. That offends and alarms the dozy people who prefer the status quo.
I saw a good interview with Anthony Scaramucci recently. He said if you meet someone who claims to be friends with Trump, you know they are either lying, or have met Trump a couple of times, and he wasn’t unpleasant to them, so they have incorrectly interpreted the connection as “friendship”. He said Trump doesn’t have “friends” in the same sense other people do, and that he is entirely transactional.
Marshall Auerback’s interview with Freddie Sayers is well worth viewing. I wouldn’t have believed the extent of the Canadian reaction/backlash to Trump if I hadn’t seen that. There has to be a cost and a risk when Trump treats his closest and most loyal allies in such a cavalier and unpredictable fashion. I can completely understand the Canadian reaction.
You do wonder if the Trump administration has any calm, experienced heads who know when and how to calm things down. Or indeed if the Trump model of governing the US can be stabilised into a new pattern and last beyond his departure in 2029.
There has always been a broad anti-Yankee streak in Canada. It goes all the way back to the break with England when the more timid and tradition-bound colonists threw their lot in with the Crown and moved north. The US generally ignores it except when Canada squeals with pain over some slight.
u say timid , but those lads beat the US lads in the last war between the 2, just saying, the US effectively lost to Canada (mostly Brit’s) in their last punch up
…the Canucks have been living in La la Land for quite a while now. The Trump Admin is giving everything a shake there and everywhere to awake the woke, and to sniff out what’s real and what’s fake.
“You do wonder if the Trump administration has any calm, experienced heads who know when and how to calm things down“. I don’t wonder about that. I know there aren’t any. Well, maybe Rubio….
If a few threats from south of the border are enough to drive Canadians back into the arms of a party that has consistently betrayed them, they are terminally indoctrinated.
In truth, Canadian independence has been nominal ever since America supplanted Britain as the world’s dominant power.