The Canada-US trade war seems to be entering a vicious spiral upward spiral. On Tuesday, Trump retaliated again against the United States by issuing five executive orders at once, not only completely banning the sale of certain Canadian alcoholic beverages, motorcycles, molasses, and whey products in the U.S., but also imposing a 50% increase on other goods and blacklisted Canadian manufacturers from participating in certain government procurement projects. Both sides engaged in real combat, but U.S. Trade Representative Jamieson Greer consistently refused to admit that the U.S. fired the first shot, instead repeatedly shifting blame onto Canada.
The Office of the U.S. Trade Representative issued a press release on Wednesday, attaching an interview he gave to the Financial Times briefing blog last Saturday, stating that Canadian Prime Minister Carney first used the term ‘trade war,’ implying that the U.S. did not intend to escalate it. For us, this is business, it’s economics. According to his logic, the additional tariffs imposed by the U.S. on Canada in August accounted for only 5% of exports to the U.S. Such a small matter is something Carney has stirred up into such a big incident, calling it a trade war or an economic attack, which is somewhat irrational. “We are simply imposing extra fees on foreign goods manufactured by foreign workers abroad. The tariff is nothing more than that. ” It must be said, the American way of thinking is truly unusual. Moreover, he is not the only senior U.S. official who denies the existence of a trade war between the two countries. At the end of August, Finance Secretary Bessent also publicly stated: We did not go to war with Canada. How could we go to war with Canada? All signs indicate that the U.S. may not have anticipated such fierce resistance from Canada, and the trade war between the two sides is unlikely to end in the short term.
From the government to the people of Canada, it seems they have reached a consensus: rather than accept a bad deal, it’s better to resist to the death. Frank McKenna, Vice Chairman of TD Bank Financial Group and former Canadian Ambassador to the United States, made a representative statement. In an interview with the Financial Post, he said, Canada is capable of continuing to hold firm amid escalating trade disputes with the United States. Although the economic strength of the two countries is not equal, in the long run, time may ultimately be on Canada’s side. The trade war is bad news for investors and consumers, but this wait is just as painful for the United States. The Canadians are very determined.
Paul Beaudry, professor at UBC’s Vancouver School of Economics and former Deputy Governor of the Bank of Canada, also stated that Canada is capable of withstanding a long-term trade dispute. The tariffs imposed by the U.S. did not collapse the economy; rather, it was a difficult adjustment. Although Canada is much more dependent on U.S. trade than the U.S. depends on Canada, it is the right course of action to keep waiting for now. “If someone wants to bully you, sometimes you have to stand up and face it.” Bodry stated that industries such as automotive, steel, and aluminium have been hit hardest by tariffs, but these sectors actually account for a relatively small proportion of Canada’s overall economy. For example, according to Statistics Canada, the automotive and parts manufacturing industry, together with primary metal manufacturing, accounts for only about 1.5% of the Canadian economy.
The share of Canada’s automotive industry also seems to be exaggerated. Cars produced in Canada actually account for only about 9% of North America’s total car production, while Canadian consumers can still buy around 2 million cars annually. In addition, Canada has stronger countermeasures, including imposing export taxes on resources like oil and potash, or restricting exports. These products are crucial to the United States, and Trump has never dared to bring them up as a matter of course. Perhaps these are the true sources of Canada’s confidence.