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By Perrin Beatty

March 4, 2025 

During Donald Trump’s first term, The New Yorker published an iconic cartoon that showed a flock of sheep grazing on a hill alongside a billboard of a wolf who is campaigning for office. The wolf’s election slogan is “I am going to eat you,” leading one sheep to comment, “He tells it like it is.”

There’s a lesson for us here. When Donald Trump says he wants to impose massive tariffs on us or absorb our country, we should believe him.

That’s not easy for Canadians. For the last three and a half decades, our relations with the United States have been built on the belief that our shared values and interests were so obvious and compelling that neither country would willingly harm the other. We were in the same boat, and it made no sense for either of us to drill a hole in the other’s side of the hull.

All of that changed in the time it took to administer an oath of office on January 20th. In an instant, Canada moved from ally to adversary on the U.S. government’s strategic balance sheet.

The President makes no attempt to disguise how he sees us. In his opinion, we could not even survive without American support; we should simply accept absorption. He has repeated the theme frequently, dismissing Canada’s capacity and maybe even its right to exist without his agreement.

When Donald Trump first threatened Canada with punishing tariffs, he justified them on the basis that Canada – like Mexico – was a major source of fentanyl and illegal immigration into the United States. Never mind that the allegation was baseless and that the flood of drugs and illegal immigrants (not to mention guns) has been flowing disproportionately from the U.S. into Canada, not the other way around. Unless we responded to his satisfaction, he would apply a 25% tariff to all Canadian imports. But what would it take to satisfy him?

Would Canada’s undertaking to implement a $1.3 billion border plan be enough to meet his demands? It’s not clear that he was even aware of the commitment until the Prime Minister spoke to him on February 2nd, although it had been made weeks before. In any case, the list of complaints against Canada continued to grow: we don’t allow American banks to operate in Canada; the U.S. doesn’t need or want Canadian goods; the trade deficit is a “subsidy” of $100 or $200 billion. Whenever we felt we were nearing the goal line, the goal posts moved again.

Predictably, his camp followers in Canada insisted that “all we have to do” is what we should have been doing anyway — fortify the border, fight drugs, increase our defence spending. In a world where facts and reason counted, that might have been true.

If the President’s goal had simply been to use tariffs to pressure Canada to do things unrelated to trade, it might have been possible to satisfy him until the next issue came along. But that assumes that tariffs are simply a tool and not an end in themselves.

In Donald Trump’s words, “To me the most beautiful word in the dictionary is ‘tariff.’” Yes, tariffs can be a useful stick for beating your opponents, but he knows their utility goes much further.

In Donald Trump’s words, “To me the most beautiful word in the dictionary is ‘tariff.’” Yes, tariffs can be a useful stick for beating your opponents, but he knows their utility goes much further.

First, Trump needs hundreds of billions of dollars to pay for tax cuts and costly election promises. A major tariff on imports from other countries, including Canada, will provide much of that money. He insists that exporters, not Americans, will bear the cost, just as he once asserted that Mexico would pay for a “great wall” along its border with the U.S.

Second, the very threat of tariffs destabilizes other countries’ economies and weakens their ability to resist U.S. pressure. Business hates uncertainty. It needs to know the rules before it invests. When the stakes are high and the rules are unclear, it responds by either putting new investments on hold or looking for other places to put its money. Canada was already experiencing a serious investment chill that cost jobs and growth before the tariffs kicked in today.

Third, Trump genuinely wants to make the United States a magnet for business investment. He has already started massive regulatory reductions. These will come on top of generous tax treatment for U.S. businesses and in addition to his willingness to press a heavy diplomatic thumb on the scales when American economic interests are threatened abroad. There has been little discussion of this reality in Canada, but it would have created a serious need for us to respond even if all of the other issues didn’t exist.

Finally, a tariff wall will provide a protected market for domestic businesses. When foreign companies offer better or cheaper products, tariffs will be the great equalizer. This isn’t about free market competition; it’s about making sure the home team wins at any cost.

Donald Trump calls himself a dealmaker. To him, relationships are transactions with a clear winner and loser. In transactions involving him, he must be seen to have won and the other side must be seen to have lost. That’s why the 2020 election must have been stolen, and it’s how CUSMA, which replaced NAFTA (“the worst trade agreement ever”), was clearly “the best trade agreement ever negotiated and … a huge win for America’s workers,” according to the White House at the time. Never mind that the Trump tariffs would violate that agreement, and that he now favours annual renegotiations.

But while the issues and the rationale may change with the weather, his goal does not. When Donald Trump says he wants to swallow Canada whole, he’s not coming for a discussion. He’s coming for dinner.

The Honourable Perrin Beatty, PC, OC, is the former President and CEO of the Canadian Chamber of Commerce and served as minister in seven different portfolios, including the Treasury Board, national revenue, solicitor general, defence, national health and welfare, communications and external affairs. He is a regular contributor to Policy.