Trading Trouble
In 1961, just one month after the Bay of Pigs fiasco, President John F. Kennedy made his first foreign trip to Canada. The charismatic Kennedy entered Parliament, giving an eloquent speech that produced a standing ovation:
Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder. We are allies. This is a partnership, not an empire. We are bound to have differences and disappointments—and we are equally bound to bring them out into the open, to settle them where they can be settled and to respect each other’s views when they cannot be settled.
Kennedy’s visit sought to strengthen ties with the Diefenbaker government, urging Canada to join the Organization of American States, expand foreign aid, and accept tactical nuclear weapons amid escalating Cold War tensions. Decades later, the geopolitical landscape remains turbulent, with the rivalry between the United States, China, and Russia proving even more precarious. Canada’s political elite continues to take its relationship with the U.S. for granted.
As trade tensions between the U.S. and Canada intensify, the Trudeau administration has been slow to acknowledge the economic risks. The Trump administration is expected to impose reciprocal tariffs. Yet, Canadian officials insist they can prevail in a trade war, despite the stark reality that 77 percent of Canada’s exports are destined for the U.S. Foreign Minister Mélanie Joly remains optimistic, telling the BBC, “We are the biggest customer of the U.S. We buy more from America than China, Japan, the UK, and France combined.” However, Joly overlooks a critical vulnerability: Canada’s exports account for 34 percent of its GDP, compared to just 11 percent for the U.S. In a prolonged trade dispute, Canada’s economy would suffer significantly more damage.
Canada’s politicians are in panic mode and are pushing hard to diversify trade, but viable options remain limited. Relations with China are strained, and ties with India have deteriorated following the Trudeau government’s allegations of Indian involvement in the assassination of a Sikh activist in Vancouver. Trade with the broader BRICS bloc is minimal. While the Global South presents an opportunity, if Canada reduces regulatory barriers in its energy sector, the infrastructure required for new energy exports would take years to develop. The best option remains the U.S., as the two economies are tightly integrated.
Trudeau’s left-wing liberal government spent a decade obsessed with woke politics and promoting open-door immigration and never paid attention to the world’s longest unguarded border between the U.S. and Canada. In the Swanton Sector—a 24,000-square-mile area covering parts of New York, Vermont, and New Hampshire—U.S. border agents apprehended 19,000 illegal immigrants last year, more than in the previous 17 years combined. Since 2021, U.S. authorities have arrested 1,746 known or suspected terrorists, with 1,089 attempting to cross from Canada. Former border officer Kelly Sundberg highlights the case of Muhammad Khan, a foreign student in Canada allegedly plotting a mass attack on Jewish New Yorkers. Sundberg believes the border has been incredibly porous and neglected for a decade. With heightened restrictions at the southern border, more migrants now see Canada as an entry point to the U.S.
President Trump has labeled fentanyl an “extraordinary threat,” and he has accused Canada of failing to curb its cross-border flow. Canadian officials contend that only one percent of fentanyl seized at the U.S. border originates from Canada. Given fentanyl’s potency—50 times stronger than heroin—even small quantities can be lethal. Security expert Christian Leuprecht warns that Canada’s overproduction of fentanyl, primarily controlled by Mexican cartels, fuels global markets, with excess supply making its way into the U.S. He criticizes the Trudeau government for expanding the civil service by 45 percent while failing to hire additional border agents.
Recent political shifts have only exacerbated tensions. Mark Carney was recently sworn in as Prime Minister following Justin Trudeau’s resignation. Traditionally, a new Canadian leader’s first diplomatic act involves outreach to the U.S. president. However, Carney has taken a different approach, declaring that he will not engage with Trump “until we receive the respect we deserve as a sovereign nation.” Instead, Carney traveled to Europe, emphasizing his British heritage and meeting with French President Emmanuel Macron. While this may have played well domestically, it did little to strengthen Canada’s standing in Washington.
Meanwhile, Canada’s economic woes are mounting. University of Calgary economist Trevor Tombe highlights a growing disparity in per capita GDP between Canada and the U.S. He estimates that in 2024, U.S. per capita GDP reached $63,000, while Canada’s stood at $44,000—a 43 percent gap that is projected to widen to nearly 50 percent. Others project that Canada will have the lowest GDP per capita growth among advanced economies for decades. Instead of addressing these economic challenges, Canada’s political leadership deflects blame on Trump.
The outcome of the upcoming Federal election will be crucial, whether the progressive flank successfully revitalizes itself under the leadership of Carney—who seeks to leverage the prevailing anti-Trump sentiment for electoral success—or the populist Conservative candidate, Pierre Poilievre, whose previously significant lead has diminished. The winning party must prioritize restoring its relationship with the United States.
President Trump is a seasoned negotiator who loves to sow seeds of confusion to keep his opponents off balance. Canada’s leaders have overreacted to Trump’s rhetorical tsunami and must refocus on economic issues. They can start by proposing an early renegotiation of the USMCA agreement and introducing a new concept, such as establishing a North American-wide customs union if it frees up trade.
Additionally, they can take inspiration from JFK’s 1961 address to Parliament, where he stated, “No free nation can stand alone against the threats posed by those who see themselves as our adversaries.”
Authoritarianism is spreading globally, while freedom is in retreat. A fractured alliance between the U.S. and Canada would only benefit America’s adversaries. The Prime Minister must remind the Trump administration of the importance of having allies. Let’s hope Canada’s political class recognizes the stakes and can rise to the challenge.
