Canadian politeness has finally met its match – President Trump’s existential and repeated threats to both the Canadian economy and our very statehood. On Wednesday, organizers of the Québec International Pee-Wee Hockey Tournament put out an unusual cri de coeur, proactively imploring hockey audiences not to boo “The Star-Spangled Banner” or the 11-12 year old visiting American hockey players when the tournament gets underway later next week. This follows repeated instances across the country since Saturday, where fans have booed the American anthem at NHL and NBA games.
In this week’s update, Alex Steinhouse of the Fasken Government Relations and Political Law team takes on the aftermath for Canada of the 30-day reprieve and sets out what comes next for the Canada-US relationship in this quickly evolving saga.
Why the 30-Day Tariff Pause?
Senior government sources on both sides of the border have begun to talk about how the last-minute (potentially temporary) denouement materialized right before President Trump’s Executive Order imposing tariffs on Canadian goods was to take effect at 12:01 am Tuesday morning.
Both the CBC and the Wall Street Journal go into great detail, and compare Canadian efforts with those of their Mexican counterparts, who had successfully obtained the same 30-day pause earlier that same day. To no one’s surprise, while the President was receiving counsel by senior advisors against imposing the tariffs on Canada and Mexico, the President has been feeling, since his election victory, particularly “emboldened to enact an unabashed protectionist economic agenda.”
Two interesting tidbits to note – apparently President Trump’s Chief of Staff, Susie Wiles, told automakers that his administration was actively considering a carve-out for cars from the 25% tariffs imposed on Canada and Mexico, while US energy firms and unions had been strenuously advocating for a full exemption on Canadian energy products, given that many US refineries use Canadian oil. On the latter, they, of course, ultimately got a tariffs reduction to 10%. Should the tariffs return, these are strands of this story to follow closely.
While President Trump, his administration, and Republican surrogates hailed the deal they struck with Canada as a win that will allow for negotiations on whether a “final Economic deal with Canada can be structured,” others, including Canadian Ambassador to the United Nations, Bob Rae, were quick to point out that, in their estimation, Canada seems to have made only “minor” concessions: It is “not true” that Canada had made considerable new promises, Mr. Rae said. Many of Monday’s border security commitments to President Trump “were already announced by the Prime Minister many, many weeks ago.”
What is clear to these sources is the fight is far from over. Canadian officials believe that the suite of border measures Prime Minister Trudeau promised the President on their 3 pm call is doable, and some of them, such as the new intelligence policy, represent important shifts to how Canada combats transnational organized crime, and that Canada will be able to demonstrate their effectiveness.
However, Canadian officials also expect President Trump to make new, and perhaps unmeetable, demands before the pause expires on March 4. One such example, which Vice-President JD Vance obliquely discussed in a post on X on Sunday: immediately hitting the 2% of GDP target for NATO spending (or perhaps even President Trump’s new 5% target).
When President Trump’s senior trade counselor, Pete Navarro, was asked what we should expect after the 30-day pause, he said: “It’s the boss’ three favorite words: ‘Let’s see what happens.’ That’s four, actually.” “When he does stuff and it looks like things are a little chaotic, it’s not,” Navarro added. “It’s genius.”
China
Meanwhile, 10% American tariffs on Chinese goods went forward this week.
In response, Beijing immediately said it will challenge the tariffs at the World Trade Organization (W.T.O). The Chinese government says that the tariffs "seriously violate" international trade rules and is urging the US to "engage in frank dialogue and strengthen co-operation."
As background, the W.T.O. has lost much of its ability to handle legal challenges, as the US has been blocking the appointment of judges since President Trump’s first term. The W.T.O appellate body has been unable to form quorum since 2019.
Later in the week, China announced 15% tariffs on American imports of coal and liquefied natural gas, while crude oil, agricultural machinery, big-engine vehicles and pickup trucks face 10% duties. Beijing also announced export controls on rare metals and chemicals.
We will follow the US-China trade dispute closely, as it stands to have spillover effects onto Canada.
Federal Government Initiatives Post-Tariffs Pause
Canada, of course, also paused its two-phase countervailing tariffs plan. Canada had already posted a list of the first $30-billion phase, which was to hit American products like orange juice, peanut butter, wine, spirits, beer, coffee, appliance, apparel, footwear, motorcycles, cosmetics, and pulp and paper.
The second, $125-billion phase would include products like passenger vehicles and trucks, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, recreational vehicles, and recreational boats. This second list is to be made available for a 21-day public comment period prior to implementation.
Canada was said to be also considering “non-tariff measures” on exports including critical minerals, energy, and government procurement. Recent polling suggests over 80% of Canadians support an export tax on oil (and even, 72% on the Prairies).
On Tuesday morning, Public Safety Minister David McGuinty hit the Emerson border crossing in Manitoba, to show off Canada’s newest border security resources, and explain the government’s border plan further, including trying to explain to Canadians what a “Fentanyl Czar” is. For those curious, the yet-to-be-named official “will serve as the main interlocutor between the Canadian and U.S. governments and will enhance our collaboration in combating fentanyl.”
Minister McGuinty also laid out the public safety objective simply: “What was our objective yesterday? Stop the tariffs. What’s our objective today? Stop the tariffs. What’s our objective tomorrow? Stop the tariffs,” McGuinty said.
The federal government also confirmed that the Canadian Armed Forces (CAF) will not be deployed at the border, but will be sending drones to the RCMP and assisting with logistics. Defence Minister Bill Blair said Canada did not offer CAF members to the Americans, unlike the deal struck between the US and Mexico. Minister McGuinty went further, criticizing CPC Opposition Leader, Pierre Poilievre, for his plan on Monday, which Mr. McGuinty said intended to “militarize” the longest undefended border in the world.
One note relating to fentanyl smuggling into the United States from Canada—the often-cited 43 lbs figure of fentanyl that is said to have crossed the border last year into the United States (compared to 2 lbs in 2023) may not in fact be accurate. The Globe and Mail reports that nearly one-third of this seized fentanyl had no connection to Canada.
Meanwhile, on Wednesday the Prime Minister convened a meeting with the Premiers on the Canada-US relationship, a meeting with the big city mayors, and organized a Canada-US Economic Summit in Toronto on Friday, which included participation from leaders from business, labour and trade associations.
At the Summit, the Prime Minister is reported to have said that the President is not joking about annexing Canada, as it is driven in part by his desire to see the US benefit from Canada’s critical mineral resources.
The Prime Minister will be heading to Europe next week, including for a Canada-EU Leaders’ Meeting, which will touch upon CETA trade.
On the Ministerial front, International Trade Minister Mary Ng has pre-emptively rejected future concessions to the Americans when CUSMA is renegotiated on dairy supply management. This despite the fact that, during his confirmation hearing, Jamieson Greer, President Trump’s choice to be the top US trade negotiator, told Senators that he “would seek to ensure that American farmers are getting the access they are entitled to Canadian dairy products.”
However, Minister Ng appeared more muted on whether the Canadian government would be open to backing down on the Digital Services Tax during those negotiations.
Procurement Minister Jean-Yves Duclos had previously stated on Monday that the federal government was only looking at limiting non-defence federal contracts to Canadian firms as part of any retaliation.
However, Minister Blair has since said that, outside of the F-35 fighter jet procurement, while Canada would prefer to continue to work closely with the Americans on military procurement, Canada “could go shopping for its defense needs, instead of buying from the United States, if Mr. Trump follows through on tariffs.”
Finally, Energy and Natural Resources Minister Jonathan Wilkinson, Industry Minister Francois-Philippe Champagne and Minister Blair have been in Washington this week arguing Canada’s case to counterparts, industry and the media against the Americans launching a trade war against us.
Has President Trump Managed to Finally Spur Canadian Internal Trade?
Transport and Internal Trade Minister Anita Anand made news this week, suggesting that Canada’s longstanding interprovincial trade barriers could be wiped away within the next 30 days: "We are making incredible, fast-paced progress with all of the provinces and territories," the Minister said.
Previously, Minister Anand has argued that removing these barriers would lower prices by up to 15%, boost productivity by up to seven per cent and add up to $200 billion to the domestic economy. These efforts first began in earnest in 1995, when First Ministers formally agreed to work together on this.
According to the Hill Times, provinces and territories are more “reserved than Anand in their level of enthusiasm about moving quickly and relinquishing autonomy over their regulatory affairs.” The path forward may ultimately be not to harmonize the various provincial regulations, but instead to proceed with mutual recognition.
The tariffs-threat has also spurred both the federal government and the Québec government to reconsider oil and gas pipeline projects in order to ship oil and gas to Québec as well as overseas.
On Tuesday, Foreign Affairs Minister told the Montreal Chamber of Commerce that the threat of tariffs was a wake up call to all Canadians, and that we are vulnerable with respect to our oil and gas production and access, and we should be considering this and other projects to remedy this.
On Thursday, Minister Wilkinson also said Ottawa and the provinces should discuss the possibility of an oil pipeline to Eastern Canada to improve energy security. On top of the "vulnerability" for Canada in exporting the vast majority of its oil to the US, he is also concerned by Ontario and Québec being served by Enbridge Line 5, an oil pipeline that runs through the US.
Meanwhile, both Québec Premier Legault and Environment Minister Benoit Charette said they would be open to (re)considering such projects in order to reduce our reliance on the US as an export market.
Of note, the Québec Premier said: “We cannot afford the luxury of not exploiting oil with the debt of 250 billion that we have, with the highest income tax rates in North American. There is an urgency to act quickly. I know that a few idealogues prevent development. Canada needs to quickly invest and then partner with large oil companies that have the expertise and move forward.”
These comments must be considered in the context of two recent polls, which are picking up a surge in Québec support/pride in Canada, flowing from President Trump’s actions thus far.
Similar change of tact in British Columbia owing to a shift in public sentiment, where the NDP Premier said this week: “If you’re not buying oil and gas from Canada and British Columbia, the alternative is Venezuela. We believe we are a friend and an ally of the United States.” The government also announced a list of 18 major projects to fast-track, including in the oil and gas transmission space, worth a total of $20 billion.
Has President Trump Renewed Interest in Canada-UK Free Trade?
Canada’s High Commissioner to the United Kingdom Ralph Goodale says the tariffs threat gives Canada “a great opportunity and a great reason to work really hard at trade diversification.” On this, Mr. Goodale implored London to get back to the negotiating table with Canada after the Brits had walked away last January over beef and dairy disputes during the talks to create a permanent free trade deal between the two countries. Canada currently has a trade continuity agreement with the United Kingdom, which preserves the main benefits of CETA.
This negotiating impasse has also posed a barrier to Canada’s ratification of Britain’s membership in the Indo-Pacific CPTPP trade bloc.
Mr. Goodale has acknowledged that reviving talks could be difficult for the new Labour Government: “We realize we’re dealing with a new government with a different set of priorities and it may take them a while to do the internal consideration that they need to do, and that’s understandable.”
To that end, Prime Minister Trudeau had a call with British Prime Minister Keir Starmer this week, in which Mr. Trudeau said they “committed to renewing efforts to advance bilateral trade.”
Meanwhile, Prime Minister Starmer’s call readout suggested they discussed “how together both countries could go further to support growth and deliver for the hardworking Canadian and British people.” The British Prime Minister also welcomed an “international conversation on the importance of trade and collaboration between allies and partners.”
President Trump has also threatened tariffs on the United Kingdom.
Finally, this week, Canada also announced the successful conclusion of free trade agreement negotiations between Canada and Ecuador. Canada imports mostly tropical fruits, flowers, cacao and seafood from Ecuador, while Ecuador imports mostly wheat, lentils and peas from Canada. Once ratified, Canada will have trade agreements with all the countries on the South American Pacific coast.
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