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Mark Magnier

The latest trade war between the United States and Canada marks a turning point with key lessons for China and other major US trading partners as well as risks, say analysts and former trade officials, as US President Donald Trump continues to put his blunt stamp on global institutions.
The breakdown in ties between Washington and Ottawa, one of the largest trade relationships in the world, opens one more front in the president’s disruptive path that could fuel a backlash and further distrust to Beijing’s benefit.
“Should Canada succeed in weathering the storm of US retaliation while standing up for its national interests, others may follow a similar ‘get tough’ approach,” said Wendy Cutler, senior vice-president with the Asia Society Policy Institute.
“There is no doubt that a growing number of partners are relating to Canada’s growing frustration with Washington, overall, and the heavy-handedness it brings to the negotiating table.”
“Beijing must be enjoying watching the volley of words and actions between Washington and Ottawa,” added Cutler, a former senior negotiator at the Office of the US Trade Representative.
“It would not be surprising if Beijing steps up its efforts to woo Ottawa into its court.”
Talks collapsed late last month after Canadian Prime Minister Mark Carney broke off negotiations, accusing the US of acting in bad faith with “unfair and uneconomic” late-stage changes.
The US countered that Ottawa was abandoning prior commitments, as Trump weighed in, calling Canadian negotiators “clowns” and “nasty people”.
Never one to back down from a fight, the mercurial president then set his sights on Ontario Premier Doug Ford, calling him “Flunky Ford” after Ford said that Trump could “kiss my a**”.
Trump followed this up with an executive order to unilaterally rename Lake Ontario, known as such for almost 400 years, as “Lake America”.

Ford countered that Trump’s name game resembled a skit from the television comedy show Saturday Night Live.
“I have a lot of real estate on my a**, so he has a lot of room to kiss,” he said. “I just do. I’m a big dude. What can I say?”
Amid the mudslinging are huge stakes involving a US$900 billion annual trade relationship, the world’s second-largest after the US and Mexico, and huge risks for Canada, whose economy is 8 per cent of its southern neighbour’s size.
Trump has a long history of issuing oversized threats to show dominance and gain leverage. Wall Street traders hope he will back down, a pattern dubbed “taco”, short for “Trump always chickens out”.
As it stands, however, Washington has imposed 50 per cent tariffs effective August 22 on some US$20 billion of Canadian imports; raised concerns over Canadian imports of Chinese EVs; demanded veto power over Canada’s independent trade policy; and tried to undermine Canada’s French labelling and media content requirements, a huge red line for the bilingual nation.
Ottawa has countered with a pledge to match the punitive US measures “dollar for dollar” effective September 8.
Trump further threatened to raise tariffs to 50 per cent effective January 1 on the hugely consequential steel and auto trades. And he has declined to automatically renew the US-Mexico-Canada trade agreement, leading to a July 1, 2027, review deadline.
One lesson voiced by Carney and increasingly internalised by the 200 nations that trade with the US is the lack of certainty in any agreement negotiated with Washington.
“There’s no such thing as a deal any more when it comes to the US, at least with the current administration,” said Abishur Prakash, geopolitical strategist at The Geopolitical Business, a Toronto-based advisory firm.
“This is a Wild West-type scenario.”
The European Union and United Kingdom crafted deals with the US, Japan pledged US$500 billion and South Korea pledged US$350 billion, only to see the US administration come back for more, examples not lost on Carney, he said.
“That’s proven to him that it’s never-ending, that every six months the trade demands return,” Prakash said.
“He’s trying to say, ‘hey, you want a deal, let’s make a deal. But if you don’t want to make a deal, this is the consequence’.”
Or, in Carney’s words, Washington’s signature is increasingly “written in pencil”.
What had distinguished Carney, previewed in his World Economic Forum speech last January, was the need for middle powers led by Canada to push back, he said, even as other world leaders had rushed to Washington to appease the transactional president.

By some indications, China led the way by forcing Washington to blink after Liberation Day, using its grip on strategic rare earth minerals. But Canada is far smaller and more interdependent.
That said, Canada is the single-largest export market for almost all major rust belt and battleground states, including Michigan, Pennsylvania and North Carolina, coming into the midterm elections, according to the Ottawa-based Macdonald-Laurier Institute.
“While some might be predisposed to think that China holds more aces in hand than Canada, that’s not necessarily true because Canada still holds the energy and fertiliser [cards],” said Nicole Bivens Collinson, managing principal with law firm Sandler, Travis and Rosenberg, formerly with the USTR and the Commerce Department.
“We have to be careful we’re not overplaying our hand.”
But Carney is walking a delicate line. While he has a few “nuclear” options, such as cutting off Canadian electricity that some 20 US states draw on, he wants to avoid alienating Americans, most of whom have soured on Trump.
And while Carney’s domestic popularity has soared – over 70 per cent of respondents supported his decision to end trade negotiations with the US leader, according to an Abacus Data survey – that will almost certainly decline if the crisis drags on and Canadian employment and economic growth sink.
“It will last and increase if Canada turns out to be right,” Prakash said. “However, if Washington doesn’t fold … the US has so many cards to play. And if Trump were to play just two of them, we would all be bleeding to bits in Canada.”
Another lesson reinforced by this crisis is that global trade negotiations increasingly move at a blistering pace. And while China has used its rare earths leverage effectively, the US, Japan and others are racing to blunt this massive vulnerability by rapidly expanding mining and processing.
“If I were China, I would probably know that I have a limited amount of time,” Bivens Collinson said.
“If the United States is willing to do that to their trading partners to the north of the border, they’re going to be willing to do that to China.”




“I would be taking this as a lesson to be heeded, and to recognise that I’ve got a shelf life on these cards that I’m holding.”
While the immediate US-Canada mud fight dominates headlines, the crisis also has more fundamental implications as long-standing US-led structures are increasingly unwound and economies race to bolster bilateral ties that exclude Washington as the US hub frays and its many spokes start to break away.
Canada’s 10-year diversification target aims to expand non-US exports by US$300 billion, an effort being replicated worldwide.
“You have to adapt to survive and sometimes when you’re forced to adapt, diversification is the only way,” said Ashley Kalyn, international trade specialist with Peacock Tariff Consulting.
“This is a case study for China and other countries right now because it shows both the possibilities and the limits of responding to US pressure.”
“China will be watching Canada very closely,” she added. “Canada demonstrates that this isn’t only about China or the other state’s practices. Washington right now is fundamentally changing how things are.”
Analysts questioned whether, given how economically and politically counterproductive the Canada trade war was, Trump offered terms knowing they would be rejected and had other geopolitical reasons for challenging Canadian sovereignty.
Instability could serve his repeated call for Canada to become the “51st state”, which has amplified pro-independence movements in Western Canada.
Others see this test of wills as a precursor to the dissolution of the US-Mexico-Canada Agreement (USMCA) covering 520 million people and a combined GDP of over US$33 trillion, which was negotiated during Trump’s first term.
His decision to delay imposing 50 per cent car tariffs until after the election, unpopular in both countries, has fuelled this theory.


“US-Canada relations are more fraught than the market is pricing in,” said Henrietta Treyz, economic policy director with consultancy Veda Partners.
“US businesses have been able to stave off the ‘nuclear option’ of triggering a withdrawal from the USMCA within six months, but they haven’t been able to do more than that, despite months of opportunity and years of forewarning.”
Increasingly erratic US policy has seen China’s soft power grow almost by default as Washington has launched wars, undercut allies, embraced unilateralism, taken on the United Nations and Nato and alienated many US voters.
But Trump’s willingness to threaten other countries’ sovereignty – whether through one-sided trade deals, language politics or force – could also concern Beijing, analysts said, given sensitivities over Xinjiang, Hong Kong and Tibet.
“Chinese are playing a fabulous game of staying quiet and observing, just watching, keeping its doors open, quite confident if this trade fight snowballs,” Prakash said, adding that anti-Washington anger is palpable in Canadian pubs and coffee shops.
“If the USMCA is scrapped, it may also push Mexico to say no, then you have both sides of the US open to China.
“The biggest question mark is what is going to be achieved by a trade fight with Canada?”


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Ottawa’s resistance tests the limits of US pressure as countries weigh diversification, leverage and the reliability of Washington deals


Ottawa’s resistance tests the limits of US pressure as countries weigh diversification, leverage and the reliability of Washington deals.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Ottawa’s resistance tests the limits of US pressure as countries weigh diversification, leverage and the reliability of Washington deals

Ottawa’s resistance tests the limits of US pressure as countries weigh diversification, leverage and the reliability of Washington deals