Trump’s tariff tantrum against Canada explained

As Trump’s tariff threats loom, trade expert Stuart Trew talks to host Donya Ziaee about what Canadian workers should be prepared for, how the corporate elite are exploiting the crisis, and how the Left can seize on the moment to push for more progressive change.

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Donya Ziaee: Welcome to The Breach Show, featuring sharp analysis on politics and social movements in Canada. I’m Donya Ziaee, a new senior editor at The Breach, and I’m excited to be returning to the podcast as an occasional host in the coming months. 

Today on the show, we’re talking tariffs.

Since taking office, U.S. President Donald Trump has dangled the threat of a 25% tariff on all Canadian imports, and there’s been no shortage of news and commentary about how we should respond to this potential trade war. With Trump also amping up his rhetoric about annexing Canada to make it the 51st American state, we’ve seen a revival of rhetoric to reclaim Canada’s national and economic sovereignty.

Meanwhile, Canada’s political and business elites have seized the opportunity to promote their own agendas, pushing for policy concessions that are supposedly intended to appease Trump, but that are–conveniently—the same policies they’ve always been asking for.

Our guest today is going to help us make sense of what’s really at stake.

Stuart Trew is a senior researcher at the CCPA, the Canadian Center for Policy Alternatives, where he directs the Trade and Investment Research Project. He previously co-founded the Trade Justice Network, which brought together labour, environmental, students, and human rights and other social social justice groups to challenge neoliberal trade rules and propose progressive alternatives.

Welcome to the show, Stuart. Thanks for joining us.

Stuart Trew: Thank you, Donya. It’s great to be here.

Ziaee: I want to start by first getting some of the basics out of the way. First of all, will he or won’t he?

We heard Trump say back in November that he would, “charge Mexico and Canada a 25% tariff on all products coming into the United States and its ridiculous open borders. This tariff will remain in effect until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our country”

But then came the executive orders on day one of his presidency, and we were all relieved to see that the tariffs weren’t on the table.

But just a few hours later on the same day, he actually casually added tariffs would be coming on February 1st, which is just a few days away. And the latest reports are just muddling things even more. They’re saying that maybe it’ll happen, but maybe it’ll be in two phases—maybe some tariffs now, maybe some later—and maybe he can still be convinced to scale them back?

What’s going on here, Stuart?

Trew: Your guess is as good as mine and probably as anyone’s, although I kind of suspect that this latest version of of reality from Howard Lutnik—he just announced today that there might be a two-stage tariff, one hitting us as early as Friday or Saturday and then maybe another one coming down the pipes in April. Probably he knows about as much as anyone about what’s going on.

We’ll have to wait and see, obviously, how high the tariffs are, what Trump actually wants with respect to borders or fentanyl or migration. We still don’t know. You kind of have to keep hitting refresh to get the latest version.

Ziaee: This was the case in 2017 as well, no? When he first took office, he came in with these great proclamations, but what happened in practice was quite different.

Trew: Yeah, yeah.This is something we’re grappling with. On top of the uncertainty, there’s questions of how alike and how different is this second Trump presidency to the first one.

In 2017, he was coming and swinging out against the worst trade deal in history, which was the North American Free Trade Agreement—threatening to cancel it, threatening to put tariffs on Mexico and Canada to pressure them into some kind of action. And of course, eventually renegotiating that trade deal over the course of his first two years for his presidency. So we’re in familiar waters here with respect to Trump’s strategy. He’s doing exactly the same thing again.

I think partly he wants what he says he wants with respect to migration, although we don’t know exactly what that is yet. He seems to mean what he says about stopping fentanyl flowing into the United States, although of course there’s not a lot of it flowing in from Canada. 

But there are other things happening that are different from then. I think tariffs being broadly understood by this administration as good, as something that can be used to pressure other countries to get whatever the U.S. seems to want from them, as a tool for raising funds for the government, as a tool for bringing in investment back into the United States—they seem to have a well-thought out plan which seems to have broad Republican support. So I think that’s different. We’re going to have much more emphasis on the use of tariffs as a regular tool for Trump to achieve what he sees as U.S. objectives, geopolitical objectives, economic objectives and whatnot.

Ziaee: And you wrote recently, in response to when Trump started floating some of these threats, that the threat of the tariffs is as much about trade as it is about coercion into getting Canada to align itself on certain policies. Can you say more about that?

Trew: Yeah, when I wrote that, it was kind of very quickly after we saw that Truth Social post in November about the tariffs and the fact that he mentioned fentanyl and migration to me was a clue that this was going to be a coercive tariff versus something what I would call maybe an economic tariff, which would be the use of tariffs to achieve some kind of strictly economic goal. Whether it’s to rebalance trade with Canada or, again, to bring investment away from Canada and Mexico, perhaps into the United States.

And I think the reason I wrote it that way was because I think that’s the eventuality. That’s the idea Canada had been preparing for. They were preparing their Team Canada approach to go in and do what they did last time, which was to do a bit of diplomacy in the United States, talk about how balanced Canada-U.S. trade is, talk about how much we depend on each other and how many jobs are fostered in the United States through trade with Canada. And then we have this announcement and it’s about borders, right? It’s about fentanyl. It’s about human bodies. And the effect that a newly authoritarian presence in Washington might have on those bodies, right?

So my question was, are we prepared for that? Are we prepared for the potential trade-offs we’re going to have to make in terms of immigration policy, in terms of our drug policy? What are we going to have to do in order to make those coercive threats of a tariff go away? 

I don’t think the Canadian government’s prepared for that. And I don’t think any of us have really thought it through. It hasn’t certainly hasn’t been in the media that much since November. There’s been a lot of panic, and the panic is creating a sense of fear, I think, among people and workers in this country that the worst possible thing is going to be these tariffs. Well, there’s actually going to be potentially other bad things that we may have to make very hard decisions about in order to get rid of those tariffs. 

Ziaee: I do want to talk about the impact of the tariffs themselves as well. In the media, at least the commentary that I’ve been reading, there’s a lot of focus on what the tariffs would mean for Canada’s national interests, what it means for Canadian national and economic sovereignty and so on. But we see less about, at least in establishment media, what the impact of these tariffs would be on Canadian workers and families and consumers .Can you say more about what the impact would be, more tangibly? Are there sectors who would be hardest hit?

Trew: This is a really tough question and it’s I think another important element of the uncertainty of all of this. The impact on workers is going to depend on a number of factors. It’s going to depend on whether we’re looking at a universal tariff on all Canadian products—and in that case, it’ll depend on how high the tariff is. So Trump has mentioned a 25% immediate tariff on all Canadian imports in the United States. That would be absolutely devastating for the Canadian economy, and we would be looking at the need to very quickly and immediately be getting worker supports out the door, basically like we did during the COVID emergency when the economy just collapsed.

But if it’s something else– it could be on certain specific products like it was last time. We’ve seen Trump this week also mention maybe he hits copper, maybe he hits steel. So again, it’s this uncertainty. We don’t know what’s going to hit.

But if it were sectoral, again, we’re looking at a different picture. It will have effects on the industries first, obviously, and then downstream industries that use those products. And so you’re looking at maybe a paired down emergency response from the federal government and some kind of retaliation on U.S. products to get an end to those tariffs.

It is very hard to prepare when we don’t know exactly how it’s going to affect people.There has been some talk, if you look at what the banks are putting out in terms of their assessments of which industries will be hit hardest—some of them say resources, because much of our resources exports go to the states so a tariff’s going to hit them first. But on the other hand, the United States needs those resources, right? So there’s a very good chance that the companies will be importing them anyway. So I think the biggest impact probably will be on small manufacturers, people supplying component parts in the auto sector, small manufacturers across the country, and then potentially some sectors like agriculture and fisheries on the East Coast could get impacted.

The other impact potentially is inflation, in the sense of we’re paying more for consumer goods. This isn’t a guarantee that we would feel that immediately. Companies have ways to adjust prices based on their costs, they can reduce costs elsewhere, they can stockpile goods, so that we’re not immediately passing the price on. 

So it’s very difficult to predict where and when the inflation would hit. But I think in the long run, obviously you’re going to have prices going up right across the board. Another reason I think why the government should be not just supporting workers but thinking about how it’s going to respond in that eventuality. Say companies start ratcheting up prices on things that we need to buy as consumers—food, toiletries, other basic products that we need to live our daily lives—the government needs to be thinking about how to constrain any price increases in that sector.

Ziaee: I’m also thinking about how these tariffs would impact American workers and farmers and so on. Wouldn’t this hurt Trump’s own base economically?

Trew: Yeah, it would. And they know that. If you read the policy documents that justify the tariffs—admittedly, they justify them on a number of different terms, they see them as a way to raise revenue for the government or as a way to correct trade imbalances—but all the time they’re saying, yeah, there would be some pain, and there would be pain for Trump supporters as well as Democrats and Republicans. But it’ll be worth it in the long run, because in the long run the goal is to bring manufacturing back to the United States. And the longer you can keep these tariffs in place, the more likely it is that firms will say, “do I really want to put a new factory down in Canada, or Mexico for that matter? Maybe I’ll just source as much as I can in the United States and establish my assembly plant there.”

Ziaee: Let’s talk about what the responses have looked like in Canada. As I mentioned, the media and political establishment have basically been breathless with commentary about how we should respond. And I’m hoping we can go through some of what’s been put on the table and talk about who’s advocating for these solutions and why and what the impact would be.

Starting with the most out there response, which has been from the likes of Kevin O’Leary, the Canadian businessman, former TV personality, or as former MP Charlie Angus recently called him, a loser billionaire. O’Leary has been arguing that to deal with this, what we need is more integration with the U.S. and even proposed the idea of an economic union. What do you make of what he’s putting out there?

Trew: Yeah, O’Leary’s a bit of a clown. I was thinking about him the other day. I was watching his interview on this with CBC and he’s talking about the signal and the noise and how only he can decipher Trump’s signal from the noise. And I was like, he’s kind of like a shit Neo right from the Matrix, you know? He can see the patterns and he’s dodging the bullets or whatever.

But yeah it’s not on anyone’s agenda, this idea of a North American economic union. When I say that, though, this is something that kind of comes back over and over again.You go back to the War on Terror period,, this was the immediate response of the business sector when actual barriers went up at the border. The Bush administration shut the border to commerce for a few days and it just created absolute panic in Canada. And the proposals that got put forward looked a lot like what O’Leary is calling for—some kind of grand North American economic space, common customs zone, maybe a common currency, common immigration policy and whatnot. 

So this comes up over and over again in the post free trade period, I’d say since the 1980s, because it is seen by some people in the business community as kind of: a natural progression of economic integration is kind of political integration.

The thing is, it’s on no one’s agenda. It’s not on Trump’s agenda. It’s not on anyone in Ottawa’s agenda other than O’Leary and a few people putting it out there.

Ziaee: And the polls are very clear that that’s not what people in Canada want.

But on a more serious front, we’ve got the Team Canada response as well, which as you know, has found an unlikely leader in the Ontario premier, Doug Ford. What’s the proposal there, and who’s it supported by? 

Trew: Team Canada to me is, is kind of  a getting back together of the team.So Team Canada was a concept that the Trudeau government put together during the NAFTA renegotiations in 2018-19. The idea was everybody’s on the same page. We know this is going to be hard. Let’s get all the provinces on the same page. Let’s speak as one and let’s put all of our resources into lobbying in the United States. Let’s just have a common strategy.

So that’s what they’re trying to do again, but they’re doing so in a much more complicated political space, I think, in terms of elections in Ontario, in terms of a potential unity crisis with the western provinces being fermented by Premier Smith and others with respect to resources. And so the Team Canada approach is really trying to do that again, trying to find some kind of unity.

Ziaee: Well, they’ve said that every option is on the table as far as responding to the U.S. tariffs, and one of the options that keeps coming up is the idea of matching tariffs, retaliatory tariffs. What would be the impact of that?

Trew: I think it’ll depend on where we retaliate.So coming back to the Team Canada question, I think Doug Ford’s onto something in his approach in the sense that he’s making threats and he’s letting the Americans know where they’re vulnerable—whether it’s on electricity exports from Ontario, whether it’s on potash, which they rely on in their agricultural sector. He’s doing this vocally to try and encourage people to realize that, yeah, the pain would be two ways.

And so the retaliation is going to be designed to be painful mostly for American businesses and hopefully less so for Canadian consumers, be they Canadian businesses, manufacturers and others who rely on imports from the United States, or consumers.

When it comes to food—again as we said, food, toiletries, other essentials—the retaliation though will have the same effect for workers in the United States. It’s going to eventually potentially create these inflationary pressures. But the goal of the retaliation would be to get an end to those tariffs as quickly as possible. So the goal isn’t to retaliate for retaliation’s sake, it would be to create some leverage in order for Canada and Mexico to try and get rid of those tariffs as as quickly as possible.

Ziaee: I just find it fascinating that the idea of retaliatory tariffs gets spun as this idea of sticking it to Trump when the ones getting screwed are really Canadian workers and families. And there was a telling passage in a Globe and Mail editorial recently called “Canada should fight U.S. tariffs with tariffs,” that said, quite directly: “These tariffs will punish Canadians just as the Trump tax on imports will punish Americans. That is the sad reality of a trade war.”

Trew: Yeah, nobody wants this, right? They will have a negative effect, obviously, on Canadian workers—retaliation would potentially also kind of blow back on workers here. And I think that underlines the importance of having a priority, for Ottawa and for the provinces, of having the support available—the income support, in case of layoffs, support for businesses who may need to cover up the windows with wood and wait for the hurricane that is  this trade war to abate. But, at the same time, the political environment, I think, in Canada is such that—and you mentioned this around the kind of resurgence of economic nationalism—it would be difficult for Canada not to respond and to just sit back and take these tariffs. It just wouldn’t fly right politically. 

And I’m not saying that’s a good reason to put the retaliation in place. In fact, I think we should retaliate very hard to show Trump that we’re not going to put up with this—there’s only so much economic coercion we should have to take—but to retaliate smartly in ways that aren’t going to affect workers as much here. And to back that up and have the counterpart of that policy, which is extremely strong supports in the short-term, and in the long-term thinking about making Canada less dependent on the U.S. market for our economy, for our jobs.

If you’re not preparing for that future world, where we’re less vulnerable to these kinds of attacks from the United States, then I don’t think you’re doing your job.

Ziaee: I do want to cover one other response, which says that Team Canada is too defensive, that what Canada needs right now is to go on the offensive to boost its competitiveness globally and to attract more investment and business and so on. And those who put forward this view have a list of pretty predictable policy recommendations that they say will get us there. Can you say more about some of the big policy concessions that are on the table from Corporate Canada, that are seizing on this trade war to push through the policies that they’ve been advocating for for a long time now?

Trew: Yeah, this is a very important part of what’s going on and an important part of the debate. The business think tanks, so Business Council of Canada, Chamber of Commerce, others are seizing on the moment, seizing on the crisis, to push things they want to see.

They want to see deregulation, for example, across the economy, in particular in resource sectors, oil and gas.They would like to see things disappear like the digital services tax that the federal government recently put in place. This is a tax on the income generated from things like watching Netflix or paying for things through Amazon in Canada. A lot of this activity is just not taxed.

Ziaee: This is the tax that Trump’s oligarchy bros love to hate.

Trew: They do, yeah. They hate this.They love to hate the Online Streaming Act and the Online News Act, which are again, intended to provide some support to domestic Canadian newspapers, for example, and digital companies.

So yeah, they want to see these—let’s just kill it. Let’s just sacrifice it now as on the altar of Trump and hope that he goes away on the tariffs. And they’re talking about things like tax cuts, too. They would like to see Canada follow Trump in a race to the bottom on corporate taxes.

This is purely opportunistic on their part.They just want to see things they’ve always wanted—lower taxes, fewer regulations, and getting rid of things like digital services tax, on behalf of the U.S. companies that are some of their members. And I think not only is it opportunistic, but it’s going to fail because Trump—he just wants investment to go to the United States, investment that is in Canada. He doesn’t think he needs us for anything. So this idea that we can just sacrifice policies here and there and he’s going to go away—I think it’s just completely wrong-headed. 

And then even on a bargaining strategy, it leaves you with nothing, right? You’re going to sacrifice things that you’re not even sure he wants. And then you come to the bargaining table when these tariffs are hit and he’s asking for something else completely. So these voices, we just have to ignore them, I think. The problem is they have such a strong, loud voice.

Ziaee: The other thing they point to a lot these days seems to be boosting defense spending.

Trew: Yeah, that’s another big one too. And this is one where we know Trump is pushing everyone. He wants, what is it now, 5% of a country’s GDP to be spent on defense? It’s an incredible amount of money when you think about it. It would be tripling, quadrupling what Canada already spends and it would require massive cuts across government in order to make it a reality.

Obviously would benefit through the sales of their products, their military products to the government. And they would also benefit because they want to see the government shrunk down in size.

Ziaee. With the fact that Parliament is prorogued right now, it’s unclear when we’ll see a government response. I’m wondering what you think a potential Poilievre government response might look like to this crisis? And how much do you think these trade disputes could have an impact on the outcome of the upcoming federal elections?

Trew: I think they’re going to have a huge impact on the election debate. I don’t know about the outcome, but it’s clear that we’ve gone from having a carbon tax election, as Poilievre wanted, to having a Trump election. And to some extent, we’ll see how things pan out once Parliament comes back following the Liberal leadership campaign and return to Parliament. But it’s looking very likely that whoever is the new Prime Minister, the Liberal government will be introducing some kind of plan to respond to whatever we’re going to see coming down in February.

It’s possible we’ll get additional tariffs hitting Canada in April. And it’s possible by the time Parliament’s back, Trump’s already talking about renegotiating the Canada-U.S.-Mexico Agreement, which he said in one of his first day memorandums on trade that that was a priority.

So the situation is rapidly developing. Any chance that Poilievre had of focusing in on the carbon tax, I think that’s gone. And it’s possible we’re going to see some kind of NDP-liberal agreement to pass some kind of initial response—this was in the news this week—to the Trump threat. At which point, how would Poilievre respond differently? We’re going to see if he’s going to vote for it or against it, and his decision will affect where we go in the election. 

Is he going to vote against the package for workers that would support them in the event that we see layoffs from Trump tariffs? I think that would be quite something if he did. But is he going to vote for the government and go back on his promise to bring the government down at the earliest moment? These things are all going to be important factors in how the election takes place.

So, I don’t think it’s important necessarily how he would respond differently than the Liberals if he and the Conservatives were in power. I think we’ve got to get through this first stage first to see how the parties respond to this initial Canadian federal government response.

Ziaee: Let’s talk about some of the more progressive responses to this trade dispute.You mentioned already some of the policy options on the table, but more broadly also the need for some sort of emergency response, whether that’s helping struggling industries or more social supports for workers who will be impacted, and then more broadly, shoring up our national industries and starting the move to deintegrate our economy from the U.S. It’s all sounding a little bit Green New Deal-y to me!

Trew: That’s a really great way to put it. You’re absolutely right. We have to seize on these crises to push our agenda forward: the progressive agenda, which always looks the same. It’s not surprising that these things look the same. It’s because they’re good ideas.

We know we need to be powering down our fossil fuel energy sector and bringing up the renewables in our grid. We know we need to be thinking about how we’re going to transition those workers fairly and safely right into new sectors. And so a lot of what we could be doing to respond to Trump would get us in the same direction as the Green New Deal, absolutely.

I think some other ideas that we should be considering is the cost of living crisis, which, irrespective of Trump and the threat this poses to our economy, is still a major issue for Canadians. And the government can play a role in reducing the cost of living, not just for you and me, but for business as well. And they can do that by providing more services.

I would like to see that come out as part of the debate around responding to Trump—how do we stop the stealth privatization and chipping away of our health care systems provincially by enhancing the services. Dental care—expanding that, for example. That was a good step in that direction. The more costs you don’t have to incur as someone who has to work to make money to live, the more costs that we can incur collectively through our government, through social services, the less businesses actually have to invest in benefits and benefit schemes to attract workers, the cheaper it is for them to establish operations here, and the better off we all are. And then quality of life goes up, companies will want to invest as well. Quality of life is one of the factors that businesses will consider when putting down a new factory or putting down new operations.

We can’t compete on a race to the bottom with the United States. We cannot compete on a race to the bottom on taxes or regulations. But what we can do is we can compete on things like public infrastructure, social services, better roads made with Canadian materials, Canadian concrete, Canadian steel, redirecting some of those products that will be affected by tariffs. We can redirect them into building houses, which we need to build here, not just houses, but social housing, apartments, all these things that we need to do to bring down the cost of living will actually enhance quality of life for businesses as well as for everyone else.

Ziaee: There are obvious, larger takeaways here about free trade and about Canada’s economic integration with the U.S. Can you speak a little bit about how we got here—to the point of being so vulnerable to the whims of a U.S. president?

Trew: Our economic integration with the United States—this is a long standing policy. This set in in the late 80s. And I think we’ve seen consecutive governments adopting the same policies: we need to do everything we can to maintain secure, stable access to the U.S. market. And what we see with this crisis, as you say, is that it’s just a fool’s errand. Somebody’s going to come down at some point with some new threat to that market access, which is going to send us spinning. In the Bush years, it was, like I said, basically blocking trade because apparently we were a source of terrorists entering the United States. And now it’s this idea of the threat of constant tariffs, one after another.

We have to, I think, get realistic about the world we live in now. It’s not a world of an ascendant U.S. power, right? It’s clearly a world of—I know we’ve said this before, we say this all the time—the U.S. power is on the decline.

Ziaee: A declining empire.

Trew: Yeah, declining empire, exactly. But I don’t see how you can not take that position now that we’re dealing with an increasingly multipolar world, a world where the period of globalization that free trade ushered in has utterly failed.

Things have to change. I don’t think cozying up to an aggressive—pretty fascist, I think we can say?—desperate-looking U.S. despot is the best thing Canada can be doing right now.

Ziaee: Progressive social movements, like you say, have been for almost 40 years now grappling with this question and challenging this kind of trade regime. At the risk of sounding naive, do you think this moment, this new aggressive agenda from Trump, could be a turning point in how we talk about the future of trade for Canada?

Trew: I think so. I think it has triggered a conversation about what Canada could be doing differently. There’s a lot of patriotism, right? I mean, there’s the mass sales of these hats— —Canada’s Not For Sale hats. Of course, we all know Canada is for sale, but the point is people are talking about it. 99% of Canadians based on polls are aware of the Trump tariff threat. And, from talking to my family and friends, everyone seems to get the idea that yeah, of course we should be thinking about a more nationally-oriented economic development.

So I think that’s the positive here. Of course, the challenge is always, in these moments of crises, how do you seize them? What are the Left’s chances of seizing them and pushing them to our advantage? There were moments like this during the post-financial crisis in 2011, the creation of new social movements like Idle No More, and Sunrise Movement in the United States post-2104. So there’s potential, right?

Ziaee: Well, the polls are on our side. Public opinion has shown that a vast majority of Canadians are ready for pretty transformative social changes.

Trew: Yes, ready in so many ways. We need it. We need some kind of major change, because the current system is obviously unsustainable, completely—can’t afford rents, we can’t afford the prices of basic commodities, the cost of living crisis is the crisis of our time.

And I think one message I try to get out when I talk about this is that we have the capacity in Canada to respond. Whatever Trump throws at us, there is the capacity to respond. COVID is an example. It was obviously devastating, and very rapidly the state stepped in in ways that were very important, and that did trigger this idea of, “Oh my God, if we can do this, what more can we do?” And from there, leaping onto things like modest steps towards pharmacare, modest steps towards dental care. 

If we’re faced with a similar hit, not only do corporations adapt and can find ways around these things—as we know, they find ways to keep the profits steady—but in our responses, we generate then the debate that leads to more things we can be pushing for. And we generate new comfort levels with new ways of using the state.

And I think because we can’t predict it in advance, we shouldn’t worry about it in advance. We should just be prepared at every step, no matter what happens, to be pushing ideas that we know will make everyone’s life better. Making sure we’re pushing for job-intensive responses to Trump and that we’re pushing for responses that insulate us in the long term.

And I do think we’re in an environment where that’s possible—not just because of the election but because we do have this change in popular opinion with respect to Canada’s place in North America.

Ziaee: Thanks for joining us to wade through all of this, Stuart. It’s great to have you.

Trew: It’s my pleasure, Donya.