The U.S.-Canada Trade War Nobody Asked For

At 12:01 a.m. on Sept. 8, Canada matched President Trump’s tariffs “dollar for dollar” by imposing 15-50% duties on more than 700 American-made products, including steel, cement, dairy, and electronics. This mirrors the 50% tariff that the U.S. slapped on $20 billion worth of Canadian goods on Aug. 22. And in response? Trump announced overnight a ban on the import of various Canadian alcohol products, some dairy, and motorcycles, effective Sept. 29. 

The Canada spat in detail

Trump’s move invokes the rarely used Section 338 of the 1930 Tariff Act, and the same order now threatens to ban Canadian products from federal contracts entirely. As if there weren’t enough fuel in the fire, Treasury Secretary Scott Bessent joked that Canada could “take their two submarines (in West Edmonton Mall) and sic them on us.” In other circumstances, specifically one in which consumers on both sides of the border weren’t paying for it, this would be rather hilarious. 

So what happens next? Well, what we do know is that construction lawyers are already advising clients on infrastructure projects to shorten their bid validity windows and rewrite change order clauses, because a 50% tariff can make an estimate entirely obsolete before any concrete is ever poured. New York City, which pulls upwards of 20% of its power from Canada, is now in the crosshairs as the saber-rattling intensifies over who can do the most harm to the other.

But none of this was actually decided by those who have to buy or sell these goods on either side of the border, and when polled, both Canadians and Americans think the trade war is silly and unnecessary. 

(Some) polls show non-majority support in Canada and America for continuing the trade war

A new Build Canada Survey of nearly 1,700 Canadians shows that almost 60% of Canadians view a trade war tax increase of just $500 “unacceptable” as the price of standing firm against Donald Trump’s trade whims. That number increases to 68% when asked about the potential job losses associated with “standing firm.” In the U.S., a Reuters/Ipsos poll shows the same trend, with a majority of Americans opposing additional tariffs on Canada. 

Here we have two publics who clearly want their governments to de-escalate, and yet both governments keep finding ways not to. 

Ottawa is calling their response “Team Canada” and framing it as unity against an unfair neighbor, and that instinct is understandable, albeit misguided. But you cannot address the Canadian people, calling Trump’s tariffs a “tax paid for by Americans,” and then implement the same at home without the same critique. Matching bad policy enacted by Donald Trump with a Canadian-made version is incredibly hypocritical and, in fact, makes the economic hardship endured from the trade war worse. Canada cannot brace for the economic storm Trump created by making it bigger. 

Show the costs

Oddly enough, there is a fairly straightforward solution here, which comes from the opposition in Canada. Conservative Leader Pierre Poilievre, who is no friend of Donald Trump, has asked Ottawa to publish its own economic analysis of what these counter-tariffs will cost Canadian consumers. University of Calgary economist Trevor Tombe has already estimated that the toll will be around $4 billion, with lower-income households carrying the heaviest burden. If Canada’s retaliatory tariffs have a regressive cost, obviously, the same economic truth would hold true south of the border, because the reality of tariffs doesn’t stop because of some line on a map. Washington and the Trump administration should face the same exact pressure to cost out every tariff it announces, because that would allow voters to actually evaluate, on a cost-benefit basis, whether all of this turmoil is worth it. 

“Team Canada” and “America First” might be catchy slogans, but they survive on vagueness. The public’s willingness to go along for this ride quickly fades when those slogans are replaced by real costs and real job losses. The current back-and-forth ends up being nothing more than an exercise in national pride that ignores the fact that someone always loses when they face artificially higher prices at the checkout. 

This article was originally published by RealClearPolitics and made available via RealClearWire.

Editor’s disclaimer

The author’s argument suffers from the classic flaw of leaving out the denominators, or assuming they’re the same. In fact Canadian consumers have been paying tariffs comparable to those both publics are now seeing. More tellingly, America’s economy is ten times the size of Canada’s. Let the reader judge which side will suffer more as the trade war continues.

Furthermore, no such person as a dedicated consumer exists. Every human being, other than a “public charge,” must produce as well as consume. The author fails to calculate the extra per capita income American laborers can now realize from the protection of the industries that employ them. (Or perhaps he assumes without warrant that importation creates more jobs than does native production.) CNAV suggests that such a calculation would be more favorable to a worker in America than in Canada.