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By Colin Robertson

February 1, 2025

The Trump tariffs of 25% that will be implemented Tuesday — based on reporting at this writing — on all Canadian imports to the United States, shatter the rules and norms that, until now, have successfully managed to mutual advantage our trade with the United States. An unprovoked abrogation of our trade agreements, the tariffs are fracturing our economic partnership and forcing us to rethink what has been our most important relationship.

We now know this is not about coercing Canada to curb the small flows of fentanyl and illegal migrants or raising our defence spending, both of which we are doing. Rather it’s a straight cash grab to pay for Trump’s promised tax cuts and, as one of the three US top trading partners (along with Mexico and China), we take the hit.

To be clear, we have never been here before. Tariffs have, in the past, been unilaterally imposed by the United States (notably the Smoot-Hawley tariff in 1930 and the Nixon 1971 import surcharge) and protectionism is not new, but no previous president of the United States, or of any other country for that matter, has ever weaponized bilateral trade in violation of all norms, rules and conventions without any consistent, plausible justification.

Furthermore, no other head of government has ever misrepresented a list of conditions that turned out to be ephemeral, simply to watch Canadian leaders at all levels scramble in futility. It has effectively, all excuses and rationales aside, compelled us to see an American president, for the first time, as a hostile actor.

Getting out of this mess is going to require patience and perseverance, and a game plan that runs on four tracks:

First, standing up to Trump to get the tariffs lifted.

We must respond with counter-tariffs and export taxes designed to inflict pain on those who influence Trump. This means targeting the Republican congressional leadership on whom Trump must rely to achieve his legislative agenda and on his new best friends in the tech ‘oligarchy’. The funds levied from our counter-tariffs will fund the adjustment needs of business and workers, while the export tax revenue should be returned to the source province for its use.

Second, trade diversification.

Efforts must be ramped up starting with our more-than 50 other free-trade partners, recognizing that we are not utilizing the potential of these agreements. Working with our Trade Commissioner Service, the premiers and provinces need to step up. They are best equipped, working with their business communities, to market their goods and services and expedite closing deals.

Our key trading partners will see the value in collaboration, recognizing that while Canada is taking the hit today, Trump will be coming after them too. So, better we hang together or, surely, we will hang separately.

Third, getting our own house in order.

It starts with the premiers eliminating the internal trade barriers on procurement, accreditation and regulations reflecting the ‘narcissism of small differences’ between provinces.

At the same time, the different levels of government need to better coordinate their industrial policies to maximize necessary improvements to our productivity and competitiveness. We have the capacity to be an agri-food and energy superpower. Do current regulatory policies help or hinder getting our resources – oil and gas, critical minerals, grains, seafood, – to market? Is our current infrastructure – ports, grids, pipelines, rail – fit for purpose? Answers to these questions should guide our investments and enabling legislation.

Trump is following his playbook, originally laid out in The Art of the Deal, of creating disruption and taking advantage of divisions to gain leverage over opponents.

This must also include another exercise in getting government right. The best model is that conducted by the Chrétien government in the early 90s, which evaluated which level of government was best suited to deliver programs. It reduced the size of government by nearly a third, in contrast to the current government, which has grown government by a third.

The prime minister and premiers should take inspiration and commit to the kind of declaration on competitiveness just issued by European Central Bank president Christine Lagarde and European Commission president Ursula von der Leyen.

Fourth, communicate, communicate, communicate.

Public confidence in governments and institutions is plumbing new depths in all the democracies. As Justice Marie-Josée Hogue concluded in her recent report on foreign interference, governments need to be more transparent in communicatinginformation. If to govern is to choose, it is also about our leadership explaining what our priorities should be, why we make certain choices and what they cost.

For now, Donald Trump is in full swagger, a bully if not a wannabe autocrat. He controls the narrative with his executive orders, and by moving fast and breaking things, he sows confusion and creates chaos, his preferred battlefield conditions. Our tariff experience is providing useful, albeit painful, insights on dealing with Trump from which our allies can benefit:

First, Trump is following his playbook, originally laid out in The Art of the Deal, of creating disruption and taking advantage of divisions to gain leverage over opponents. He has always liked tariffs, and they have become his principal tool of statecraft. They are also used to coerce Americans to reshore and foreigners to invest within the US, thus fulfilling his promise of restoring manufacturing jobs within the homeland. Economic coercion is also achieving other objectives, like expediting deportations, as we witnessed last week with Colombia.

Second, he pays close attention to the markets, a fact that may eventually help us gain relief if the economists’ predictions about the tariffs spooking the markets and raising prices come to pass.

Third, he is the decider but to try persuading him with facts is a fool’s errand. At 78, he works by feelings and gut instinct. As for trying to predict him, New York Times columnist David Brooks put it best: “We’ve got this perverse situation in which the vast analytic powers of the entire world are being spent trying to understand a guy whose thoughts are often just six fireflies beeping randomly in a jar.”

Like it or not, we are now in an era where American foreign policy swings like a pendulum. The activist and mostly benevolent internationalism that characterized postwar administrations is for now replaced by the mercantilist and transactional ‘America First’. The rules-based international order is devolving into spheres of influence, multipolarity and great power competition. The tariffs are just a symptom of our new disorder. This is forcing the rest of us to redefine our interests and plan strategically.

For Canada, these questions include: What do we aspire to be? What are our niches of excellence? What investments do we need to make in defence, diplomacy and development assistance?

Tariffs and trade wars are destructive. They disrupt supply chain flows, lower wages and lower productivity. They are forcing our various levels of government, our political parties, business, labour and civil society to come to terms with our current malaise. How we respond will go some distance to determining our fate as an independent nation.

Contributing Writer Colin Robertson, a former career diplomat, is a fellow and host of the Global Exchange podcast with the Canadian Global Affairs Institute in Ottawa.