By Eric Vandenbroeck and co-workers

Trump’s threat to impose 25% tariffs on Canadian goods to coerce action from Ottawa on border issues saddled Trudeau with fears of a profound recession ahead of an election year which will dawn with him in deep trouble. Trudeau on the brink.

Donald Trump is stoking political mayhem in Canada by intensifying a crisis that threatens to oust Prime Minister Justin Trudeau.

The president-elect’s bullying of an embattled political foe, whom he mocks as the governor of the 51st state in an insult to America’s loyal northern neighbor, is a preview of a belligerent strategy as he scours the globe for big second-term wins before even taking office.

And his willingness to plunge into an ally’s domestic politics ought to be a warning to other strife-torn governments in places like France, Germany, and South Korea, where political chaos and internal divides could make it hard to fight back.

Trump’s threat to impose 25% tariffs on Canadian goods to coerce action from Ottawa on border issues saddled Trudeau with fears of a profound recession ahead of an election year which will dawn with him in deep trouble.

It also represents an extraordinarily hardline approach to a nation that has deep diplomatic, cultural, and familial ties to the United States, is one-half of one of the world’s most lucrative trading relationships, and sent its troops to die in defense of its ally after the September 11 terror attacks in 2001.

 

Trudeau on the brink

Trudeau, the already wobbling Liberal prime minister, may have suffered an existential blow this week with the sensational resignation of Finance Minister and Deputy Prime Minister Chrystia Freeland, who delivered an indictment of his rule hours before she was due to deliver a critical budget statement in parliament.

Policy tensions had been simmering between Canada’s two most powerful politicians for months, and the Liberals already looked doomed in an election that must be held by next fall, after consistently trailing opposition Conservatives by around 20 points in opinion polls.

But Trump’s tariff gambit catalyzed for political combustion inside the Canadian cabinet. In a searing resignation letter, Freeland, a longtime Trudeau loyalist, effectively accused him of promoting frivolous policies that would leave Canada badly exposed to Trump.

“Our country today faces a grave challenge. The incoming administration in the United States is pursuing a policy of aggressive economic nationalism, including a threat of 25 per cent tariffs. We need to take that threat extremely seriously,” Freeland wrote. “That means keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war.” Freeland went on: “That means eschewing costly political gimmicks, which we can ill afford and which make Canadians doubt that we recognize the gravity of the moment.”

After nine years in power, Trudeau has squandered the confidence of many Canadians, and much of his parliamentary party. Speculation is rife on whether he will step down early next year, to let his party pick a new leader and prime minister, or whether a confidence vote could fell his minority government and trigger a snap general election.

“I wouldn’t say that Trump being elected was changing the Canadian government, but he’s certainly changing the conversation, he’s changing what the next election will be about and this government’s response,” said Matthew Lebo, a visiting professor at McGill University in Montreal. “And probably, he’s changing the timing of when Justin Trudeau would go,” added Lebo, who also teaches political science at Western University.

For Trump, this week of chaos in Canadian politics can hardly have gone better. At one stroke, he was rid of Freeland, with whom he clashed when she led trade talks with the US in his first term and damaged Trudeau, whom he doesn’t like and is seen in his orbit as weak, ultra-progressive and “woke.”

“The Great State of Canada is stunned as the Finance Minister resigns, or was fired, from her position by Governor Justin Trudeau,” Trump wrote on Truth Social on Tuesday. “Her behavior was toxic, and not at all conducive to making deals which are good for the very unhappy citizens of Canada. She will not be missed!!!”

 

With Trump, trade is a win or lose game

This is vindictive behavior from the leader of a great nation toward its biggest trading partner. But it fits Trump’s view of every foreign policy interaction as akin to a transactional business dispute between two adversaries that only one can win.

And Trump’s tactics appear to be working. Trudeau, for instance, rushed to Mar-a-Lago in a show of deference last month that confirmed Trump’s dominance in the relationship. This may also have sharpened the prime minister’s tensions with Freeland, who favored a tougher Canadian approach. Trump also shattered political unity north of the border that has been critical to Canada’s approach to relations with Washington in the past. Ontario Premier Doug Ford warned, for example, that Canada should halt critical energy exports to the United States in retaliation for Trump’s threats, a step that alienated him from other leaders in other provinces, especially those in the carbon-rich prairies.

“I want to sell more electricity; more power to our US friends and closest allies in the world. But that’s a tool that we have in our toolbox,” Ford told CNN’s Erin Burnett Tuesday. “We ship down 4.3 million barrels (of oil) every single day. If there was a tariff on that, that would increase gas by $1 a gallon, that wouldn’t go over very well.” The Ontario premier, a Progressive Conservative, said, however, that he would prefer to work with Trump since the US and Canada are stronger together.

Trump knows he’s operating from a position of strength. The United States is the most powerful partner in the relationship and while a full-on trade war would hurt American consumers, the fastest, most severe consequences would be felt in Canada.

Trump’s demand that Canada do more to prevent illegal migration and to cut the flow of fentanyl across the border has brought promises from Ottawa of hundreds of millions of dollars of investment and more border searches and personnel, even if these issues pale in comparison to the situation at the US-Mexico border.

But Trump’s disdain for alliances that other presidents nurtured for decades and his resistance to compromises that suit both sides make it hard for America’s friends to manage normal relations with the United States when he is in power.

This attitude is almost certain to become more pronounced in Trump’s second term. In the case of Canada and Mexico, he appears to be angling for big concessions ahead of the scheduled renegotiation of the USMCA continental trade agreement, which he hailed as a famous triumph in his first term but now wants to change.

“We lose a lot of money to Canada, (a) tremendous amount of money,” the president-elect said at a news conference in Mar-a-Lago on Monday. “We’re subsidizing Canada. We’re subsidizing Mexico. That can’t go on. And I get along with the people of Mexico and Canada very well, but we can’t let that happen.” He went on: “Why are we supporting and giving other countries hundreds of billions of dollars? It’s not fair. It’s not right.”

It is not clear what Trump means by the US giving other nations hundreds of billions of dollars. He could be referring to trade deficits, which he often seems to regard as evidence that another nation is taking advantage of the US — but often reflect the zeal of the American consumer to buy goods, wherever they are from, in a healthy measure of US economic prosperity.

Trump’s hardened negotiating positions reflect supreme self-confidence after his election triumph. He speaks for millions of Americans who believe that global free trade hollowed out American manufacturing and benefited business elites who sent jobs to low-wage economies overseas. Many of these communities are in border states close to Canada.

While past US political leaders saw global trade and deals in North America and with China and the European Union as forces that spread wealth, many Trump supporters blame them for economic blight that has left entire regions behind and created social deprivation.

Yet the reality of continental trade is also complex. Manufacturing and supply chains are deeply entwined because of trade deals. Parts of an automobile, for instance, may cross the border many times before its final assembly. So a trade war between the United States and Mexico and Canada could have a detrimental impact on US workers and consumers as well as those over the northern and southern borders.

 

Who’s next?

While Canada and Mexico are in Trump’s sights now, he’s certain to turn to what he regards as other unfair trading relationships once he takes office next month.

Trump is likely to try his divide-and-rule strategy among European nations, seeking to mirror his success in creating discord inside Canada. While some of these states enjoy the protection of the European Union’s collective trading might, he’s got plenty of political discord to work with. French President Emmanuel Macron has been embroiled in a self-inflicted political crisis for months. The government of German Chancellor Olaf Scholz has just fallen with elections due next year. New British Prime Minister Keir Starmer has a big majority, but the UK no longer enjoys EU protection after Brexit, and Trump’s treatment of Canada is showing that smaller, loyal allies can’t expect a break.

Trump has another incentive to play hardball politics — these countries have conservative populists in the wings with whom he’d no doubt prefer to deal. Canadian Conservative leader Pierre Poilievre, a blunt right-winger by his country’s standards, is widely seen as prime minister-in-waiting, and was lionized by US conservative media for supporting trucker protests that converged on Ottawa in 2022 and in which support for Trump-style populism was palpable.

As rhetoric escalates across the 49th parallel, Canadians are getting an early taste of what Trump’s second term will be like. But everyone else will soon catch up.

“I think Canadians had not anticipated how different a second term might be from a first term. … I certainly think that this is going to be a drastically different four years than the first four years,” Lebo said.

“And I think Canadians are just starting to get a handle on that, and not knowing what to do either. I’m sure that they will just look for a different leader than Justin Trudeau, a different party than the Liberals, and hold on and hope that a new Canadian government can keep Donald Trump from targeting this country and will target someone else.”

 

 

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