Welcome back to This Week in Canada, where Carney’s refusal to buckle to Trump on trade might just be working; three masked men unmask our crime problem; “The Lolita Line” is back in service; and more. Let’s jump right in!
Is Canada’s gamble to refuse a bad trade deal and wait for political pressure to build on Donald Trump going to pay off?
Prime Minister Mark Carney said last week that Canada is prepared to muddle through its trade war with the United States until 2029 rather than “lock in something that’s not in Canada’s interests,” according to Politico. “Every month that goes by, Canada grows stronger,” Carney said. “Our options increase.”
That isn’t quite what the economic numbers say. Canada is surviving the trade war, now in its third month of 50 percent tariffs imposed on CAD$27.6 billion of Canadian-made goods, better than some people feared, but the costs are steep. The average U.S. tariff has climbed to 7.5 percent from essentially zero, the Bank of Canada estimates, while employment growth is particularly weak in industries that are most reliant on U.S. demand. Steel exports to the U.S. have fallen by half, and auto, steel, and aluminum companies have delayed investment, scaled back production, or shifted some investment to avoid tariffs.
Carney isn’t really hoping to win a trade war against an economy more than 10 times the size of Canada’s. He is hoping that Canada can withstand the ongoing pain, buy more time to reduce its economic dependence on the U.S., and allow political pressure to build on the other side of the border.
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