Donald Trump is back in the White House, and with him, a renewed sense of foreboding hangs over Canada’s most vital relationship. His recent salvos — reviving the spectre of tariffs, calling Prime Minister Justin Trudeau a “governor”, and threatening “economic force” — have shattered any illusions of a reset. Instead, they’ve reopened old wounds from Trump’s first term, a time when Canada’s economic stability seemed at the mercy of his whims.
For Canadians, Trump’s return stirs fears of renewed trade tensions. The steel and aluminium tariffs, the contentious North American Free Trade Agreement (Nafta) renegotiation that birthed the United States-Mexico-Canada Agreement (USMCA), and the strategic use of trade as a political weapon — all are chapters from a playbook Trump appears ready to revisit. This time, however, there’s a new brazenness. His dismissive remarks about Trudeau and Canada hint at a deeper lack of respect.
To Trump, Canada seems less like a partner or rival and more like a neighbour whose economic dependence on the US can be exploited. This approach could exacerbate economic challenges and prompt retaliatory measures from Canada.
An economic crisis waiting to happen
The US accounts for over 70 per cent of Canadian exports, from Ontario’s auto parts to Alberta’s crude oil and Saskatchewan’s wheat. So when Trump speaks of tariffs, these industries don’t just worry, they panic.
In Alberta, energy producers are bracing for potential disruptions to the US supply chain, which could devastate one of Canada’s most crucial economic lifelines. In Ontario, just-in-time manufacturing networks that rely on seamless cross-border trade are at risk of being derailed by tariffs.
Quebec, too, is nervous. Aluminium producers and aerospace manufacturers remember all too well the bruising rounds of negotiations that forced painful concessions during the USMCA talks. Farmers across Canada are eyeing Trump’s rhetoric with trepidation, knowing how quickly trade disruptions can devastate agricultural exports.
Trump’s second term, then, isn’t just a diplomatic challenge for Canada but a full-blown economic crisis waiting to happen. The interdependence of the two economies, once a strength, now feels like a weakness. And Canada’s leaders know it.
In Ottawa, the Trudeau government, now tested by years of navigating Trump’s unpredictability, faces a more fragmented domestic front. In 2018, Canada’s strategy during the Nafta crisis was centralised, cohesive, and largely effective. But this time, provincial leaders are asserting themselves in ways that both enrich and complicate Canada’s overall approach.
Ontario premier Doug Ford has emerged as a staunch advocate for his province’s auto sector. His focus is clear: protect jobs, safeguard manufacturing, and push back against any measures that would harm Ontario’s economy. But Ford’s calls for action underscore the larger challenges of uniting Canada’s provinces in the face of Trump’s policies, particularly as Alberta’s premier Danielle Smith, by contrast, has focused on critiquing Ottawa’s approach — her sharp rhetoric highlighting both the urgency of the situation and the fractures in Canada’s internal political landscape, exposing the difficulty of presenting a unified front.
Breaking the dependence
In Washington, Trump’s approach to foreign policy is anything but conventional. His erratic musings — whether about buying Greenland or challenging Panama’s control of the canal — reflect a politics that thrives on chaos and his rhetoric about Canada shows a willingness to upend norms to have his way.
Trump’s threats of using “economic force” against Ottawa are a chilling reminder of his transactional worldview. Every relationship, whether with allies or adversaries, is a zero-sum game. And Canada’s dependence on the US market makes it an easy target for his brand of economic brinkmanship.
But the unpredictability doesn’t stop at trade. Trump’s fossil fuel revivalism clashes directly with Canada’s clean energy ambitions, creating potential friction in areas where cooperation once seemed possible. His disdain for multilateral agreements further complicates Canada’s efforts to diversify its trade relationships, as global markets remain volatile under his influence.
Calls for trade diversification have grown louder in Canada, but the reality remains stark. Despite agreements like the Comprehensive Economic and Trade Agreement (CETA) with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with Asia-Pacific nations, the US remains the dominant market for Canadian exports. Breaking this dependence isn’t just a matter of signing new deals; it requires fundamental shifts in supply chains, business strategies, and government priorities, and all these shifts take time.
Trump’s tariffs and threats create an immediate urgency that long-term strategies can’t address. For now, Canada must focus on protecting its most vulnerable industries while laying the groundwork for broader diversification in the future.
A twofold challenge
As the 2025 federal election looms in Canada, the political stakes are also immense. Conservative leader Pierre Poilievre has seized the opportunity to attack Trudeau’s handling of Trump, branding it as weak and ineffective. Meanwhile, New Democratic Party leader Jagmeet Singh is calling for stronger protections for workers, appealing to Canadians who feel left behind in the global economy.
Ottawa’s challenge is twofold: managing the immediate risks posed by Trump while demonstrating a long-term vision for Canada’s economic sovereignty. This requires not only engaging with US stakeholders but also building domestic consensus across provinces and political parties. Canada’s experience during Trump’s first term offers lessons for navigating his second.
The relationships built during Nafta renegotiations remain valuable, and the goodwill of US border states like Michigan and New York can serve as a buffer against Trump’s more extreme policies. However, Canada cannot rely solely on these tools. A more proactive approach is needed, one that combines diplomatic engagement with bold domestic action.
This means investing in industries that reduce dependence on the US, from clean energy to technology. It also means strengthening ties with other trading partners and doubling down on diversification efforts. And it means confronting Trump’s rhetoric not with outrage, but with strategic resolve.
