While a last-minute deal has temporarily averted a trade war between Canada and the US, experts warn that businesses and residents should prepare for future threats from President Trump's unpredictable actions.
Last-minute negotiations may have averted a trade war between the United States and Canada for at least a month, but B.C. residents and businesses should still prepare themselves for future threats, according to experts. Prime Minister Justin Trudeau announced Monday afternoon (Feb. 3) that the U.S. has agreed to pause tariffs on Canada for at least 30 days after speaking with President Donald Trump .
The announcement came after the two leaders had spoken earlier and after the United States had held off imposing tariffs on Mexico. The United States had announced Saturday that it would slap 25-percent tariffs on both countries starting Tuesday, Feb. 4, with a 10-percent carve-out for Canadian energy. Both Canada and Mexico had announced over the weekend they would retaliate. Trudeau said on X that Canada will be implementing its earlier announced border plan worth $1.3 billion. Trudeau also promised to appoint a 'Fentanyl Czar' and to list Mexican cartels as terrorist organizations, launch a joint Canada-U.S. force to combat organized crime, fentanyl, and money laundering. Trudeau also promised a new intelligence directive on organized crime and fentanyl backed by $200 million. UBC political science lecturer Stewart Prest Monday warned against premature celebrations. 'U.S. credibility is shot, but we still have to take the threat seriously,' he said. 'We have 30 days to get ready for the next round of brinkmanship.' Ulrich Paschen, instructor at Kwantlen Polytechnic University's Melville School of Business, said the delay is part of a larger goal to destabilize Canada's bargaining position. 'He is keeping us and all the other targets of his potential tariffs on their toes to essentially weaken our position in whatever negotiations may be coming,' Paschen said. He added that the 30-day break itself is not weakening Canada's position, but rather the on-and-off threats themselves by creating uncertainty. 'The best quote I have heard is that we are being held hostage and the hostage taker hasn't made their demand known yet,' Paschen said. 'That's the big issue ... the point here is the uncertainty that he is very intentionally causing with Canada and everyone in Canada essentially not knowing what he is after.' Pauschen pointed to the shifting rationale with which Trump has tried to justify the tariffs. They have included at various moments, Canada's failure to protect the U.S. from fentanyl and illegal immigrants; Canada's trade surplus with the United States; Canada's failure to spend more money on the military; and Canada's refusal to allow American banks to operate in Canada. Experts have for the large part dismissed these arguments as pre-texts, if not outright lies in the case of American banks allowed to operate in Canada. Trump, however, has also said that Canada could avoid these tariffs by joining the U.S. as the 51st state. Trump supporters frequently argue that such positions are part and parcel of a negotiating strategy that demands the maximum before settling. But Prest warned against dismissing Trump's rhetoric as not serious. 'So until he starts something different, we have to take as the foundation of his negotiations,' Prest said. 'It's not ultimately about fentanyl. It's not about migrants moving in both directions across the border. It's not about any those of issues so much as Canada's independence and I think we have to respond with an intensity equal to the task to make it clear that Canada is not to be picked on and bullied without consequence.' Trump supporters have also frequently made the argument that his tactics represent those of an aggressive real estate investor. 'There is a fundamental question of international law and sovereignty,' Prest said. 'States can trust each other and they can cooperate only so long as they trust that their partners are going to respect their sovereignty,' Prest said. Canada has been able to rely on the United States for more than a century as its closest friend on the international stage. 'But when the threat is coming from that southern neighbour, the entire situation changes,' Prest said. Paschen also sees a fundamental change in Canada's economic relationship with the United States. While a 'host of goods' won't find viable markets outside the United States based on physical proximity and associated shipping costs, the 'comfort level' that businesses have developed with each other over the last decades of peaceful cooperation is being undermined right now, he said. Paschen said businesses on both sides of the border will likely use the next 30 days to stockpile goods in preparation for any future disruptions in the short term. But they will also use the time to further diversify their markets to 'try and find customers who aren't the playground bullies.'
CANADA TRADE WAR US TARIFFS DONALD TRUMP JUSTIN TRUDEAU NEGOTIATIONS INTERNATIONAL RELATIONS ECONOMICS
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