(Evelyn Hockstein/Reuters)
When President Trump announced a month ago that he would impose a 50% tariff on Canadian alcohol, auto parts and dairy products because of the forest fires that were occurring in Northern Ontario, I made this observation:
Carney's smartest move would be to walk away and ignore Trump and not return his calls. Yes, that will make Trump angry. But Trump would get angry if his Diet Coke was flat. Canada is getting nowhere with the United States. The United States is wasting Canada's time. Canada's time is better spent engaging in negotiations with countries which actually want to negotiate with it in good faith and for mutual benefit not with a country which begrudges Canadians for forest fires.
Just before midnight, Prime Minister Carney did exactly that. Canada will match U.S. tariffs dollar for dollar. Carney issued a statement which reads in part:
We have recognised from the beginning that America has changed, and that we will not return to our old relationship. Our government understood, before many, that America is altering all its trade relationships. Putting tariffs on its closest allies and charging for access to its vast market.
We have worked in that context. To strike a fair deal that would provide the best access to the U.S. market and greater certainty to Canadian businesses and workers. Throughout, our goal has been to secure the best deal for Canadians, never a deal at any price or on any deadline.
In recent weeks, we made important progress toward improving Canada’s position as having the best deal in the world with the U.S.
However, that progress has not been enough to meet our objectives for Canadians. As a result, this evening, I have decided to suspend trade negotiations with the U.S. and have directed Canada’s negotiators to return to Ottawa. They have worked hard, in good faith, to defend the interests of Canadians throughout these negotiations up until the very last minute. However, last-minute changes in the U.S. proposed terms were unfair, uneconomic, and called into question the reliability of any deal.
Carney went to say that in the coming days that the Canadian government "will introduce additional measures to support Canadian workers and businesses." This tells me that Carney believes Canada will be in a trade war with the Trump Administration for the long haul. I suspect that Canadians will be granted either a stimulus or a rebate or perhaps of combination of both in an effort to compensate for financial strain as a result of the implementation of U.S. tariffs.
Recent federal polls have given Carney's Liberal Party a lead over Pierre Poilievre's Conservative Party ranging from 7 to 20 points. I suspect that the Liberals will consistently lead the Tories by double digits in the coming weeks and months.
These reciprocal tariffs could also have an effect on U.S. midterms especially in Senate races in states bordering Canada namely Maine and Michigan and could help Democrats Troy Jackson and Abdul El-Sayed in their respective races. Jackson has been particularly vocal about Trump's tariffs although nearly 30 years he was part of an effort to blockade the Canada-U.S. border to prevent Quebec loggers from working in Maine. For her part, Republican incumbent Susan Collins has opposed Trump's tariffs with equal vigor.
In Michigan, unlike Collins, Republican candidate Mike Rogers has defended Trump's tariffs with dubious claims they are bringing back American jobs. In view of these reciprocal tariffs, this gives El-Sayed an opening. Mind you, El-Sayed might be too busy denigrating Jews and Israel to give a damn about tariffs.
At this point, however, Carney has called Trump's bluff and is now in the driver's seat having put his foot on the gas pedal ready to sell Canadian auto parts, alcohol and dairy to other parts of the world on more favorable terms.
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