Have your say: Trump’s economic war on Canada

We must finally break free from our trade dependence on the U.S.

Opinion by Andrew Burlone

August 3, 2025

Donald Trump’s tariff assault on Canada isn’t just another trade dispute—it’s a wake-up call that should terrify every Canadian who cares about our economic sovereignty. After decades of warnings from economists and policy experts about our dangerous over-reliance on the American market, we’re now paying the price for our collective complacency. With more than 75 per cent of our exports heading south of the border, we’ve essentially handed Trump the keys to our economic future.

Let’s be clear: Trump has unleashed a comprehensive economic attack designed to extract maximum concessions from Canada. His 35% tariff on Canadian imports represents the highest trade barriers since the 1930s. This isn’t trade policy—it’s economic coercion, pure and simple.

Let’s be clear: Trump has unleashed a comprehensive economic attack designed to extract maximum concessions from Canada.

The numbers tell a devastating story. During previous steel and aluminium tariffs, Canadian exports in these sectors plummeted by 40% and 20% respectively. Now, with broader tariffs in place, we’re looking at a potential 2.4 percentage point drop in GDP over two years. That translates to real pain for real families: $1,900 in additional annual costs per household and 675,000 export-related jobs in Ontario alone hanging in the balance.

What makes this particularly galling is that Canada has been America’s most reliable trading partner for generations. We supply them with energy, raw materials, and manufactured goods while buying their products and services in return. Yet Trump treats us like an adversary, wielding tariffs as weapons to bend us to his will.

The USMCA sword of Damocles

If current tariffs weren’t threatening enough, Trump has an even more devastating weapon in his arsenal: the potential termination of USMCA in 2026. The agreement’s Article 34 provision requires all three countries to confirm renewal by July 1, 2026, or face termination in 2036. Trump has already signalled his intention to withhold American approval unless Canada and Mexico accept his demands for renegotiation.

This is where Canada’s position becomes truly precarious. The mere threat of USMCA termination creates what economists call “investment paralysis”—businesses cannot justify long-term commitments when the fundamental trade framework might disappear. We’re already seeing this play out, with investors demanding higher returns or avoiding North American markets entirely.

‘What makes this particularly galling is that Canada has been America’s most reliable trading partner for generations.’

The cruel irony is that terminating USMCA would hurt all three countries, but Canada would suffer disproportionately. While the U.S. would experience economic disruption, we would face financial catastrophe. Trump knows this, which is why he can use the threat so effectively as leverage.

Canada’s pathetic response options

Faced with this economic assault, Canada’s response options are embarrassingly limited. Our retaliatory tariffs would be like bringing a water pistol to a gunfight—they might provide some symbolic satisfaction. Still, they won’t meaningfully pressure the Americans while causing significant self-inflicted wounds to our economy.

Some experts suggest Canada should refuse early USMCA renegotiation unless Trump withdraws his tariff threats. This sounds principled, but it ignores the brutal reality that we need the American market far more than they need ours. Negotiating from weakness while pretending to have strength is a recipe for disaster.

The truth is that Canada is fighting a two-front economic war it cannot win: managing immediate tariff damage while preparing for what could be the most lopsided trade negotiation in our history. We’re essentially hostages trying to negotiate with our captor.

How did we get here? Through decades of willful blindness to our trade vulnerability. Successive governments, both Liberal and Conservative, paid lip service to economic diversification while doing virtually nothing to reduce our dependence on the American market. They were content to ride the wave of North American integration, assuming our “special relationship” would always protect us.

‘Successive governments have been content with paying lip service to diversification, without ever actually reducing our dependence on the American market.’

This was always a dangerous delusion. Countries that depend on a single market for three-quarters of their exports aren’t partners—they’re economic colonies. Trump’s tariffs have made this uncomfortable truth impossible to ignore.

The pandemic should have been our wake-up call. When global supply chains collapsed and countries turned inward, Canada’s trade dependence was exposed as a critical vulnerability. Instead of using the crisis to accelerate diversification efforts, we largely returned to business as usual once borders reopened.

The diversification mirage

Now, faced with an economic crisis, Canadian officials are desperately promoting trade diversification as if it’s something we can accomplish overnight. This is either naïve or dishonest. You don’t restructure a $1.9 billion daily trade relationship built over decades without massive economic disruption and years of patient effort.

Yes, Canada should pursue closer trade relationships with Europe, Asia, and Latin America. But let’s be honest about the timeline and costs involved. Finding alternative markets for Canadian energy, agricultural products, and manufactured goods will require enormous investments in infrastructure, logistics, and relationship-building. It will take decades, not years.

Meanwhile, we’re trying to liberalise internal trade as if reducing interprovincial barriers will somehow compensate for losing access to the massive American market. This is like rearranging deck chairs on the Titanic—useful, perhaps, but hardly adequate to the scale of the crisis we face.

The most painful aspect of this crisis is how it exposes the limits of Canadian sovereignty. We like to think of ourselves as an independent nation, but our economic dependence on the United States means we’re essentially a client state in terms of trade policy. Trump’s tariffs aren’t just economic measures—they’re a demonstration of American power over Canadian decision-making.

‘Finding alternative markets for Canadian energy, agricultural products, and manufactured goods will require enormous investments in infrastructure, logistics, and relationship-building.’

Consider the humiliating spectacle of Canadian officials desperately trying to curry favour with Trump administration figures, hoping to secure exemptions or special treatment. This isn’t diplomacy between equals—it’s supplication from a subordinate to a superior.

The USMCA renewal process will likely be even more degrading. Canada will be forced to accept whatever terms Trump demands, no matter how disadvantageous, because the alternative—losing access to the American market entirely—would be economically suicidal.

What we should have done (and still must do)

Canada should have begun serious economic diversification 30 years ago when NAFTA was implemented. We should have used the prosperity generated by North American integration to build relationships with other markets, develop domestic supply chains, and reduce our export dependence.

Instead, we became addicted to easy American market access and cheap American imports. We allowed our manufacturing base to hollow out, became hewers of wood and drawers of water, and convinced ourselves this was a sustainable economic model.

Even now, facing the most serious trade crisis in our modern history, there’s little evidence of the transformational thinking required to address our predicament. We’re still hoping this will all blow over, that Trump will be voted out, that somehow we can return to the comfortable dependence of the past.

It’s time for some brutal honesty about Canada’s situation:

First, our “special relationship” with the United States is largely mythical. Americans view us as a convenient supplier of resources and energy, not as a cherished partner. When their interests conflict with ours, they will choose their interests every time.

‘We’re still hoping this will all blow over, that Trump will be voted out, that somehow we can return to the comfortable dependence of the past.’

Second, economic diversification isn’t optional anymore—it’s essential for our survival as an independent nation. This will require massive public and private investment, fundamental changes to our economic structure, and probably a generation of slower growth as we build alternative relationships.

Third, the era of stable, predictable trade relationships is ending. Trump has shown that trade agreements can be weaponised, that economic relationships can be held hostage to political demands. Even if we survive this crisis, we’ll face similar challenges in the future unless we reduce our vulnerability.

The choice before us

Canada faces a stark choice: continue down the path of economic dependence and accept client state status, or begin the difficult work of building true economic sovereignty. The latter will be painful, expensive, and politically challenging. It will require sacrifices, investment, and patience that may extend beyond multiple electoral cycles.

But what’s the alternative? Remaining perpetually vulnerable to the whims of American presidents, whether named Trump or something else? Accepting that our economic policy is ultimately determined in Washington rather than Ottawa? Becoming the 51st state?

Trump’s tariffs and the looming USMCA renewal crisis represent more than trade policy challenges—they’re an existential test of Canadian independence. We can continue pretending that our dependence on the American market is sustainable, or we can finally confront the uncomfortable reality that true sovereignty requires economic diversification.

‘Canada faces a stark choice: continue down the path of economic dependence and accept client state status, or begin the difficult work of building true economic sovereignty.’

The stakes couldn’t be higher. If we fail to use this crisis as a catalyst for fundamental change, we’ll remain trapped in a cycle of vulnerability, forever at the mercy of American economic and political pressures. Our children and grandchildren will inherit an economy that looks more like a branch plant than an independent nation.

The time for comfortable illusions is over. Trump has forced us to confront truths about our economic dependence that we’ve avoided for decades. The question now is whether we have the political will and national determination to do something about it.

Canada’s economic independence and prosperity don’t just hang in the balance—they’re already slipping away. Unless we act decisively to reduce our trade dependence, we’ll discover that political independence without economic sovereignty is just an elaborate pretence. And Trump, whatever his other flaws, will have taught us that lesson the hard way.

Disclaimer: The opinions expressed in this article are my own and do not necessarily reflect the views of my co-publisher or other contributors to WestmountMag.ca.

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