How Canada Became an Enemy

It’s not about trade, it’s about ego

Until Alex Pretti was murdered, the biggest story of the weekend was Donald Trump’s threat to impose 100 percent tariffs on Canada. Obviously Pretti and the backlash that followed were far more important than trade policy.

But while the murder of Pretti and its consquences are the most important issue for America right now, we shouldn’t let the attack on Canada slide. We are, after all, talking about a destructive rupture with a neighbor that was, until Trump returned to power, one of our closest allies and remains our second most important trading partner. And Trump and his minions are lying about the reasons for that rupture.

Now, Trump has been ranting about Canada since early last year, when he falsely claimed that Canada had a $200 billion trade surplus and bizarrely insisted that getting energy and auto parts from Canada somehow constituted a U.S. subsidy to our northern neighbor. For the record, trade between the U.S. and Canada is roughly balanced, and cutting off this trade would be severely damaging to both economies:

Source: Bureau of Economic Analysis

Trump followed those imprecations by imposing new tariffs on Canada along with many other countries. But the effect of these tariffs was blunted by the U.S.-Mexico-Canada agreement, formerly NAFTA, which still allows many Canadian goods to enter the United States tariff-free.

So what set Trump off again? Canada, which has been imposing 100 percent tariffs on imports of Chinese electric cars, has reached a deal allowing a limited number of these cars to enter with much lower tariffs in return for Chinese purchases of some Canadian agricultural products. In his Truth Social post threatening prohibitive tariffs, Trump declared both that Canada will become a “Drop Off Port” for Chinese goods to enter the U.S. market, and that

China will eat Canada alive, completely devour it, including the destruction of their businesses, social fabric, and general way of life.

OK, if you think Trump really feels deep concern about Canada’s future, I have some Melania meme coins you might want to buy. As Phillips O’Brien points out, whenever Trump claims to care about other people, it’s a “tell” that he doesn’t care about the issue at all.

On Sunday Scott Bessent, Trump’s Treasury secretary, tried to buttress Trump’s “Drop Off Point” claim: “We can’t let Canada become an opening that the Chinese pour their cheap goods into the U.S.” However, Bessent is corrupt, not ignorant; he has given up his soul but not, I think, his brain. So he has to know that what he’s saying is nonsense, on two levels.

First, the China-Canada agreement is limited: China only gets to sell 49,000 cars at the lower tariff rate, which is around 3 percent of total Canadian auto sales and 0.3 percent of total U.S. sales.

Second, the USMCA is a free trade agreement, not a customs union, an important distinction. In a customs union like the EU, once goods have crossed the border they can be freely shipped anywhere within the union. For example, a cargo that is unloaded at Antwerp and pays customs there can stay in Belgium, be transshipped to Germany or France, whatever, without any further restrictions or fees.

The USMCA, by contrast, allows many Canadian products to enter the United States tariff free, but the shipper must complete fairly onerous paperwork to prove that they are, in fact, Canadian goods. You can’t just ship goods from China to Canada, then send them south. As a result, it makes no sense to think of Canada as offering a way for China to flood U.S. markets.

But if the sudden tariff threat against Canada isn’t about sincere concern for Canadian welfare, and isn’t about protecting the United States from a flood of Chinese goods, what is it about?

To some extent it’s about national power. By making a trade deal with China, Canada is somewhat reducing its dependence on the United States. And Trump doesn’t want that.

More importantly, this is about Trump’s ego. Although he will never admit it, Trump is obviously aware that the speech Mark Carney, Canada’s Prime Minister, gave at Davos was hailed around the world for its courage and clarity, while his own rant was widely seen as evidence of his cognitive decline. So Carney must be humiliated.

One tell about Trump’s real motivation: In his post threatening prohibitive tariffs, he called Canada’s leader “Governor Carney” — surely a reference to Trump’s delusions about making Canada the 51^st state, not a reference to Carney’s former career as a central banker. Gratuitously insulting foreign heads of state isn’t something you do if you’re trying to achieve policy goals, but it is what you do if your whole purpose in life is to dominate and demean everyone around you.

So, is Trump actually going to follow through on his threat? I’ve argued that people invoke TACO — Trump always chickens out — far too much. All too often he doesn’t chicken out. However, given how devastating an all-out trade war with Canada would be for some U.S. industries, TACO may be a good bet in this case. Furthermore, Trump is getting crazier by the day, promising vengeance on so many people and institutions that it’s unlikely that he or anyone in his administration can even keep track of his threats. Yesterday he threatened new tariffs on South Korea, another erstwhile ally.

One last point: If Trump does impose punitive tariffs on Canada, he will presumably do so by invoking the International Economic Emergency Powers Act, which means that his actions will clearly be illegal. But the Supreme Court keeps enabling Trump by delaying a ruling on the legality of his tariffs.

There’s no plausible explanation of this failure to act other than sheer cowardice on the part of right-wing justices. They surely know that Trump is exceeding his lawful power and that they will disgrace themselves if they say otherwise, but they are afraid to defy him.

As I said over the weekend, Trump’s cowardly enablers are largely responsible for the abyss America has plunged into.

MUSICAL CODA

So many great Canadian bands to choose from