---
title: "Canada Shows the Limits of Trump’s Hardball Trade Tactics"
type: "post"
post_id: "14821"
slug: "canada-shows-the-limits-of-trumps-hardball-trade-tactics"
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published: "2026-10-31T18:09:04+00:00"
modified: "2026-10-31T18:23:14+00:00"
author: "penny2"
categories:
  - "Uncategorized"
tags:
  - "Canada"
  - "US"
site_name: "PFYT2"
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language: "en-US"
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> **Trump’s trade war with Canada assumed economic size would translate into bargaining power. Ottawa’s refusal to back down, and the strain the tariffs are putting on U.S. border states ahead of the midterms, are opening cracks in the administration’s approach**.

######  [Canada Shows the Limits of Trump’s Hardball Trade Tactics](https://www.cfr.org/articles/canada-shows-the-limits-of-trumps-hardball-trade-tactics)

***From Edward Alden- CFR Researcher***

> The U.S. economy is ten times the size of the Canadian economy. It stands to reason, therefore, that in trade disputes between the two countries—which were frequent even before President Donald Trump unleashed his tariff war—the United States will get its way ten times as often.
> 
> That was what Robert Lighthizer, Trump’s first-term U.S. trade representative, once told his Canadian counterpart Chrystia Freeland, according to Freeland’s new book on her dealings with the United States, cheekily titled Unreliable Boyfriend. That a negotiator as smart and seasoned as Lighthizer could make such an elementary mistake—confusing economic size with bargaining leverage—goes a long way to explaining why the second Trump administration finds itself mired in a losing trade war with its economically much smaller and militarily much weaker neighbor to the north.
> 
> The standoff is counterintuitive. White House Deputy Chief of Staff Stephen Miller’s “iron laws of the world”—a foreign policy approach that argues that force and power are the only things that count—should have caused Canada to capitulate long ago. Yet along with China, it is one of only two countries in the world that have retaliated against Trump’s tariffs. And with Republicans facing tough midterm election races in northern border states that are heavily dependent on trade with Canada, it is the United States that now appears to be backing down by lifting tariffs that are causing too much economic harm. Other countries that will face at least another two years of Trump’s trade bullying, regardless of the midterm outcomes, have much to learn from Canada’s response.
> 
> Canada, for reasons known only to Trump, who calls it “one of the worst countries in the entire world,” has been the president’s favorite tariff target. Along with Mexico, it was the first country hit with the 25 percent tariffs imposed under the International Emergency Economic Powers Act, or IEEPA, which were later overturned by the Supreme Court. Many of its largest exports—autos, gas, steel, aluminum, lumber—are facing tariffs of 25 to 50 percent under Section 232 “national security” authority, and they are likely to stand up to legal challenges and congressional review.
> 
> Since July, many Canadian goods have faced 50 percent tariffs under Section 338, a Smoot-Hawley Act relic that has never been used to impose tariffs (the courts will decide this one too). So far, Canada has matched those tariffs nearly dollar for dollar and taken other steps such as banning U.S. alcohol sales in most provinces. Next, the United States is preparing to raise the tariff on autos and auto parts to 50 percent unless a U.S.-friendly deal is reached before January 1, 2027.
> 
> The Trump strategy is simple and crude: inflict enough economic pain on Canada through lost exports to the United States that its northern neighbor will be forced to capitulate. If Miller is right, the administration should get its way. Yet, although the damage has been real, Canada has so far shown itself to be remarkably resilient. The International Monetary Fund predicts Canada’s economic growth over the next two years will be second among the Group of Seven countries, behind only the United States. Its fiscal position is the best of the group, allowing the government to support industries hurt by the U.S. tariffs. Prime Minister Mark Carney and Ontario Premier Doug Ford recently announced a C$9 billion package for the auto and metals industries.

###### Including a few edited excerpts below

> **Windsor, Ontario, a manufacturing city across from Detroit that depends heavily on auto and component sales to the United States, saw its unemployment rate spike three percentage points following the Trump tariffs in 2025. But it has since largely recovered**
> 
> The weak **Canadian dollar, which has remained near historic lows** despite rising oil prices that have historically strengthened the “loonie,” **has helped offset the cost of the tariffs**. **Canada is getting the benefit of surging oil revenues from its Alberta exports without additionally harming the Ontario manufacturing heartland**.
> 
> **The federal government is fighting with U.S.-based Cleveland-Cliffs over its plan to cut five hundred jobs from the Stelco steel facility in Hamilton, Ontario.** **( In the news quite a bit lately)** **Ottawa is similarly suing Stellantis,** the carmaker, over its plan to close the Brampton, Ontario, plant building the Jeep Compass and relocate production to Illinois.
> 
> Despite the pain, **Canadians across the country are in no mood to back down from the fight. Carney’s approval ratings are among the highest ever for a Canadian prime minister…**
> 
> - As the trade war with Trump has escalated, Carney has pursued alternative partners.
> - He has fast-tracked a new pipeline from Alberta’s oil sands to the Pacific coast to double oil exports to Asia.
> - It is pursuing “associate membership” in the European Union, the particulars of which are still being ironed out.
> - And Carney has sidestepped Canada’s traditional concerns over human rights in China, India, Turkey, and the United Arab Emirates to pursue closer trading relationship **( I don’t buy into the human rights idea at all)**
> 
> **Each of these may take years to come to fruition and will not fill the hole of lost exports to the United States. Yet they demonstrate that Canada will not be the pushover Trump had imagined.**
> 
> **The scholars Robert Keohane and the late Joe Nye used U.S.-Canada negotiations as their template for the 1977 classic Power and Interdependence, which argued that in complex economic relationships, the smaller power still holds many cards.**
> 
> **For Canada, the list includes exports that are critical to the U.S. economy such as oil, potash, and electricity, the dependence of many northern states on selling their goods to Canada**—**which is the largest market for U.S. exports—and the deep cross-border ties that reach into companies, labor unions, and regulatory agencies.**
> 
> **Given such complex relationships, there are sharp limits to how far any U.S. administration can push Canada around. The 2017–18 negotiations that produced the United States-Canada-Mexico Agreement (or USMCA) demonstrated that clearly; despite playing a seemingly weak hand, Canada got almost everything it wanted from the deal**. ([That deal was made during the 1st Trump administration- The one he called the best deal)](https://trumpwhitehouse.archives.gov/briefings-statements/remarks-president-trump-usmca-celebration-american-workers-warren-mi/)

**Oh and last sentence..**

***“Canada stands alone in resisting U.S. demands. But so far, it seems to be standing tall.”***

**So, my fellow Canadians, what do you all think?**