Trump’s Trade War With Canada Is Not About Canada

By Kevin D. Williamson

Wednesday, August 26, 2026

 

The leaders in Iran will agree to nothing. The leaders in Canada could agree to anything—and it would not be enough. What should be understood is that the latter is, to some considerable degree, a consequence of the former.

 

Poor Canada has been geopolitically upgraded from afterthought to distraction—our polite friends to the north were better off when we U.S.A.-type Americans had forgotten they were there.

 

In trade as in most things, the Canadians have been nothing if not agreeable: They agreed to NAFTA, they agreed to NAFTA’s reworking as the U.S.-Mexico-Canada Agreement, just as they had agreed to the Reciprocity Treaty of 1854 and the Canada-U.S. Reciprocal Trade Agreements of 1935 and 1938, and the Canada-U.S. Free Trade Agreement of 1989.

 

That’s a lot of agreement. The Canadians probably would agree to a good deal more if Donald Trump and his clown car of an administration were to put a serious deal on the table in front of them, but there is no such proposal. Prime Minister Mark Carney was right to walk away from “negotiations” with the United States because there were no genuine negotiations under way: Canada is simply a punching bag for the Trump administration, a prop used to gin up a couple of days’ worth of headlines when a distraction—from Iran—is desired by the retired game-show host and quondam pornographer who has been, incredibly enough, twice elected president of these United States.

 

The notion that the United States is being victimized by trade with Canada is so insipid and so imbecilic that one almost feels degraded by explaining it, if only because such an explanation implicitly takes seriously the premise that Trump et al. take the premise seriously.

 

But here goes:

 

The United States does have a substantial trade deficit with Canada, for which the United States ought to be grateful, inasmuch as that deficit is mainly driven by Canada’s export of discounted crude oil to U.S. refineries, without which the price of gasoline and diesel—and everything that is moved, processed, or stored with the use of petroleum products—would be even higher than it is right now. (Diesel is damned near $6 a gallon at my local.) Canadian producers sell their oil at a discount to U.S. buyers for a couple of reasons: 1) Canadian pipelines mostly run north-south rather than east-west, and the only potential buyer north of Canada is Santa Claus; 2) Canadian oil is sulfurous, sludgy stuff, and there are not many refineries outside of the United States set up to efficiently handle that kind of crude.

 

It takes a special kind of stupid to believe that Canada is victimizing Americans by selling us oil at below-market rates. The case is closer to the opposite: Americans buy Canadian oil on sale because Canadian producers would have a hard time getting market rates for their oil from buyers in Europe or Asia. Crude oil is not an entirely undifferentiated commodity, and transporting the stuff is a major factor in the market. Canada desperately needs investment in its energy-export infrastructure but, alas, it is as difficult to build a pipeline there as it is in the United States, and so Canadian producers remain largely captive to the U.S. market—however fickle and abusive a trade partner the United States may prove to be.

 

The more meaningful points of trade friction between Canada and the United States are relatively minor and mostly parochial: Canadian and U.S. timber producers work under different pricing structures because most Canadian production happens on public land while most U.S. production happens on private land, and U.S. producers complain that the Canadian government should make it more expensive for Canadian producers to operate, because Americans who want to buy wood-framed houses simply must be protected from lower prices. Canada does maintain a very stupid regime of dairy protectionism that should be reformed—as, indeed, does the United States, which keeps milk prices artificially high in the U.S. market through the usual methods of government controls and trade restrictions.

 

I do not enjoy writing this, but: None of the preceding 384 words really matters. The current U.S.-Canada trade drama is not about U.S.-Canada trade: It is about the Trump administration’s amazing feat of compressing about 80 percent of the political experience of the Vietnam War into a few months, packing in all of the defeat and humiliation but sparing Americans—for now, at least—the draft and the body bags.

 

The world is laughing at Scott Bessent, and only in part for his greatest personal faux pas, i.e., being Scott Bessent. The proximate cause of today’s laughter is that, having announced an “economic D-Day” targeting Iran, the Trump administration has announced a program amounting to—as predicted in this space—approximately squat. Tehran’s economic lifeline is held by Xi Jinping, with China consuming about 80 percent of Iranian petroleum exports. A regime of “secondary sanctions”—meaning applying economic sanctions to those countries whose governments decline to enforce American sanctions on Washington’s behalf—would mean a direct and ugly economic confrontation with Beijing. It is worth remembering that China ran circles around the Trump administration the last time the incompetents and amateurs in the dopey red caps tried that, with Beijing using the threat of withholding rare-earth minerals to force Trump to cry whatever is Mandarin for “Uncle!” in about two minutes.

 

Trump does not have a free hand to beat on Iran because he does not have a free hand to beat on China. But beating on Canada is a low-risk proposition.

 

The Canadians might, someday, wish to do something about that.