Canada Can Make Trump Regret This Trade War
“You are at war when you get attacked. We got attacked,” Prime Minister Mark Carney said when meeting reporters on August 22 after his decision to end intensive negotiations to avert fresh American tariffs.
So how does Canada fight back? In his fifth-century BCE classic The Art of War, Chinese general Sun Tzu argued that the greatest victories are achieved not by beating the enemy militarily, but by defeating its strategy. This rule holds especially for smaller powers. Fighting a more powerful adversary on its terms is useless. The better approach is to understand what the enemy wants most, how it intends to get it, and the limits of its power—then exploit that knowledge to frustrate its objectives. Most of all, when you are a weak party, survival itself is victory.
Another way to look at this: the stronger party enters any conflict anticipating an easy and rapid win. Crucially, everyone else expects this too. That can be a burden. For the weaker side, there is little, if any, expectation of victory. Thus, simply by denying the stronger side its anticipated easy victory, the weaker side can “win.”
The key is to force the stronger party to expend much more energy and treasure than it bargained for, for much longer, and suffer an unsustainable loss in public confidence both at home and abroad. We are seeing this play out today. United States president Donald Trump has declared victory over Iran more than once (“They have no navy—totally wiped out—they have no air force—totally wiped out”), and yet, the fighting goes on. Iran now has at least a degree of control over the Strait of Hormuz, and Trump seems desperate for a way out. Russian president Vladimir Putin is experiencing a version of this in Ukraine.
While any conflict between a great power and a smaller adversary is fundamentally unequal, the imbalance runs deeper: for the great power, nothing short of abject surrender will do. For the smaller nation, the bar is lower; all that is required is to show they are prepared and able to resist. It may be true Iran’s navy is mostly at the bottom of the Persian Gulf, but it can still fire some missiles and drones at US troops, and it can throttle the global economy by holding the strait hostage. Of course, such resistance carries a high price in terms of civilian casualties and other damage; to persevere, the smaller nation must have the support of its people (Ukraine) or not care how much they suffer (Iran).
The insight that smaller nations can “defeat” bigger ones by wearing them down is not new. America learned it in Vietnam, the USSR in Afghanistan, and France in Algeria. Indeed, the British learned it in America itself in the late 1700s. So why do great powers keep forgetting it? And what might Canada learn from that history as it confronts the US in a profoundly unequal trade war? Canada cannot overpower the American economy. But does it need to? Or does it simply need to make the fight so costly and frustrating that the American people decide it is not worth it?
To bring all of this home to the economic fight Canada currently faces is a stretch but less of one than you might think. If the leaked details of the failed negotiations between Canadian and US trade teams are to be believed and the deeper aim of the Trump administration is to vassalize Canada—strip us of our industries and force us to trade our raw materials only with them and only under their diktats—then our independence really is on the line. Under these circumstances, we are at war and should start acting like it. So, let us determine how to exploit the stronger enemy’s weaknesses to frustrate its objectives and thereby win by not losing.
The first weakness is that the US is terribly divided internally. Ideologically, regionally, racially, economically, culturally, the country is riven: red states versus blue; 1 percenters against the rest; the coasts against the interior; MAGA against everyone else (and even itself, more and more). Its legislative branch is barely functional. If the Democrats win in November, we may see some change. But even then, they may find it hard to achieve any kind of internal unity except to oppose everything Trump wants—which would be fine for Canada but would not strengthen the US one bit.
This is not to say the US is weak, especially relative to Canada, only that the internal cohesion needed to bring about what Trump considers victory is not there. Prosecuting a war, even an economic one, requires a degree of unity and sacrifice. And the fact that overwhelming majorities shake their heads in incredulity every time Trump describes Canada as a threat diminishes any ability he has to rally the country against us.
Canada can help this along. We cannot go toe to toe with the Americans in terms of economic warfare, but we don’t need to; we just need to give the massive centrifugal forces tearing at America a push. Focus retaliatory tariffs on congressional districts, wedge regions and manufacturing groups to accentuate growing differences and splits. If things get bad, raise the costs of key raw materials (aluminum, potash, energy, critical minerals) but do it in such way as to economically hurt people who can politically hurt Trump—and Republicans more broadly.
This strategy will invite retaliation. It will hurt. If an August Leger poll is to be believed, Canadians are willing to endure this—although some of our premiers, such as in Alberta, may be a weak link here. All this will need to be done carefully. We also don’t want to push so hard that we turn Americans against us, and especially those inclined to have a good relationship with us. This would do Trump’s job of unifying America for him.
But if any retaliation we mete out is framed around a “we really don’t want to do this, but your guy is forcing us” narrative, large parts of a divided America might well buy it.
America’s second weakness is that, were it not the world’s largest economy, its finances might look like those of a failed state. This is particularly true of its staggering national debt, which just passed the unprecedented $40 trillion mark. Consider demographics: the US will soon no longer be able to replace its own population naturally; fewer and fewer workers to support and replace an ever-increasing number of older people. And this at just the moment when US politics have made the main source of cheap labour—immigration—taboo. Key entitlement programs required to maintain that aging population, such as Social Security and Medicare, will go bankrupt in the early 2030s. Sooner, if there is a recession.
Indeed, were it not for the immense boom in AI spending, the US might be in a recession right now. If that bubble bursts, or even substantially slows, as technology frenzies are apt to do, the results could be spectacularly bad. Even Republicans are growing increasingly worried at the direction Trump is taking the US economy. A time is quickly looming when that economy could succumb to the forces crushing it.
These pressures expose a vulnerability Canada can exploit. A heavily indebted, aging, and politically divided America has less room to cushion the costs of tariffs, subsidize injured industries, or persuade voters to make sacrifices for a fight many of them never supported. Canada’s overall strategy, then, should be less about drawing blood than outlasting the US. Retaliate selectively and where their dependence on our goods is greatest but also steadily reduce our own dependence on them—we are their largest customer.
This reality is double-edged. Even if we enter a post–Canada–United States–Mexico Agreement world, the US will remain our largest trading partner. No matter how much we diversify, a deep and enduring recession there will hurt us. But an economic war is ultimately a contest over who can absorb pain for longer. On that measure, Canada may have the advantage.
The third weakness is Trump himself. He is a terrible leader. He is a disorganized, chaotic narcissist. He has ridiculous, ill-informed, wild impulses he routinely gives into. Whereas Trump’s first term featured a cabinet of heavyweights who could restrain some of these impulses, his second has seen him surround himself with lightweight sycophants whose only qualification is that they loyally implement whatever crazy idea he has next.
Congress and the Supreme Court seem to have abandoned their constitutional roles as checks and balances. Some observers think all this gives Trump enormous power, and it does. But it also gives him unparalleled power to fail spectacularly. And he is doing just that as he leads the US into one extraordinary misadventure after another. Trump’s plummeting popularity is at historic lows; even elements of his own base are restive over the Iran war.
Trump’s leadership failings are a godsend for Canada. Virtually all military strategists will tell you that, in a conflict, it is critical to carefully select and maintain your aim. Distractions accumulate costs that weaken you. Trump has manically thrown America into excursions and side-fights with seemingly everyone, everywhere, all at the same time. He needs ever-fresh distractions to re-direct attention from yesterday’s list of broken promises, failures, and corruption.
This means Canada may have Trump’s full attention today, but if a quick victory eludes him, he may tire of us and change the channel by picking, or reviving, a fight with someone else. At minimum, he will have to juggle his fight with us alongside other conflicts simultaneously. We have only one fight, and we can devote all our attention to it.
There is another advantage for Canada in Trump’s strategic promiscuity. If it is true that China poses the real long-term risk, Trump’s endless wars (real and economic) make it harder to lead an effective response. To contain China, the US needs to marshal other democratic economies, such as the European Union, United Kingdom, Japan, Australia, South Korea, and Canada. Instead, he picks fights with them.
Worse, his preferred weapons (threats, insults, humiliations) drive those allies into each other’s arms and, tentatively, even toward China. Beijing must be thanking whatever gods lapsed communists pray to that fate has put Donald J. Trump in charge of the only country able to muster an international coalition against them.
So this may be an American weakness where we really don’t need to take action. To borrow an old strategic maxim, never interrupt your enemy while he is busy defeating himself.
Finally, for Canada, the fourth weakness is the arrogance of Trump and those around him. His entire strategic view seems to be that the US is bigger than Canada, and, if enough pressure is applied, we will give him what he wants. He seems incapable of grasping that even a weak opponent, if its back is to the wall, should not be underestimated or toyed with. This is a source of strength: our determination to resist may surprise his team, as Iran’s did, and they will be confounded.
And Canada is not a weak opponent. Because we are locked up in this continent with a hegemon ten times our size economically, we tend to forget that we are, in global terms, a heavyweight ourselves. And while phrases like “energy superpower” have become somewhat cringeworthy, they are not wrong. Canada has, in abundance, the things much of the world needs—from energy, to critical minerals, to food—and we are a stable, democratic country that respects contracts and the rule of law where many of the others who possess these resources are not, including, increasingly, the US itself.
These are not small things. The world is eager to do business with us, if we can get our act together and get resources to the markets that want them. While Trump, in the service of his fifty-first-state agenda, condescendingly portrays Canada as a country that would not survive if it weren’t for US largesse, this is simply not true. We survived before free trade and can do so again. A recent Deloitte report argues that the end of CUSMA would hit some sectors hard but hardly prove “cataclysmic” for the economy as a whole. Over time, greater trade within Canada and abroad could offset much of the damage.
In short, arrogance leads Trump to see Canada’s economic dependence on the US as proof of weakness, when, in fact, it is a mistake which can be corrected and never repeated. Indeed, his bluster is forcing changes that might ultimately leave Washington with less leverage the next time it comes demanding more.
These four US weaknesses form the basic building blocks of a strategy for Canada. As outlined, each can be exploited in various ways. But it will not be easy or painless, or necessarily quick. In any conflict, economic or otherwise, the enemy also gets a vote. The Trump people will adapt as this goes forward.
If we adopt a strategy of “ragging the puck” to outwait Trump, they will launch new tariff threats to force us to the table, as they have done. More broadly, they will determine and exploit our own weaknesses against us. Beyond the economic, perhaps the greatest of these weaknesses is the risk we will lose unity. Not for nothing has the administration and its ideological friends sought to interfere in and influence the Alberta separation debate. And, just as we should exploit America’s internal divisions against it, the new round of US tariffs has been cleverly designed to hurt those regions of Canada which have stood up to Trump (Ontario, British Columbia, and Quebec) and largely spare those who have not (Alberta and Saskatchewan).
Keeping the country together is imperative. Aside from the logic of unleashing Canada’s energy reserves to raise the cash necessary to cope with the challenge Trump poses, Carney’s loosening of his commitment to the green agenda in order to get pipelines built may also be recognition that unity is the more important national objective right now.
As a final point, any good military strategist will tell you not to become so bound up in day-to-day combat that you are incapable of looking ahead to the kind of peace you want to achieve. Geography will remain what it is, and the US will always be a critical factor in Canada’s life: we cannot abandon the US market. “The goal,” as Colin Robertson writes in Policy magazine, “is not decoupling but greater freedom of action.”
This suggests that we should look for opportunities to begin new economic relationships—or maintain existing ones—with Americans prepared to build them. In other words, make nice with anyone who wants to make nice with us. Much of this will be at the state and local levels and with specific sectors, such as the automotive industry. Good relations with power centres do not fully replace a productive relationship with Washington, of course, but they help weather the storm, and they sow seeds with actors who may replace Trump one day.
Thinking of our economic conflict with Trump in military terms will be unfamiliar, and we should not get carried away. Analogies are never perfect. But we must not succumb to hopelessness. If we are prepared to hold our ground, absorbing and inflicting pain where necessary, then Trump’s incompetence, growing unpopularity, and the economic devastation he is inflicting on the US will do the job for us.