The Pointless Trade War with Canada

National Review Online

Tuesday, August 25, 2026

 

Handling China, Russia, or the EU will always be tricky. Mistakes and missteps on our part are, of course, undesirable, but given the complex issues involved, probably unavoidable. However, for the U.S. to be in the middle of a poisonous brawl with Canada (Canada!) takes a degree of foolhardiness that would once have been inconceivable.

 

President Trump’s tariff plans were always going to anger Canada, but persisting with “jokes” about the “51st state” made things worse. They helped insert a turbocharged Canadian nationalism into tariff negotiations and ensured the election of Mark Carney, a Davos-Canadian with an agenda all his own as Canada’s prime minister.

 

NAFTA was a good deal for the U.S. Its successor, USMCA, wisely kept most of it intact while adding some needed updates and unneeded protectionism. Trump described it at the time as the “largest, most significant, modern, and balanced trade agreement in history.” Once reelected, Trump wanted more, but, from his opening salvos onward, he has made reworking our trading relationship with Canada much more difficult than it needed to be.

 

The latest tariff standoff with Ottawa was triggered by the administration retaliating against Canadian retaliation (trade fights are like that) at federal and provincial levels, for earlier U.S. tariffs and the insults that preceded them. The White House claimed the power to do so under Section 338 of the 1930 Tariff Act, an act, as we have observed before, better known as Smoot–Hawley, a familiar name to students of the Great Depression. Section 338, which allows the president to impose tariffs up to 50 percent under certain conditions, had lain dormant for the better part of a century. Its survival is, to repeat ourselves again, a reminder of the value of sunset clauses.

 

Trump had given Ottawa a deadline to come to a deal covering various disputed areas in order to avoid tariffs on $20 billion of goods. Despite the two sides reportedly coming close to an agreement, the deadline was missed (each side is blaming the other). The new tariffs have come into force. Canada’s Carney has said that Canada will retaliate dollar-for-dollar starting September 8, with tariffs affecting a wide range of goods from dairy products to electronics. Trump has now announced on Truth Social (why bother with Congress?) that from January 1, yet more tariffs will be imposed: “Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%.”

 

Using wording clearly intended to refresh memories of earlier insults, Trump added that “Canada will be treated like a State no longer!” He also referred to Canada’s trade surplus of $60 billion with the U.S., a surplus more than accounted for by U.S. imports of $90 billion worth of crude oil. As was noted by the editors of the Wall Street Journal, Canadian heavy crude is particularly well-suited to U.S. refineries. Exclude it, and “U.S. refineries would also operate at lower capacity.” Is that in our interest?

 

As is so often the case, tariffs will inflict economic damage on both sides of the border. U.S. manufacturers will take a hit, not least because anticipated cuts to tariffs on steel and aluminum will not now take place. Trump’s new tariff hikes will also have a direct impact on the prices of a range of consumer goods, unwelcome news for those who have to pay them and for the Republican candidates who will be asking for their votes in a few weeks.

 

The geopolitical consequences may also be serious. In an age of anxiety over supply chains, creating a cohesive North American bloc makes sense. As Carney remarked recently, Canada supplies 99 percent of all U.S. natural gas imports, 85 percent of its electricity imports, and 60 percent of its crude oil imports. But the U.S. is constantly moving in the opposite direction. It recently exercised its right to reject automatic renewal of the USMCA, setting the stage for an annual battle over its terms with our northern and southern neighbors. Meanwhile, Canada is looking to become less dependent on the U.S., with measures that may include the construction of an oil pipeline that would make it easier to supply Asian buyers.

 

The way that the administration is behaving toward Canada, an old friend, cannot fail to alarm other American allies. Referring to Canada’s trading agreements with the U.S., Carney commented that sometimes the Americans’ “signature was written in pencil,” a remark that will inevitably raise questions about the reliability of the U.S. in other policy areas too, not least defense.

 

Clearly, the U.S. and Canada need to resolve this crisis as soon as possible, a task that will be made more difficult by the likelihood of public anger in Canada over any significant concessions. But even when this has been accomplished, the damage done to one of this country’s greatest assets, its close friendship with its resource-rich and strategically located northern neighbor, is going to take a long time to repair.

 

And for what?