The hard facts behind Trump’s tariff threat, and how Canada should respond.

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By Thomas d’Aquino

January 13, 2025

Donald Trump’s outrageous threats toward Canada in recent days have ignited a fire among Canadians.

As ridicule has turned to shock, disbelief, then anger, a growing number of political leaders, past and present, and Canadians from every part of the country have stood up for Canada. This is most welcome.

This is a time of upheaval for Canada. Our politics are in turmoil, there is a vacuum at the federal level, Trump smells weakness; especially in the lack of a unified strategy to respond to his economic sabre rattling, which is already having a dampening effect on our economy.

Suddenly, the country we have counted on as an unshakable friend and ally for more than a century is about to anoint a leader who has threatened a trade war as an apparent prelude to subjugation based on the undermining of Canada’s economic foundations.

Canada must unleash a counteroffensive that goes well beyond the zero-sum game of a tariff war. Our relationships with the Americans at the local, state and national level are deep. We need to buttress these with unprecedented zeal, with an all-hands-on deck level of national engagement. We will not be alone in our efforts to win over Americans. There will be resistance to a tariff-driven industrial policy within the United States, with the disruption and inflation it will create.

Joining Canada will be Mexico Europe, Japan, South Korea and all affected countries. In the end, however, it is Americans themselves who must lead in countering the disastrous effects of a global bully in the White House.

In winning over Americans, Canadians must articulate in the clearest of terms why the massive tariffs proposed will be self-defeating.

We need to start with the hard facts:

At the top of the list is Trump’s rationale for applying the tariffs — namely the $60 billion trade deficit the United States is running with Canada.

Hard fact: that imbalance is mainly due to the significant exports of Canadian oil and gas and other minerals that fuel the American economy.

Hard fact: our highly integrated supply chains are critical to American advanced manufacturing and innovation, not to mention highly paid jobs.

Hard fact: no two countries in the world share such a deeply-rooted regime of exports and imports — relationships that would be difficult and costly to unravel.

Canada’s ability to prosecute a winning strategy with the Americans will be significantly hampered in the early part of this year due to the absence in Ottawa of a new prime minister with a fresh mandate. Meanwhile, with an election still months away, Canadian interests in the United States should be advanced by Ottawa’s existing political leadership buttressed by strong public service support, activist premiers and a fully engaged business community.

Of course, Canada is not the only target of Trump’s threatened tariffs. Our North American trading partner and co-signatory to our shared continental free trade agreement, Mexico, is also in Trump’s crosshairs. Canada should assign high priority to leveraging our well-developed relationship with Mexico in coordinating a continental response to Trump. If Canada and Mexico were to fail, the very survival of the Canada-United States-Mexico Agreement (CUSMA) could be jeopardized.

Likewise, we should work with our European and Pacific trade partners who stand in fear of Trump’s use of tariffs as his chosen instrument of waging economic war and gaining political concessions. At Kananaskis in June, Canada, led by a new prime minister, will host the G7. Perhaps too much to hope for, but it would be salutary if all six of the seven non-US leaders were to counter the fallacy of a tariff-driven trade war based on a protectionist industrial policy. In dealing with the American colossus, let us never forget that there is strength in numbers.

As someone who has spent decades immersed in the business relationships that are the lifeblood of this exceptional bilateral dynamic, I believe Canadians owe Trump a vote of thanks. For far too long, Canada, with our massive geography and rich natural endowments, has wallowed in complacency, content to amble along with lacklustre economic performance and underinvestment in our security. This affliction of complacency was a dominant concern during the three decades I headed the Business Council of Canada, when I complained that all too often we eschewed gold in favour of bronze or less.

Now, for the first time since World War II, we are once again faced with an existential threat from beyond our borders, this time from the unlikely source of the neighbour next door. During World War II, Canada marshalled a response that was staggering in consequence and that changed the face of our nation.

Trumpian policies, and sharply increasing global risks, combined with declining productivity, diminishing investment, fiscal weakness, a less-than-muscular foreign policy, and dangerously inadequate defence capabilities at home demand a powerful response infused with a new and vibrant sense of patriotism.

Our natural endowments are second to none, we boast one of the world’s most educated populations, we are governed by the rule of law, we are not short on creative and entrepreneurial ideas. What has been missing is the will to achieve the ambitious destiny that awaits us.

The pursuit of this destiny should be the highest priority of the new prime minister and cabinet that will emerge from the forthcoming national election — a call to action on the part of all our leaders fuelled by broad public support. This should be Canada’s carpe diem moment. Let’s seize the opportunity.

Policy contributor Thomas d’Aquino is an entrepreneur, philanthropist, corporate director and educator. His book Private Power Public Purpose – Adventures in Business, Politics and the Arts was published last February by Penguin Random House and within the first week of its release, was a number one national bestseller. He is founding CEO of the Business Council of Canada.