Canada is bracing for the impact of newly inaugurated President Trump. It looks likely to be a tumultuous period for relations between the Canadian and US states.
Although Trump did not announce tariffs on Canadian and Mexican imports on his first day, he has said he plans to introduce them on February 1.
Much like in his first term, Trump has embraced an “America First” political agenda. He is doubling down on his break with the traditional US approach to allies, by bullying them to spend more on defence and increase imports from the US.
Going further than his threatened broad 25 percent tariffs on imports from Mexico and Canada, he has proposed US takeover of Greenland, either through purchase or miliary force and the annexation of the Panama Canal. He stated that Canada should become the 51st state of the US, although he has ruled out military force to achieve this, instead preferring “economic force.”
Mexican and Canadian businesses have been panicked by the threat of tariffs. The three North American countries are not economic islands, with trade between each country being vital. The movement of manufacturing from the US and Canada to Mexico, with its lower wages and environmental controls, was a crucial aspect of the neoliberalizing of the North American economy.
Canada and Mexico are the largest US export markets, followed by China. Mexico and Canada are the first and third largest source of US imports, with China in between.
In recent years Mexico has seen a surge of investment by Chinese corporations, leading to Trump’s claim it is a “backdoor” into the US market to get around restrictions and tariffs.
Canada has firmly tied itself to the US. Canada has been more reluctant than the US to decouple from Chinese trade, especially in its exports of raw materials. It placed tariffs on key Chinese import products, blocked Huawei’s phone equipment and restricted Chinese ownership of companies long after the US did.
Trump has been accusing Canada of a border security problem, allowing immigrant and drug smuggling, although Canada is neither a major source of fentanyl nor of undocumented immigrants. In response, Trudeau’s government proposes to boost spending on border security by $1.3 billion — with more drones and border patrols including with helicopters and more surveillance — in an effort to appease Trump. Alongside the border concern, is the $8.2 billion trade deficit with Canada (as of November 2024). Although the US is the world’s largest producer of oil, it uses more than it produces and imports around 40 percent of the oil it consumes. Canada provides over half of all the US oil imports, worth around $124 billion a year. If the import of cheap Canadian oil is excluded, Canada has a trade deficit with the US.
Aside from reining in Mexico and Canada, Trump’s policies aim to project a pro-US worker sheen. Throughout his campaign he promised “jobs, jobs, jobs” and to “bring jobs back” from overseas. He hopes that the tariffs will give the impression of action on jobs although major tariffs on imports will boost inflation and unemployment in the US. He hopes that his attacks on immigrants and trans rights will distract workers from his pro big-business policies.
Is the Annexation Threat Real?
Annexation is farfetched. A war with Canada would be too costly, besides the fact that Trump has already ruled this out himself, and he would certainly be reined in by American capitalists disinterested in breaking America’s strategic alliances.
The vast majority of Canadians are opposed to joining the US (Abacus, 6 percent in favour; Angus Reid, 10 percent in favour). Canada’s bourgeoisie and their media and politicians have widely condemned Trump’s remarks. Political union between Canada and America is a fringe position at the best of times.
Trump is a known bombast, for example, claiming he would build a literal wall across Mexico’s border (up to now it is a mix of wall, fence and nothing). Most likely, Trump’s proposal to annex Canada is to intimidate Canadian businesses and politicians in trade negotiations. However, it is still disconcerting for Canada’s bourgeoisie.
The tariff threat is real and has sent Canadian business into a panic.
The Tariff Threat
The Canadian Chamber of Commerce has outlined the importance for business of Canada’s trade partnerships with the US. It estimates that a 25 percent tariff on exports to the US would cut Canada’s GDP by 2.6 percent and cost the average household $1,900 a year. The BC government has estimated that this level of tariffs would cut 124,000 jobs by 2028.
Canadian capitalists are searching for ways to discourage Trump from going ahead with such tariffs. Retaliatory tariffs or blocking exports have been proposed by businesses, and both the federal and provincial governments across Canada. These tariffs would target key exports like oil and gas, potash, manufactured components, uranium, and critical metals. Ontario’s premier, Doug Ford, has suggested cutting electricity exports to the US, which overall are a small portion of total US electricity use, but are important in the north-east US states.
Big business would certainly offload some of the costs of tariffs onto working people, in higher prices and fewer jobs, arguing they cannot take the hits, even though many corporations have had record profits in recent years.
“Team Canada”
Canada’s bourgeoisie, and their media and politicians, have so far nearly unanimously lined up to defend “team Canada” against Trump’s threatened tariffs. Twelve premiers of provinces and territories, along with the federal government, all agreed on policies to retaliate against Trump-imposed tariffs. The exception is Danielle Smith, Alberta’s premier. She has refused to countenance any blocking of the sale of oil from Alberta to the US. Smith has a history of pushing an “Alberta first” policy, even talking of Alberta’s “sovereignty.”
She has faced criticism from other conservative politicians, noticeably Doug Ford, who said of Smith: “I have a little different theory: protect your jurisdiction but country comes first, Canada’s the priority.” On Trump, Ford said: “He’s going full tilt at Canadians as a whole. We need to be united. United we stand, divided we fall.”
Conservative leader Poilievre has also been noted for his weak stance. He does not want to alienate his base in Alberta but risks not speaking to the rest of Canada. It has been easy for him to do sound-bite politics; it’s harder to deal with the real world. For his part, Trudeau has attacked Poilievre on this basis, attempting to revive the Liberal Party’s chances in the next election.
Every politician has used increased nationalist rhetoric to shore up support amongst Canadians.
Arctic Interest
Glossing over the catastrophic results to the environment, as Arctic ice melts it opens up the region for the extraction of fossil fuels. Shipping through the Arctic is becoming more realistic as the sea ice melts.
This makes Canada (and Greenland for that matter) a target for American interests, hoping to secure future resources for production and military equipment and as a strategic arena in the conflict with China.
Workers Lose No Matter What
In his response to Trump’s annexation proposal, Trudeau stated, “There isn’t a snowball’s chance in hell that Canada would become part of the United States. Workers and communities in both our countries benefit from being each other’s biggest trading and security partner.”
Trudeau is right, but not for the reason he thinks.
Workers in both Canada and the United States have common interests. Capitalist trade wars between countries benefit workers on neither side. The rich on both sides continue being rich, meanwhile increasing the misery of workers by pushing the economic costs onto their backs.
Workers have more in common across borders than they do with the wealthy of their own and other countries. All workers suffer from the effects of worsening living standards, cost-of-living increases, climate disasters, crappy jobs, and cuts to public services. Alternatively, the rich of all countries live comfortably off the labour of workers.
International trade, whether dominated by “free trade” or protection, is designed to benefit the capitalist class. The only way to combat the decline in living standards, the loss of decent jobs, the climate crisis and much more, is on an international, working-class basis against the capitalist class of all nations.
