U.S.-Canada Tensed Relations

Once close allies, the relationship between the U.S. and Canada has been marked by tensions this year. The U.S. policy pushed the country to shift away and grow its own “Canada first”. PM Carney stated that the old relationship was over. Canada now increasingly seeks to diversify strategic, trade and defense ties beyond the U.S. The population also feels the same way and backs up its government.

Here is an overview of the situation. 

Trade war

Trump first imposed 25% tariffs on most Canadian imports. He then escalated to 35%. Goods transshipped to another country to evade the new tariffs would be hit by 40%. He also imposed tariffs on:

• Automobile (25% on cars and auto parts),

• Aluminum (50%)

• Steel (50%)

• Some copper products (50%).

Trump said he raised tariffs because Canada failed to act on the public health crisis. He said fentanyl and illicit drugs flowed across the border into the U.S. But most of the smuggling comes from the Mexican border. Trump can also be trying to punish Canada for its promise to recognize Palestine.

Canadians countered with a boycott of U.S. goods. There has been a decline in travel to the U.S. Tourism fell up to 40% year-on-year. Plus, 90% of the population wants to reduce its ties with the U.S. The country also responded with tariffs on $30 billions worth U.S. goods. They could extend that to $155 billions.

These tariffs seem hard but 90% of Canadian goods exported to the U.S. fall under free trade. They are covered by the free trade deal between Canada, the U.S. and Mexico (CUSMA).

Annexation threat

Trump often implied that Canada could become the 51^st U.S. state. He offered perks in exchange such as:

• Golden Dome defense system protection,

• Access to tariff exemptions,

• Military equipment,

• Energy cooperation.

This led to a diplomatic and popular outrage in Canada. PM Carney said these statements were an insult to his country. The population called for more partnerships with the EU. 

Canada’s shift away from U.S. influence

PM Carney stated that his country will recognize the State of Palestine. He still waits for certain conditions to be met like reforms, elections, and an end to Hamas. Through that statement, Canada is shifting away from its alignment with the U.S.

 It also deepened its partnerships with countries beyond the U.S. In June, it signed a defense and security partnership with the EU. This allows its participation to the ReArm Europe and SAFE systems. It also thinks of buying fighter jets from the EU and called off the U.S. F-35 purchase.

Plus, Canada worries about the influence of politics on U.S. intelligence agencies. In fact, Trump talked about taking the country out of the “Five Eyes” alliance. Canada is then calling for deeper sharing with the EU and other allies.

These issues led to the most severe tensions between the U.S. and Canada. Trump’s pressure moves created a rise in Canadian nationalism. But also, a will to emancipate from the U.S. This did not just impact local politicians. The population backs up its leaders. It is then unlikely that PM Carney will back down and make concessions to Trump. This leads to questions on how far the escalation could go.

But some historic agreements do not seem to be threatened in the near-term. Neither Trump nor Carney expressed a will to review the CUSMA. This agreement concerns most of the trades between the two countries. Pulling out of it could have disastrous impacts for companies.

On the military side, air defense shared command NORAD should not be threatened. Trump said he could review that partnership. But the U.S. DoD reassured Canada this was not going to happen. In fact, talks are more focused on making sure NORAD evolves to meet challenges. Without Canada’s radar sites, there would be a lack of resources. The U.S. would lose a big amount of early warning awareness. This could impact conduct of air and maritime defense.

Decoding geopolitics isn’t a job. It’s survival.

Joy