The roller coaster of Canada – US relations continues. The breakdown of trade talks spells more turmoil and uncertainty.
Trump’s 50 percent tariffs on $28 billion of trade are estimated to hit around 90,000 jobs and push the sluggish economy back towards recession. The Canadian government responded with equal tariffs on $28 billion of imports from the US and Trump has threatened another round in January 2027.
While it is unclear how long this round of Trump’s attacks on Canada will continue it is likely to escalate, with mutual retaliations, before there is a pause or winding back.
Trump’s art of NO deal
Trump brags about his skill at making deals, yet he cannot make a deal with Canada over trade or Iran to end the attacks that he started, putting the world economy on the brink of a recession and pushing millions, especially in Asia and even in the US, further into poverty.
The truth is that Trump does not make long-term deals – as Carney said he signs deals in pencil, only to rip them up later. Trump’s tariff war on Canada is part of his goal to make Canada the 51st state or, at least, a total vassal of the US, as the demands to reduce French language rights and to control Canada’s trade with other countries make clear.
Carney’s boost
Even before the collapse of the talks, Carney and federal Liberals were riding high in opinion polls. Now Carney has boosted his reputation for “standing up” for Canada. An Angus Reid poll just after the talks broke down found that 76 percent of Canadians thought Canada did the right thing by refusing the terms and only 13 percent thought it was the wrong thing (about the same level as Canadians with a positive view of Trump in an early August Angus Reid poll). Doug Ford’s robust response to Trump will reverse his recent decline in support.
The Tories and Poilievre are floundering as Carney stole many of their policies such as scrapping many environment actions, giving bigger handouts to business and fast-tracking a pipeline to the Pacific. The Tories have less support now than in the 2025 election. Poilievre is seen as divisive and there are rumbles of concern within the party. Recently, he argued the “need to get back to tariff-free trade,” but without any plan to do so – empty words. Meanwhile, the NDP is still in the early stages of rebuilding.
In the short-term, it will be hard for the Tories and NDP to meaningfully criticize Carney as in the run-up to the collapse of talks, both urged Carney not to give too many concessions, as “no deal is better than a bad deal.” Even before the collapse of talks many provincial premiers were skeptical of what seemed on offer and stated support for ending the talks, although as usual Alberta’s Smith was most reluctant to do anything.
Fragile economy
The Canadian and world economy is fragile. Everywhere workers are struggling with higher costs, which in turn reduces consumer spending. Growth in the US is driven by rich consumers and the billions pouring into AI, without AI investment the US would be in or near a recession.
Corporations’ and governments’ mountains of debt of (especially the US and China) are pushing up the cost of borrowing into a self-reinforcing spiral which could trigger a global debt crisis and recession.
The Canadian economy was on track to grow about 1 percent in 2026 after flatlining in 2025, but an increased trade conflict with the US will put that in doubt. This conflict could drag on for months, with rising unemployment and prices. Although officially overall prices are up 11 precent since June 2022, food is up 19 percent, health-care services are up 18.5 percent (already 22 percent of Canadians skip medications), and shelter is up over 16 percent. These hit working people hard and are going to get worse.
Not “All in this Together”
While there will be much talk of all in this together and rally round the flag, the reality is that it will be workers, and small farmers and businesses that will pay. There was the same “rally round the flag” talk during COVID. It was a lie – workers died and lost jobs while the bosses were safe. During the inflation spike, workers had to fight the bosses to get pay rises to keep up with soaring prices while many corporations made super-profits. Despite talk of protecting workers, and small businesses and farmers, the reality will be that the capitalist class will try to make working people pay.
Carney has made it clear over the last year that his government is for big business with subsidies and bailouts all round. Condo developers are getting a handout from government (page 7), the proposed new pipeline to the Pacific, mostly paid for by taxpayers, is a huge gift to the highly profitable oil companies (page 12) and there are threats to workers’ rights (page 8). The government is cutting jobs – 30,000 from Canada Post and up to 60,000 public service workers. Inequality increased again in 2025.
Union leaders need to start now preparing to fight to defend jobs and pay. Canadian youth unemployment is officially (an underestimate) 12.6 precent. The fight needs to be both to defend current jobs and future jobs for young people starting in the working class. This would include workplace meetings, arguing an injury to one is an injury to all, drawing up plans, if needed, for strikes and occupations.
Avi Lewis was right to warn that “We may be united as Canadians in rejecting more concessions, but we’re not all in this together when it comes to who’s going to get hurt.” He argues for “an economy that prioritizes housing, health, climate and the cost of living.” No mention of more bombs and climate destroying policies!
While Trump is the direct cause of the attack on jobs, behind him stands a sizeable part of the US capitalist class. US workers are not the enemy of Canadian workers; many millions of US workers are suffering from the bosses’ attacks, with higher prices, ICE raids, no growth in manufacturing jobs since Trump took office and youth unemployment officially at nearly 10 percent. Trump’s tariffs are shifting wealth from workers to the super-rich. US workers are also resisting Trump as in Minneapolis earlier this year with the city-wide strike and mass demo in sub-zero temperatures.
There is huge need and plenty of money to pay for a jobs program. The Carney government plans to spend $150 billion a year by 2035 on weapons, as countries around the world boost spending in preparation for war. Thanks to Trump’s attacks on Iran (page 15), the Canadian oil industry expects profit for all of 2026 to be over $60 million, maybe as high as $100 billion.
NDP to have a bold program
The growing trade conflict highlights the longstanding need for a strong left, socialist party that stands up for and with workers. Avi Lewis’s election as leader means that the NDP has the potential to build one. But potential and reality are different, as was shown as the leadership of Your Party in Britain squandered is massive support (800,000 signed up to join in the summer of 2025). Lewis certainly has momentum with the largest majority support of any newly elected NDP leader.
The party has started to rebuild from the 2025 disaster when it got the lowest ever share of the vote, 6.3 percent, for the NDP and the CCF before that. It only elected 7 MPs and two have abandoned it since then. Its support has climbed steadily in opinion polls. In August, according to the website 338canada.com it stands at 11 percent, up 75 percent since the election and would elect 14 MPs, double the election result. Concern about Carney’s abandoning of action on climate is a key issue boosting the NDP. The are reports of increased activity and support for the NDP. Although still a long way to go, it is heading in right direction.
Carney recent boost may slow the NDP’s recovery, but as working people’s suffering due to this trade war grows, increasing numbers of people will look for alternative answers. The reality of many of Carney’s policies such as cutting jobs and public services while boosting military spending, failure to build affordable housing, and trashing the environment in favour of big oil have yet to sink in.
The NDP has an opportunity now to patiently explain its polices by talking with people on the streets and in workplaces. The mood will shift. An across Canada day of action in early 2027 would build support.
Canada needs a program that provides good jobs using tariffed steel, lumber and aluminum and turns manufacturing skills to make what is needed to build homes, produce renewable energy, and upgrade public transit and long-distance rail.
More turmoil and chaos are coming. The NDP should keep in mind the words of an astute conservative analyst, Andrew Coyne: “In the chaos that is headed our way, more voters may be willing to give the NDP a look than is presently accounted for.”
International socialists have long argued for “neither free trade nor protection,” (tariffs and other trade barriers) as neither favour workers. The mutual tariffs between Canada and the US hits workers and consumers in both countries. We counterpose planned international trade. Socialist Alternative argues for an economy that does not exist to make the rich richer, instead it is run to meet workers’ needs and protect nature. This is best done by working people – the real experts – planning the key sections of the economy through democratic public ownership.
Socialist Alternative Jobs Program includes:
- Protect nature and the climate with millions of good union jobs
- Rapid transition to renewable energy, insulate buildings and install heat pumps
- Defend public health (against privatization especially the moves in Alberta and Ontario) and improve the quality of the public health system
- Build millions of quality public homes to rent, not spend billions on military hardware
- Improve urban public transport
- Take the railways into public ownership and invest to upgrade the bed and track, electrifying and dual tracking parts to connect all of Canada by quality rail services
- Protect and expand workers’ rights
- No to AI data centres
- Make the bankers and oil companies pay and Tax the Rich!
