The Trump trade war presents a huge opportunity for Canada to rethink outdated policies. Here’s how we can negotiate a better deal
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The Trump trade war is a major opportunity for Canada to think creatively and act in a way that secures our objectives. Instead of reacting defensively and sticking to outdated strategies, Canada should take control. By addressing key U.S. concerns—border security, defence spending, energy exports, trade fairness and manufacturing—we can turn a potential trade conflict into a win for both sides. We win, Trump wins.
To understand the best course of action, we need to examine not just what Trump is saying but also his official statements—his campaign platform, executive orders, and legislative proposals. At the same time, we must consider the legislative and constitutional limits that constrain a U.S. president’s authority.
Trump’s top priority in his campaign platform was border security. The executive order authorizing tariffs is entirely focused on that. It states that if Canada addresses these issues, including fentanyl trafficking, the tariffs will be removed. A secure border and a reduction in two-way trafficking benefit Canada as well. Potential outcome: we win, Trump wins.
 Canada can turn the Trump trade war into its biggest opportunity. |
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National defence is Trump’s second priority. He is rightly concerned that Western defence partners are not paying their fair share of security costs. The reality is that the United States has been subsidizing us in this respect.
Trump’s interest in Greenland may seem unexpected, but it has strategic merit. Given the increasing threats from Russia and China in the Arctic region, securing Greenland’s cooperation would enhance both Canadian and American defence capabilities. Strengthening partnerships in the Arctic ensures greater security for North America as a whole.
Canada could respond by committing to increased defence spending and proposing an expansion or modernization of NORAD that includes a trilateral Canada-U.S.-Greenland defence partnership. This would bolster joint security efforts, improve Arctic surveillance and defence capabilities, and reinforce regional stability against geopolitical threats. Enhanced cooperation would benefit all three nations. We win, Trump wins.
Canada has significantly restricted its energy industry based on climate ideology rather than science. Instead of limiting production, Canada should expand its energy exports to the U.S. and global markets. Increasing oil and gas exports would not only boost Canada’s economy but also provide the world with a stable energy source from a democratic nation.
By contrast, the Biden administration pleaded with Iran and Venezuela—countries with questionable human rights records—to pump more oil. If we produce and sell more oil and gas, we prosper. Provinces like Alberta would feel more secure within our federation. Meanwhile, the U.S. would gain a stronger, more reliable trade and military ally. Bonus: when we export more oil and gas, the value of our dollar rises. Trump would view a stronger loonie as a trade win in itself. We win, Trump wins.
Trump’s third priority is eliminating unfair trade practices. His speeches and proposed legislation make it clear that while he recognizes the value of free trade, he believes the U.S. is being exploited by many countries. Some trade partners, like China, subsidize exports or restrict U.S. goods, services and investment. Canada should work to remove trade irritants that harm both us and the United States. For example, our dairy marketing system drives up prices for our own consumers. Getting rid of it would be a win for everyone. We win, Trump wins.
Trump’s fourth priority is maintaining a strong U.S. manufacturing presence, particularly in strategic industries like steel. Canada can help by cutting back on expensive subsidies for manufacturing sectors that compete with the U.S. Governments are notoriously bad at picking winners and losers, and these programs are often influenced by political favouritism. If we eliminate selective subsidies, we win, Trump wins.
Trump’s fifth priority is shifting the tax burden from income taxes to tariffs. Canada can minimize the impact on itself by negotiating an exemption from general revenue-raising tariffs—perhaps as part of a broader bilateral agreement that meets Trump’s other priorities. We win, Trump wins.
Beyond economics, Trump is using tariffs as a tool to achieve foreign policy goals. For example, the threat of tariffs pushed Panama to reduce Chinese influence. He will not let Canada or Mexico undermine his ability to use tariffs effectively. If Canada works with the U.S. to create mutually beneficial new agreements, Trump’s leverage will remain strong, and we avoid unnecessary trade battles. Given today’s world—marked by an aggressive China and rogue states like Russia and Iran—the U.S. is our most important ally. If it can meet its strategic objectives without military force, we win, Trump wins.
Canada can take a reactive approach that might see Trump lose a little, but we lose much more. Consider, for example, targeting red states in economic retaliation. This is a bad strategy. Americans have their national pride, just as we do, and red states are particularly nationalistic. Meddling in U.S. domestic politics would provoke more anger than cooperation. Trump loses a little; we lose big.
Instead of accepting a loss or settling for an exhausting tie, Canada should aim for a decisive and lasting win. We need to stop limiting ourselves with outdated thinking. Instead, let’s be bold, pragmatic and strategic. We, too, can negotiate artfully.
Bryan Schwartz is a professor of law at the University of Manitoba. This commentary was submitted by the Frontier Centre for Public Policy.
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