Neil Malik
What’s Carney’s best response to Trump’s newest tariffs on Canada?
What’s Carney’s best response to Trump’s newest tariffs on Canada?
Image: Office of the Prime Minister
The Topline
- Last week, U.S. President Donald Trump imposed “an additional 50 per cent tariff on certain Canadian goods in response to Canada’s discriminatory treatment of American products,” starting Aug. 19 — even if those goods are currently tariff-free under the existing Canada-United States-Mexico Agreement (CUSMA).
- The list of goods targeted by the U.S. includes products such as alcohol, furniture and electronic equipment.
- CBC reports that B.C. and Quebec stand to be the two provinces most affected by the new tariffs, with Alberta and Saskatchewan largely spared
- Recent polling from Angus-Reid finds the majority of Canadians would choose to retaliate against the U.S. with counter-tariffs
- Today, Trump told Fox & Friends in an interview, “Mexico and Canada need us, we don’t need them,” adding that CUSMA is “not important for us.”
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Switch sides,
back and forth
Enough is enough
The day after Trump announced new tariffs against Canada, Prime Minister Mark Carney told reporters he plans “to intensify negotiations in the coming weeks, and the team and myself look forward to doing that.”
Sounds lovely, doesn't it?
In a perfect world, both countries shake hands on a negotiated free trade deal. They’ve managed to do it three times before — first in 1988, then in 1994 and most recently in 2020.
Everyone gives a little, but everyone gets a little. Then we all join hands and sing Kumbaya while our economies flourish.
But this isn’t a perfect world. It’s Donald Trump.
In his book The Art of the Deal, Trump writes , “My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.”
Case in point: whenever Canada makes a concession in good faith, Trump comes back to demand more.
Ottawa strengthened the border, scrapped the digital services tax, removed most retaliatory tariffs, eased pressure on American streaming companies, and compromised on the Gordie Howe International Bridge.
Yet in return, Canada gained nothing except Trump repeatedly imposing or threatening new tariffs anyway.
Peter Harrell, an attorney who served as former president Joe Biden’s senior director of international economics, told Semafor, “What the administration is trying to do here is to amp up pressure on Canada to get them to make more concessions in the USMCA negotiations.”
“What this might just as easily do in Canada is force them politically to dig in despite the costs — and actually retaliate and escalate in response,” Harrell added.
That’s exactly what Canada should do.
Normal negotiation just isn’t in the cards, especially when Washington describes its newest tariffs as a response to Canadian tariffs, even though those tariffs were introduced only after Trump first targeted Canada with tariffs of his own.
It’s time to take a page from the premiers’ playbook. The removal of American liquor from Canadian shelves is resonating, especially in Kentucky and California.
Carney’s next move should be to impose tariffs on products that also stand to resonate — starting with the items Trump intentionally excluded from his latest tariffs: energy, potash, fish and critical minerals.
Take energy, for example. The U.S. leans on Alberta’s oil because of existing pipelines that were built up over decades, according to the Canadian Energy Centre.
“If they’re looking for alternative sources of supply, you’re probably looking at shipping it in by tankers and putting it into railcars, which are very expensive,” Fraser Johnson, the Leenders Supply Chain Management Association chair at Western University’s Ivey Business School, told the Toronto Star in March 2025.
“All the estimates I’m seeing is between a 40 and 50 cent a gallon increase in the price of gas” for American consumers, he added. That’s like another 15 to 20 cents per litre in Canada.
Keep in mind, Johnson’s comment was made almost a year before the Iran war caused gas prices to skyrocket. Imagine how Americans might react now, especially considering Trump’s approval rating is already suffering in part from high gas prices.
Back in Canada, the premiers of Alberta and Saskatchewan are firmly against that idea. Alberta’s economy runs off oil exports, while Saskatchewan is a major supplier of potash to the U.S.
There’s no doubt that retaliatory tariffs on either product will be challenging for those two provinces. Since a portion of Alberta’s gets shipped back from U.S. refineries to Canadian gas pumps, residents across Canada might feel the sting too.
But meanwhile, Ontario, Quebec and B.C. are getting hardest hit from Trump’s trade war. Alberta and Saskatchewan can’t expect the rest of the country to keep taking damage while their biggest exports remain off limits.
As long as Canadians are up for it — which polls suggest they are — Trump’s track record suggests strong retaliation could be effective.
In 2019, he removed his steel and aluminum tariffs a year after the Trudeau government answered with dollar-for-dollar counter-tariffs. And in 2025, he dramatically reduced tariffs on China after Beijing responded with punishing tariffs of its own.
So let’s stop being polite Canadians. Time to start using our leverage to punch right back at the bully next door.
Keep calm and carry on
That’s the famous British slogan from 1939 amid the threat of war.
Here’s a fun fact: that campaign was never actually seen by anyone at the time. It only went viral and resonated across the globe after being accidentally rediscovered 61 years later.
Today — another 26 years later — the phrase once again rings true. In the midst of a trade war with Trump, Canada’s best response is exactly that — keep calm and carry on.
In Trump’s own book, The Art of War, he writes , “The worst thing you can possibly do in a deal is seem desperate to make it. That makes the other guy smell blood, and then you’re dead.”
If Canada follows Trump’s advice and stays cool for the next few months, it may ultimately find itself in a much stronger position to negotiate from.
Here’s how: To invoke these new tariffs on Canada, Trump is using Section 338 of the Tariff Act of 1930. That’s right — 1930.
Trump is the oldest U.S. president ever sworn-in, and he wasn’t even born until 1946. That’s how old this thing is.
Also called the Smoot-Hawley tariff, Section 338 allows the president to impose tariffs on countries he believes are discriminating against U.S. commerce.
But instead of improving life during the Great Depression, the Smoot-Hawley tariff made things worse. U.S. imports and exports tanked. Overall world trade fell by some 66 per cent between 1929 and 1934.
Even the U.S. State Department’s own Office of the Historian says the Smoot-Hawley tariff “did nothing to foster cooperation among nations in either the economic or political realm during a perilous era in international relations.”
When the U.S. finally realized its strategy had backfired, it passed the 1934 Reciprocal Trade Agreements Act and started lowering tariffs. Smoot-Hawley went down in history as a “watchword for the perils of protectionism.”
For the next 92 years, Section 338 was never used to impose tariffs — until Trump came along.
The lesson learned from Smoot-Hawley was this: Trying to make your neighbour poorer can ultimately make you poorer too — and that’s why Canada shouldn’t use oil or potash to retaliate against the U.S.
In 2025, Canada exported about 3.9 million barrels per day of crude oil to the U.S. But we also imported about 390,000 barrels per day of U.S. refined petroleum products — things like gasoline, diesel, jet fuel and heating oil.
Putting oil tariffs on the U.S. risks making those imports even more expensive during an energy crisis that’s already being felt across the globe.
Similarly, nearly $5 billion worth of potash was exported to the U.S. last year, with much of it used to grow American crops. Some of that food gets exported back to Canada, so any new tariffs on potash risks pushing grocery prices even higher for Canadians.
Trump was smart enough to carve out oil and potash from his tariffs on Canada because hitting those products would risk being more destructive than effective. Canada should follow his lead.
Here’s the better approach. The U.S. midterm elections are happening in November. Trump’s already feeling heat from starting a war, high fuel prices, inflation and his previous tariff policy getting shot down by the Supreme Court.
He needs a political win — badly. So as long as Canada stands tall, he won’t get one from us.
If the Democrats win the House of Representatives, and maybe even the Senate, then a weakened Trump might leave Canada in a better negotiating position.
In the meantime, Canada should think about stroking Trump’s ego by using carrots — not sticks — as bargaining chips after the midterm elections.
For example, putting American alcohol back on provincial store shelves would give Trump a “win” — but still allow Canadian drinkers to ultimately decide with their wallets.
When Alberta lifted its ban on U.S. alcohol after three months, Grant Schneider, owner of Aligra Wine & Spirits, told CityNews Edmonton that American products weren’t nearly as popular as they once were. “Sales are down for American products, no doubt about it,” he said.
Carney’s doing the right thing. Don’t panic over Trump’s latest tariff threat. Don’t fold your hand. Stay the course.
As November gets closer, it won’t be long before Trump starts feeling the heat from his own voters and Canada finds itself in a stronger position to make a trade deal.
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