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Dear America, from Canada
I’m a Canadian with a lot of fondness for all of you down there. Last time we had a consequential election, when Trudeau came to power, I posted my (conservative-leaning) take as an “explainer” for Americans. It got a lot of attention, but my cautious optimism was misplaced; Trudeau was a disaster for this country. His father was our Obama, but Justin was more like Carter, just kind of stuck in a malaise, too myopic to understand the challenges of his age. We are poorer and more dependent on government than ever; productivity growth since COVID is the worst out of the top fifty – FIFTY – world economies.
Let me try again after another consequential vote, as I process the shock of my neighbours’ sudden decision, after years of griping, to re-elect a flock of left-wing ideologues hiding behind a boring and besuited banker, Mark Carney. The personality is normal: our system tends to prefer the colourless characters of a lower parliamentary house. Your Mitch McConnell and Mike Johnson are closer to our norms of Jean Chretien and Stephen Harper (who?).
But what were we thinking? In Pierre Polievre, we had a smart, slightly nerdy Conservative on offer – not a radical, but at least a proponent of a commonsense revolution. The last Conservative government in Canada ensured the financial crisis barely touched us, left us with low debt, and generally represented us well internationally. We shook our heads when we saw Barack Obama’s radicalism, and wondered if maybe the convention that “Canadians are way left of Americans” had it backwards. The Conservative before him, Brian Mulroney in the 1980s, was more colourful and consequential. He persuaded the country that we would prosper, while remaining strong and free, if we entered into free trade with the United States.
That discussion was two hundred years in the making. The US has invited Canada to join them many times — during your revolution, when we kicked your tails in the War of 1812, after your Civil War, and in the early 1900s, to name a few. American leaders were instrumental in enticing Canada to adjust itself for free trade in the 1980s, abandoning our traditional policy of pursuing trade with Europe and Asia as a government-funded diversification strategy.
We were persuaded because we were offered access to your markets — first in the 1950s as thanks for our participation in Korea, and later as part of the 1988 FTA and 1994 NAFTA. We gave you Arctic access, equal footing in our markets, preferential treatment in our military procurement, and general access to our own sizeable market. Our economy is of course smaller than the US’s, but is not THAT small: for most of our history, we were your largest trading partner. It was a Conservative idea, but the Liberals opposed it before coming on board later.
It worked. Both countries got much wealthier. The only people who disliked it thought (incorrectly) that Canada was the reason the auto sector moved to Tennessee. Ontario got a bit of business from companies fleeing rust belt unions, but not much — our manufacturing growth was earlier and in tandem with the big car companies, offering cheap power, simple taxes, and a good workforce.
For years, if you wanted to pitch a business idea to a Canadian investor or bank, the last sentence was always “…and we think we can eventually enter the US, or sell to a US company.” If that line was credible, the answer was always “Yes, we’ll invest in your US-focused tech.”
That goodwill amongst the monied class in Canada is just a fact of business here, and represents a valuable AMERICAN asset: Canadian money would build tech that Americans would buy, first as products and later as companies, and then they’d move all the talent south: Univar, Alcan, Inco, Seaspan, Mitel, Creo, Traders Group, etc. Canadians disliked the hollowing out of our corporate sector, but accepted that it was ultimately good for us, too.
So it was unpleasant when Trump came in with sudden tariffs. If he’d given us a year’s notice to negotiate some meaningful compromises, we could have lived with it, but companies have to plan ahead, and the costs to us have been devastating.
A case in point. I know a company that has a $6 million theme park in New York and is in the middle of a $2 million construction project there. On a week’s notice, they got hit with $300k of tariffs to move their Ontario equipment in, but had to keep going to meet permitting and legal obligations. The tariffs wiped out most of the company’s profits for the year and caused their investors to permanently kill two more investment projects in the US, each scheduled to bring America around $5 million. All of the company’s investment will now go to second-tier expansion projects in Canada. The existing US satellite will get no more capital investment, despite a previously promising model. That’s why the US markets are cratering: part of these projects were going to be done with US suppliers and banks — that business is now permanently lost to the US, and both sides are poorer.
What Trump doesn’t seem to realize is that the so-called “trade deficit” matched, dollar for dollar, a capital surplus — an investment — from Canada to the US. Always and everywhere, those two things find balance. If they didn’t, the imbalance would have sent the currency either up or down until it reached balance.
Canadians are keenly aware that when we adopted free trade, our leaders had to make that technical case in a sophisticated way to our voters. We were suspicious that the US would suck away all our autonomy. The Conservatives told us not to worry, we’d get rich; the Americans benefit from this too, and will honour their deals; and that changes are only possible with years of notice and planning. The Liberals sounded unduly concerned about a then-reliable trading partner.
Trump’s mercurial trade policies just proved the Liberals right, 40 years later. That’s why they won last night.
So… now we’re stuck with boys in girls’ sports, virtue-signalling leftists, extortionate tax, state-assisted suicide for everyone (even those not sick), and ever-expanding spending and unneeded welfare programs. The election wasn’t exactly about trade, it was about judgment. The pro-American Conservatives looked like Silda Spitzer as she confronted her husband’s betrayal.
And our grey banker seized his moment: Carney promised to hold the course on Trudeau’s familiar social policies (ugh), but would aggressively pursue trade with China and Europe instead of the mercurial customs agents a few miles to our south. The Conservatives didn’t know what to say, but even a Canadian conservative has to agree that sounds like a rational way to hedge our bets. Business-friendly provincial governments have been trying to build oil pipelines and ports east and west, not south to you, for decades.
Is that really what America wants? We were so good together. We went with you to Afghanistan, holding your back there when you were in Iraq (ok, that one was a bit much for us); at your request arrested a Chinese businesswoman, Meng Wenzhou, at great diplomatic cost to us; lots of intelligence sharing; military cooperation in the Arctic; big deals with Boeing; and so much more.
But we have the world’s largest coastline and, like Australia, we can trade all over the world if you don’t want to do it with us. We will have a painful adjustment, but pretty soon there will be no room for us to adjust back.
Even today, if Trump took the tariffs back off, that Canadian investor’s goodwill is gone. He will ask not how my tech invention will end up in the United States, but about what my backup plan is. So, America: How should I answer him?
I know a Chinese guy who will buy it.
Published in General
Canada’s version of free trade in dairy products, for example, is a thicket of “quota management” regulations that insure no tariffs on small amounts of of imports but 250% tariffs on imports over quota. “But those tariffs aren’t charged in practice.” Is the usual Canadian reply. True. Because a 250% tariff makes imports so uneconomic that they never occur.
I don’t know if tariffs are good or bad. I don’t know if NAFTA is good or bad. I don’t know whether trade deficits are good or bad. At least based on what I read – there seem to be arguments pro and con. I suspect they are good for some people and not for others.
But what I do know is that we have benefitted greatly from a long, peaceful border to the north and the good will of our Canadian neighbors. I was very sorry to see that relationship strained for no really good reason. All of the trade issues could have been negotiated in a spirit of friendship.
And now you have a dweeb for a prime minister.
I hope at some point, this episode is put behind us and we resume cheering respectfully for each other’s national anthems at hockey games.
A terrific post with deep insight! You seem to know more about international trade than does our own President.
You seem to have bought into the “Canada’s ripping us off” narrative from Trump, the guy who negotiated the very deal involving the dairy products you are citing. Virtually every country in the world, including the United Sates, has tariffs targeted to protect certain industries over others. No country in the world has a flat rate for all products. The U.S. for instance, has the same exact system on sugar that you cited in Canada’s dairy market. We only allow a certain amount of foreign sugar into our country, and anything above it is tariffed at 62%, effectively pricing out any foreign competitors. As a result, American consumers and companies pay double the amount for sugar than does the rest of the world.
As the result of Trump’s deal with Canada in 2018 (the one that he is bashing now), 98% of the products we ship to them have zero tariffs. I think it is unfair to complain about Canada’s tariff system.
Sugar is far from the most expensive thing Americans buy/consume. And on the other hand, we have a domestic sugar industry that we can rely on in times of trouble. If there were no protections at all, our entire domestic sugar capacity could disappear due to sugar produced by “slave labor” in other countries. As it is, we do import substantial amounts, thus supporting the elevation of other countries, and meanwhile other countries who have little or no domestic sugar production can do their part as well. Otherwise our own consumption could cause problems such as what we cause by using corn as fuel rather than food.
It’s true that we have done some of these things to ourselves, such as by destroying much of our own lumber industry with regulation etc. But the long-term solution to that is not to “lie back and enjoy” imports from Canada.
Well neither are dairy products in Canada.
We always have dweebs for prime minister. We are Canadian.
I hope we can get back to a semblance of normal, and of course there are many silly things about our economy: if the Trump tariffs inspire us to get rid if dairy products so I don’t have to pay $13 for a block of cheese, I’ll be overjoyed. But in many ways, we are a low-tax, efficiently regulated, high-trust business environment with a good education system.
But we are exporters of big, heavy industry, and if you want us to orient south, it means a lot of investment and a long-term strategy. Tearing up trade agreements every few years will necessarily inspire us to look elsewhere.
For what it’s worth, I would never boo your anthem at a hockey game. You’ve got the best national anthem, because it tells a real story! Here’s hoping America can be its best, whatever that is.
Which is why it’s not a big deal for them to protect their own dairy industry, even if it makes things cost more.
Very nicely written, “VP the C”. I admire the historical craftsmanship, selecting the details that are most likely to be relevant to US citizens.
EDIT: Spelling corrected, hat tip to @kedavis
Well said. Frankly, I would have done the opposite. No tariffs of any kind with Canada.
The US and Canada have one thing in common in that we speak the same language with the exception of Québec. I do admire Canada for doing the only thing possible with the last French colony in North America and that was teaching them how to play hockey.
The historical difference is that the US had to fight for its independence rather than waiting for a monarch and parliament to grant independence.
Both Canada and the US as large as they may be, are too dependent upon elected officials that govern or rule from one city. There is a rural divide in both countries. Perhaps there is too much lead in the pipes in Ottawa or DC or a lack of oxygen but there is no shortage of TV cameras and politicians that run towards them.
Canadians and Americans should remember regardless of Left or Right no one’s life, liberty, or property is safe when Congress or Parliament is in session.
Right … 98% of the products actually shipped … you are leaving out the products NOT SHIPPED because of Canadian tariffs
Americans have a very good point about our supply management: taking excess milk and pouring it down the drain to keep excess supply in business as a matter of national strategy. It’s our strategic milk reserve.
Be careful what you wish for, though: if you ever persuade us to adopt a market approach, you’ll have an oversupply of milk, and the free flow will go south and flood your market!
There are some things in Canada that have local-ownership restrictions, but most small countries need something like it:
These matter, I guess, but they’re pretty light restrictions on US suppliers.
This is an excellent, informative post. Thank you, Vorpal.
I do not wish to see Canada become less engaged with us and looking for other partners, but I completely understand. Why would Canadians want to make a new trade deal with us when our president may happily violate the new agreement, just as he has the current one? It would be like giving a loan to someone who is bragging about defaulting on his current loan. Our only (and faint) hope is that Congress will grow a spine and remember that the Constitution gives them the authority to set taxes, not the president.
Americans should have rejected Trump back in the 1980s when Trump criticized US trade with Japan. Now, the chickens are coming home to roost. We Americans did this to ourselves. Of course, Canada is going to expand trade with Europe and China given Trump’s unpredictability.
Meanwhile, Trump is sounding a lot like Bernie Sanders did when he criticized the fact that Americans had lots of choices in deodorant.
I was thinking about Bernie Sanders and his comment about deodorant (and I think it was sneakers) a couple of nights ago. There is no question that if these auto import tariffs go into effect, there will be fewer models of vehicles for us to choose from. We thought it was ridiculous when Bernie Sanders made his statements, but MAGA supporters tell us that’s OK, they’re willing to sacrifice the option of other people to buy the cars we want.
Foreign nations should factor into their decisions that the current administration will be in place for a little less than four years. Given the advanced age of the president it may be less. The president’s unconventional approach is an outlier and whoever succeeds him will predictably be more normal.
An example of a decision that needs to be made now with a decades long impact is Canada has suspended the purchase of 72 F35s and may decide instead to buy the quite capable Swedish Gripen fighter. Canada reconsidering F-35 purchase amid tensions with Washington, says minister | CBC News
Since Canada has already paid for 16 F35 and will accept delivery it makes little sense to logistically support two different aircraft for the same role but who knows how they will decide. Could be politics or could be idealogy, but Carney really sounds like he wants Canada to have much fewer ties with the U.S.
There is a chance the Supreme Court may rule against some or all of them citing the major questions doctrine. I agree there here is no chance Congress will act unless we have a major economic crises.
BTW: I am neutral/undecided on tariffs in themselves but am hostile to who was targeted and how they were rolled out.
Canadians get who they vote for and deserve whomever they get. If they have a hissy fit like Georgia did in 2000, they deserve whomever. they elect. I’m unmoved by their choice, not my problem.
Re tariffs, that is worth debating. Trump is doing what he said he was going to do. Did Canada have restrictions and/or tariffs on our goods? If so, why weren’t they removed? Is some fentanyl coming in from the northern border? If so, what is Canada doing to stop it?
Do you really think Trump can make Canada our 51st state? Why all the high dudgeon? Just laugh it off. The idea is funnier than booing our national anthem. When I played in community bands in Florida, we played the Canadian National Anthem out of respect to our “snowbird” winter visitors from the north.
I wish my northern brothers the best and will be visiting your great country this summer.
I don’t have time to go into a detailed explanation, but yes, they have some tariffs and some protected industries, just as we do. Both of our countries agreed to free trade in principle, but needed a few exceptions to the rule because both of our countries have some segments that would riot if they had to compete at world market prices. NAFTA and its replacement, USMCA, have these exceptions built into them. I have not read one single accusation that Canada has broken the agreement. It is our side that has set the agreement on fire.
Do you think illegal drugs are moving in only one direction across the U.S./Canada border? I expect smugglers are moving drugs of different types in both directions.
From my experience in, uh, stopping trafficking, it goes wherever the traffickers want it to go. We stop some but not enough to make it not worthwhile to traffic. Our demand is part of the problem. I will tell you stuff next time I see you in person.
Why? Why should some Canadian citizens booing our national anthem at a sports event be looked at as more offensive to us than our head of state repeatedly making jokes dismissing their national sovereignty at the same time he’s violating a trade agreement he had previously negotiated with them and (as illustrated by the anecdote in the OP) bringing economic pain and uncertainty to them? My understanding is their booing our national anthem was in response to Trump’s actions and rhetoric, and I’m not going to blame them for being a little steamed.
This is what Charles C. W. Cooke wrote in his column “Trump’s ’51st State’ Folly”
And there is the argument made by Steven Calabresi at the Volokh Conspiracy website that Trump’s tariffs are unconstitutional.
If stuff hits the fan, can Sweden produce enough fighters and parts to keep them going? And what if Sweden was the one invaded?
It is pretty much the entirety of the problem. Even if rutabagas were illegal, there would be almost zero rutabaga smuggling because few people want them. We know how terribly dangerous fentanyl is, yet America’s thrill-seekers willingly risk death in search of a higher high. If people are that desperate to get high, someone will supply them with the means. I don’t mean to suggest that the smugglers and dope dealers are off the moral hook, but I grow frustrated with the people who speak as if the people buying drugs are helpless victims.
From my experience in, uh, stopping trafficking, it goes wherever the traffickers want it to go. We stop some but not enough to make it not worthwhile to traffic. Our demand is part of the problem. I will tell you stuff next time I see you in person.
I’m pretty much nonplussed by the whole thing. Tariffs didn’t come out of the blue. Trudeau was a putz. There are negotiations going on. Let them negotiate , deal, and then we all move on.
What products would those be?
Because Trump approved of the restrictions and tariffs! And he bragged about it! Trump is the guy who made this deal with Canada. Why is it that MAGA supporters can so easily criticize Canada’s trade deal and never acknowledge that Trump negotiated this deal and said it was best trade deal ever made? This disconnect stands out like a sore thumb.
Off the top of my head it was something like 41 pounds of fentanyl in a single year. Probably ten times that amount gets smuggled into just Detroit every year. The amount coming from Mexico, by contrast, is two or three tons per year.
Although the amount of fentanyl coming from the U.S. captured by Canadian border guards in 2024 was trifling, the amount of other illicit drugs captured coming from the U.S. was about 3,600 pounds. A really interesting read about the illegal drug trade and weapons entering Canada from the U.S., which is rapidly increasing.
https://www.cbc.ca/news/politics/trump-complaints-drugs-guns-border-1.7457605
So it looks like we have a large trade surplus with Canada when it comes to illegal drugs. Success!