Since returning to the White House in January 2025, Donald Trump has unilaterally imposed tariffs on 80 countries around the world that has dismantled decades of global trade norms, triggered widespread retaliatory measures, and provoked ongoing court challenges. After the U.S. Supreme Court struck down Trump’s emergency tariffs in February, his administration has replaced them with new levies under a different set of legal authorities, as his administration was forced to issue billions of dollars in refunds.
In his first term, Trump negotiated the United States-Mexico-Canada trade agreement that replaced the widely criticized North American Free Trade Agreement or NAFTA in January 2020. Although at the time, Trump called his USMCA deal the “greatest trade deal ever,” not long after returning to the presidency he condemned his own trade deal, and launched a trade war against Canada, America’s second biggest trading partner, in February last year.
Trump justified his imposition of a general 25 percent tariff and a 10 percent energy tariff on Canadian imports, by stating that new trade sanctions were imposed to stop illegal migration and fentanyl from entering the U.S. where neither charge was true. The confrontation escalated sharply in July when Trump imposed a 50 percent tariff on nearly $28 billion worth of Canadian goods. After talks with Ottawa collapsed in late August, Canada retaliated “dollar for dollar,” imposing a similar set of tariffs on U.S. imports effective on Sept. 8. Between The Lines’ Scott Harris spoke with Lori Wallach, director of the Rethink Trade program at American Economic Liberties Project. Here she examines Donald Trump’s trade war against Canada that she describes as “the most stupid trade fight in history.”
LORI WALLACH: For whatever is the personal and non-strategic reasons this fight has started, it has a political utility to both heads of state. So I’m not so sure it’s going to end anytime soon, particularly because so far, despite all the breathless press coverage, it’s not actually a lot of money. So they both want for different reasons, a political distraction and they both get that. And so far it’s not actually that economically impactful so far.
SCOTT HARRIS: Last I read, it was 50 percent tariffs that the U.S. was imposing on some products from Canada imported here to the U.S., and Canada responded by matching dollar for dollar on a set of U.S. products. But maybe you can dig deeper a little bit into how this maybe now, maybe later, could impact consumers here in this country and Canada for what they need to buy day to day.
LORI WALLACH: So it’s 50 percent tariffs and $20 billion worth of Canadian goods sent here. Just a crass fact is that is less than one-half of 1 percent of the goods imports that the U.S. has each year. So it’s a very small part of our trade and it is sort of peculiarly targeted to be annoying and pesky, but not that impactful. So for instance, if you must drink only Toronto, Ontario icewine, a sweet dessert wine, you will have a 50 percent tariff. But if you’re happy to get that from Germany or Austria, an icewine, or you have a different after dinner drink, or if you have to have a Canadian hockey stick, though a lot of high-end ones are made other places, the hockey sticks are tariffed. Bizarrely, the shin guards and pucks are not. It’s a weird mix of things that are and aren’t tariffed. Most of them are things that are replaceable from another country and it’s a small amount.
Now, the impact of Canada’s tariffs on us are half the deal, and then that probably will have more impact on jobs. So the U.S. tariffs and Canada stuff coming in is to the extent there’s an impact, it would be more of a consumer impact, but it’s such a small amount. The reason why the Canadian tariffs may have more of an effect has to do with the ways in which certain U.S. states, particularly the northern tier of states, have Canada as a major export target. And so when Canada’s putting tariffs up broadly on various U.S. goods, it’s targeting in a more strategic way, places have big political fights, etc. So Wisconsin butter and cheese is being targeted, for instance. There are a lot of goods in aerospace and in autos that go back and forth between the two countries as part of the assembly process.
And so there the impact could be on jobs as compared to on consumers. But overall for the moment, it’s just not a ton of money. And so if it’s a specific industry, a specific thing you want to buy, you could be impacted. But the reason why to some degree this sort of tit-for-tat back and forth can go on is it’s either delayed. So Trump is threatening tariffs, very big tariffs on autos or bans on things, but the higher tariffs, they start at the end of September and then the really big tariffs don’t start until next year. And by that point, likely they’ve worked something out. With Canada, the targeted stuff, their threats of “we’ll cut off this, we’ll cut off that” sometime maybe. So the distraction it’s causing has proved really useful because in Canada, it’s creating this rally around the flag phenomenon where otherwise Prime Minister Carney was getting very unpopular because he was doing many very unCanadian things.
He had enacted what they call up there the Maple-Leaf DOGE. He whacked 40,000 federal government scientists, environmental experts, food safety inspectors. He was trying to privatize the ports in the airports. He had redirected $20 billion of taxpayer money to a private pipeline for an oil company. He was trying to limit the right to strike. There were a bunch of things that someone who is a liberal party prime minister should not be doing, and he was getting a lot of blowback.
But fighting with Trump, who is universally despised across political parties in Canada, and rightly so, has gotten him a reprieve and really a distraction from those things that he’s doing that were getting him in trouble. And obviously Trump wants a distraction given his Iran war of choice and what’s happened with gas and diesel prices and inflation and the general disaster of many of the economic outcomes of his policies.
So they both kind of are for a low economic cost so far have gotten very useful political distraction.
Listen to Scott Harris’ in-depth interview with Lori Wallach (20:06) and see more articles and opinion pieces in the related links section of this page. To subscribe to our podcasts, email newsletters, our Between The Lines Radio Newsmagazine Substack or social media, subscribe here.
