Carney is delusional if he thinks he can beat Trump in a trade war
Donald Trump’s threat to impose 50 per cent tariffs on certain Canadian goods, including alcohol, clothing and hockey sticks, became a reality earlier this month. The specific details of why the negotiations unravelled are still unclear, with both sides unsurprisingly pointing fingers at one another for being the culprit.
Yet, one thing has become surprisingly clear. Mark Carney, the Canadian prime minister, is delusional enough to believe his country will come out of this trade war from a position of strength. “We’re stronger now than when the United States started this trade war,” Carney told reporters at a press conference the day after negotiations fell apart.
In Carney’s view: “Canada is becoming stronger and less dependent on America. We are already giving ourselves more than they can take away. And we are just getting started.” One would naturally expect the PM to put on a brave face and utilise some positive spin when speaking in public.
But anyone who believes Canada has been getting stronger during a time of political turbulence and economic crisis is fooling themselves.
Canada is much smaller than the US in terms of total population and overall economic impact. An estimated 41.4 million people live in Canada, versus more than 342 million in the U.S. The IMF’s World Economic Outlook, which ranks countries by nominal GDP, lists the US in first with $32.8tn and Canada in 11th place, with a comparatively paltry $2.51tn.
In other words, the US is roughly 13 times larger than Canada. No matter how much accelerated economic growth and job creation Canada experiences, it pales in comparison to the mighty US economy – and always will.
Meanwhile, the Canadian government’s website acknowledges the US is “Canada’s largest trading partner in goods and services, while Canada is the US’s second-largest trading partner”. It also notes that “nearly $3.6bn (US$2.6 billion) worth of goods and services crossed the border each day in 2024”. Canada relies heavily on the US for goods, services and daily needs. It’s a unique trade partnership based on decades of friendship, spirited competition, geography and a shared border.
Carney’s strategy to make up for this gigantic economic loss is to seek out questionable trade deals. This includes a highly controversial decision to increase trade with Xi Jinping’s authoritarian China, as well as a push to get closer to the European Union (there have even been calls for Canada to join the bloc).
The truth is that most countries perceive Canada as nothing more than a middle power with a decent-sized economy. They’re not going to rush out to buy Canada’s energy, oil, minerals and water when most can get the same resources much closer to home at much lower cost.
Finally, there are the intangibles. Exporters suggested they could lose half their revenue if Trump’s tariffs are imposed, according to a recent survey conducted by the Canadian Federation of Independent Business.
An Oxford Economics report for the Canadian American Business Council also noted the possibility of hundreds of thousands of jobs lost in both countries due to the tariffs, along with significant financial impact and decline in GDP. Both sound awful, no matter how you slice it.
That’s why Carney is delusional in suggesting Canada will get stronger in spite of the loss of the US as a major trading partner. My country will likely get weaker, experience a rapid economic decline and struggle to compete in the free-market economy. If that’s his vision for Canada, we should demand better.
Michael Taube was a speech-writer for former Canadian prime minister Stephen Harper