Trump's tariff threats: Canada's four-year negotiating gauntlet begins

Donald Trump has discovered a negotiating weapon he intends to use repeatedly over the next four years, and Canada is about to learn what that means. On Monday night, he threatened to impose 25-per-cent tariffs on all Canadian goods unless the country stops fentanyl trafficking and illegal migration into the United States. The demand sounds straightforward until you examine it closely: Canada is not a major source of fentanyl entering America, according to U.S. government data itself. Stopping the flow entirely—not reducing it, but stopping it completely—is the actual condition. It is a test that no country can pass.

This is Trump's pattern. He makes a large threat, waits for panic to set in, collects concessions, and then moves on to the next demand. He did it during the renegotiation of the North American Free Trade Agreement. He signed the new USMCA deal in 2018 and then imposed tariffs on Canadian steel and aluminum anyway. He loves tariffs because they fit his view of trade deficits, because he believes they could lower U.S. income taxes, and most importantly because they work as a tool he can deploy again and again without exhausting its power. Each time he uses it, someone gives him something he wants.

Canada is already negotiating against itself. Quebec Premier François Legault called the threat an enormous risk and demanded the federal government make the border its top priority. Alberta Premier Danielle Smith said Trump's concerns are valid and Ottawa should do whatever it takes to avoid the tariffs. There is a rush to comply, a scramble to offer concessions before the threat becomes real. Mexico's president, Claudia Sheinbaum, took a different approach. She said Trump was unaware of what Mexico had already done to reduce illegal migration and warned that Mexico would retaliate with its own tariffs. The contrast is instructive.

Meredith Lilly, who holds the Simon Reisman chair in international economic policy at Carleton University, argues that Canada should acknowledge drug trafficking and border security as shared problems and propose genuine cooperation with the United States. She also suggests Canada should lobby American politicians—particularly Republicans with business interests in Canada—to make the case that Canada's border is not the real problem. Canada has leverage, she notes. Tariffs on Canadian oil would hurt the American economy. But Lilly emphasizes that this is a marathon, not a sprint. Trump is unique in his willingness to link non-trade issues to trade negotiations and to threaten tariffs repeatedly.

Deputy Prime Minister Chrystia Freeland has pointed to the signed USMCA agreement and Canada's alignment with the U.S. on tariffs against Chinese electric vehicles as evidence of cooperation. But Trump can use tariff threats to demand more from that same deal. He could threaten tariffs to force Canada to increase defence spending, drop its digital sales taxes, or both. The list of possible demands is limited only by his imagination and his willingness to use the threat.

Canada must prepare for what is coming. The country needs to quietly develop its own retaliatory tariffs and be ready to use them. Canadian leaders cannot rush to accept every demand. They must build a constituency within the United States against tariffs, especially among Republicans who depend on trade with Canada. Most crucially, Canada must understand that this tariff threat is not an isolated event. It is the opening move in a four-year pattern. There will be another threat after this one is resolved, and another after that. The negotiating gauntlet has begun.