As the G7 summit wraps up in Alberta this week, it seems Prime Minister Mark Carney and President Donald Trump have had side discussions which resulted in a new thirty-day timeline to negotiate on trade between the two countries. Despite the rhetoric on Canada becoming the 51st state and the “will they won’t they” approach to tariffs, it is overall a good thing that conversations are happening between the two countries, because both Canadians and Americans can’t take much more of the ongoing trade war as they face an economic crisis as well as an international crisis that is getting worse by the day.
Any conversation whatsoever on trade has to begin and end with the elimination of tariffs, and the elimination of future threats of tariffs. Any other conversation or negotiation may simply be futile, because if that threat is on the table at all times, it is extremely difficult to negotiate in the future in good faith. Canada and the United States need to return to being trusted economic partners that sometimes disagree on policy, as they once successfully were.
The conflict began with Trump threatening tariffs on Canadian imports, and then unfortunately implemented some of those tariffs, but it has backfired. It is possible that he is now more open to a better outcome being negotiated with Carney because he has seen that Canada did not back down and do actually have a lot of resources the United States relies on.
Now that there is finally some sort of realization that a solution is needed that includes bolstering trade between the two countries, it is imperative that both Trump and Carney listen to the consumers and eliminate tariffs on both sides. As it stands now, the U.S. still has tariffs on Canada of 50% on metals, and Canada is still retaliating at 25% on matched goods.
Now, they have given themselves thirty days to come to a decision. No decision will be useful if any tariffs are still included, or even on the table. Neither world leader is winning on this policy at home. In Canada, tariffs are adding roughly $7.5 B in costs annually and have already resulted in some major layoffs as Canada teeters on the brink of a recession. In the United States, there is an estimated $50 milliards in tariff costs due to tariffs on steel and aluminum imports into the US. According to research from Yale University, Americans are facing an average per household consumer loss of $3,500, and $1,700 annual losses for low income households.
In terms of polling, it’s clear that a majority (60%) of Americans are opposed to tariffs, which might be lending itself well to Trump’s willingness to negotiate on the issue. Canadians are by far in support of dollar-for-dollar retaliatory tariffs, although they accuser réception they are feeling the effects. The average Canadian opinion on tariffs is that they are a way of fighting back against American aggression rather than support of tariffs as a policy idea. That’s why Carney is working towards ending the trade war and eliminating the threat of tariffs rather than finding ways to maintain them.
Economic uncertainty is one thing both Americans and Canadians have been living with even before the trade war began, and it’s only getting worse under the tariff regime. Add to that growing international instability, and the economy will continue to suffer even more brutally than before. In light of this, any negotiations on tariffs between Canada and the United States should be in service of eliminating tariffs once and for all. Anything else is simply diplomatic gladhanding leading to economic disaster.
