President Donald Trump of the United States has placed his trade conflict with Canada and Mexico temporarily on hold, despite his previous commitment to impose 25% tariffs on a significant portion of imports from these countries. However, he has already enacted tariffs on all steel and aluminum imports from Canada.
Trump has intensified his stance by warning that tariffs could rise further if Canada follows through on its own threats of retaliatory measures, with additional sanctions likely in the spring after a U.S. government study examines ways to tackle the country’s trade deficits.
This situation represents an attempt to economically subordinate Canada by its larger and, until recently, friendly neighbor. What renders Trump’s looming trade war particularly absurd is its foundation in a series of inaccuracies.
Trade, drugs, migrants, banks
Trump has alleged that the U.S. faces a trade deficit with Canada amounting to “US$200 or $250 billion.” However, data from the American government indicates that the trade deficit in goods with Canada for 2024 was only US$55 billion.
When considering services (including technology and finance), where the U.S. maintains a trade surplus, the annual trade deficit with Canada reduces to US$45 billion. If energy exports—which are often sold at discounted prices to the U.S.—are excluded, the trade balance shifts decidedly in favor of the U.S.
Furthermore, Trump has claimed that tariffs are justified to penalize Canada for permitting an “invasion” of drugs, primarily fentanyl, and undocumented immigrants into the U.S.
Yet again, statistics from his own governmental agencies reveal that just 1.5% of migrants apprehended in 2024, and a mere 0.2% of all fentanyl seized at U.S. borders that year, came from Canada.
Just hours before the U.S. decided to postpone tariffs, Trump introduced another misleading argument: that Canada restricts American banks from entering its market. In reality, many U.S. banks operate in Canada, representing half of the nation’s foreign banking assets.
THE CANADIAN PRESS/Giordano Ciampini
The grip of populism
What motivates such falsehoods? An exploration of nationalist populism provides some insight. This form of populism is underpinned by a deep, often illogical emotional connection.
Much like in his 2016 election campaign, Trump’s efforts in the 2024 race tapped into the frustrations and worries of people regarding issues like rising food prices, housing difficulties, and job insecurity as he repeated his mantra of “making America great again.”
Tariffs became a central theme, with Trump adopting an “America First” approach aimed at punishing the country’s three largest trading partners—Mexico, Canada, and China—for what he claims are their “unfair” trade practices.
Such alluring populist rhetoric rallies individuals under a shared cause, alleviating their anxieties. However, this reliance on the creation of national adversaries to unite the populace presents significant dangers. In 2016, Trump specifically targeted Muslims and Mexicans; today, the focus has shifted to migrants, transgender individuals, and America’s supposed trade foes.
Dangerous sentiments
Thus, Trump’s populism is rooted in irrational and potentially hazardous feelings: extreme fear, arrogance, xenophobia, transphobia, racism, and aggression.
It’s no surprise that he resorts to blatant lies and aggressive tactics. His fabrications serve to portray the U.S. as a victim despite its dominance in numerous global sectors, thus rationalizing efforts to subjugate both alleged “enemies” and traditional allies. Populist sentiments, driven by a foundation of irrational eagerness for pride and unity, disregard facts, logic, or truthfulness.
An illustration of this is Trump’s assertion that the U.S. is “subsidizing” Canada due to the trade deficit. This claim lacks any economic foundation—trade deficits arise from a natural market balance of imports surpassing exports—but it invokes a fear that Canada is taking advantage of American taxpayers.
Populist sentiment supersedes rational discussion. Bluster fuels national fervor.
(AP Photo/Jose Luis Magana)
Much ado about nothing
This dynamic explains why Canada’s attempts to placate Trump have not yielded significant results. Following Trump’s election victory, Prime Minister Justin Trudeau promptly visited him in Florida to address concerns regarding fentanyl and migrants.
The Canadian government responded by announcing a $1.3 billion border security initiative and improved oversight of opioid production.
In the lead-up to Trump’s executive order on tariffs, Canadian ministers and provincial leaders launched a public relations campaign (including appearances on American media, meetings with congressional representatives, and Trump’s cabinet nominees) trying to sway opinion, all to no avail.
Ultimately, Trump conceded just hours before the February 4 tariff deadline. Trudeau’s offer of measures, most of which were already included in the earlier security and fentanyl initiatives, seemingly allowed the President to claim victory while merely granting Canada a temporary respite.
Read more:
Trump’s tariff threats show the brute power of an imperial presidency
In summary, this is all much ado about very little. It has involved a lot of theatrics and posturing, but little real progress, especially concerning the alleged primary issue of trade deficits.
The Trump administration has adhered closely to its populist agenda, further illustrating that logical decision-making is absent from this equation.
On the contrary, efforts to appease Trump seem to reinforce the belief that his threats yield results, prompting even more demands. This is evident in the potential for tariffs in March and additional measures looming afterward (including on steel and aluminum).
Self-defeating irrationality
Trump’s tariff strategy is illogical. If implemented, these measures could drive Canada into a severe recession that would necessitate government intervention to preserve the economy and jobs, alongside retaliatory trade actions.
This may, in fact, be Trump’s goal—he has stated a desire to annex Canada through “economic force”—but it is likely to backfire. A trade conflict would negatively impact not just Canada, Mexico, and China, but also the U.S.
Canada’s counter-tariffs would specifically target states that heavily support Trump.
Moreover, given America’s reliance on Canada for approximately 50% of its crude oil imports, Canada possesses a potent leverage point: imposing tariffs on oil exports to the U.S. This move would likely cause gas prices in America to surge overnight, which would be extremely unpopular.
In the long run, no parties will gain from Trump’s ill-advised populist policymaking. Until then, brace for continued unpredictability, brinkmanship, intimidation … and, of course, untruths emanating from Trump’s administration.
