Tasha Kheiriddin: The end of free trade is here
- Trade tensions between the United States and Canada have escalated, ending decades of economic integration and sparking real consequences for millions of people.
- Canada is responding by diversifying trade, having signed 20 new agreements recently, and reducing reliance on U.S. trade, which has declined from 76% to 68% since 2024.
- Historical attempts to balance Canada’s economic relationship with the U.S. have fluctuated, but recent U.S. actions and trade terms have been perceived as hostile and unacceptable by Canada.
- Prime Minister Mark Carney stands out as a reasonable leader amid rising tensions, with the world watching this dispute closely as a potential model for future interactions with the U.S.
Welcome to Trade Wars, the reality show that pits the mighty United States of America against the mouse that roared, aka Canada. How’s everyone feeling today? “Kiss my ass!” yells Ontario Premier Doug Ford. “Flunky! I will rename Lake Ontario Lake America,” claps back U.S. President Donald Trump. Insert laugh track, cut to a commercial for a Ford F-150 pickup, and check out the ratings — 76 per cent of Canadians agree with Prime Minister Mark Carney’s decision to quit the talks. Everyone’s watching — what a hit.
But this isn’t a triumph. And it isn’t fiction. It’s a real dispute, with real life consequences for millions of people. It represents the sad demise of over 50 years of economic integration, starting with the Canada–United States Automotive Products Agreement of 1965, through free trade deals signed in 1988, 1992 and 2018, which have seen both countries prosper through increased trade and economic activity. All of which Trump calls a “rip-off,” even though he was at the table doing the last deal.
So now, it’s elbows up — and out. Canada is seeking new trading partners, inking 20 agreements in the last year alone. Our trade with the U.S. has dropped from 76 to 68 per cent of total trade since 2024, and will no doubt decline further with the imposition of matching tariffs on $26 billion of U.S. imports, including steel, agricultural equipment, appliances.
We’ve come full circle, back to the 1960s, when philosopher George Grant lamented that Canada had become a “branch plant economy,” of the United States. He blamed the Liberal party for surrendering to “continentalism,” whereby American companies were buying out Canadian businesses or opening their own here, effectively making us a U.S. subsidiary.
Grant had witnessed the failure of populist Progressive Conservative Prime Minister John Diefenbaker to diversify 15 per cent of Canada’s trade to Great Britain in 1957, followed by the subsequent Liberal government of Lester B. Pearson signing the Auto Pact and embracing closer economic ties with the United States. The pendulum then swung back in the 1970s, when Liberal Prime Minister Pierre Elliott Trudeau tried to trade more with Europe and created the Foreign Investment Review Agency, designed to prevent takeovers but criticized for stifling investment.
Diefenbaker and Trudeau failed to drag Canada out of America’s orbit, in part because during the Cold War with the Soviet Union, Washington was our friend, not foe. Today, things are different, but Trump is, increasingly, an Emperor who has no clothes
For the American president has a major weakness: underestimating his adversaries’ resilience. This is on full display in that murderous regime of Iran, where his war has now dragged into its seventh month. And it is on display in erstwhile best buddy Canada, where rather than roll over and accept unacceptable trade terms, we walked away and basically gave America the finger.
Some analysts say those terms — attacks on the French language, curbing our ability to trade with other nations, and continuing to tariff pickup trucks at a higher rate — may have been a deliberate poison pill, inserted at the 11th hour by Commerce Secretary Howard Lutnick to scupper the deal and make political trouble for Carney. Whether true or not, the reality is that we were treated badly, and the prime minister was right to say enough is enough. You don’t turn on an ally whose people have fought and died alongside you, whose cheap oil has powered your industry for 100 years, and whose people have cultivated ties of friendship with you for generations.
As the insults fly and the temperature mounts, Carney has emerged as the only reasonable actor in this drama. It’s one that all the world is now watching — and could script their own sequels dealing with America.
Tasha Kheiriddin is Postmedia’s national politics columnist.