Donald Trump’s Tariff Threats Show Why Canada Needs To Be Less Dependent on the United States, Experts Say

After narrowly avoiding a 25% tariff on specific products from the United States, experts say there is no going back to the way things were before. 

US President Donald Trump was set to introduce 25% tariffs on Canada and Mexico on Tuesday, but has delayed introducing them for another 30 days after calls with Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum.

According to experts, introducing tariffs has the potential to destabilize Canada’s economy through massive job loss while increasing the cost of consumer goods at a time when three cities in Ontario have already declared a food insecurity emergency. 

Ontario initially responded to the tariffs by cancelling all government contracts with American companies. On Monday, Doug Ford announced that he was “tearing up” Ontario’s $100 million contract with Starlink, a satellite internet service provider owned by Elon Musk. 

However, after the tariffs were delayed, it was announced these deals with American companies were back on – including the Ford government’s $100 million deal with Musk’s Starlink. 

But going back to business as usual might not be possible. 

In a February 3 statement, Unifor President Lana Payne called Trump’s tariffs a “turning point” for Canada, adding Trump was declaring economic war on Canadian workers.

“There is no going back,” Payne said in the statement. “No one should let their guard down at this 30-day pause on the tariffs.”

Unifor represents 315,000 workers in Canada, including nearly 22,000 in auto assembly – a sector that would be hit particularly hard by the tariffs. 

“I think the idea that is being put out there by the parts sector, Unifor, and by workers, that there’s a risk that the auto sector will disappear is not that alarmist,” Stuart Trew, a senior researcher with the Canadian Centre for Policy Alternatives told PressProgress. 

“If the 25% tariff is put into place, trade will grind to a halt quickly and become too expensive to make these vehicles at a profit.” 

Although some have said these tariff threats were used to accomplish US goals focused on increased border security, Trew is skeptical.

Trew says that people should take the US President seriously when he says he doesn’t want to buy anything from Canada and that Trump’s real goal with threatening tariffs was about bringing more manufacturing inside the US border. 

“The threat itself is the point,” Trew said. “The threat tells companies, this is not going away, you might as well put your investment in the States.”

This intimidation tactic, according to Trew, is something Canadian politicians are going to need an answer for.

 “The future is Trump imposing tariffs on Canada or threatening again and again …He’s just going to use this over and over again, so we have to be ready for that.”

DT Cochrane, a senior economist with the Canadian Labour Congress told PressProgress that Canada should respond to these looming tariff threats by investing in our economy with our future well-being in mind.

“We need a new approach, and this gives us one more reason why this has to happen,” Cochrane said. “We need the government to lead and actually invest in the productive capacity for our future economy.”

Cochrane said Canada has options beyond a continued overreliance on the United States. 

“We should be building east-west transportation infrastructure to allow people and goods to flow and develop more value-added productive capacity instead of sending so much of our raw materials to other countries to add that value.”

The economic threat posed by tariffs is pushing some to ask for proactive measures to ensure the well-being of Canadians is not dependent on the goodwill of the United States. 

Last Friday, the Climate Action Network (CAN) published a statement proposing a response that would create a more self-sufficient and sustainable Canadian economy.

“We’re tired of pretty much the same solutions being peddled out every single time by the fossil fuel industry, by the billionaire class and their politicians who care more about their interests than others,” Alex Cool-Fergus, National Policy Director at the Climate Action Network Canada told PressProgress.

“For us, this is yet another moment where transformative change is possible, but we weren’t hearing much of that.” 

Cool-Fergus said the network decided to come together to make it clear what people in the country actually needed to end this cycle of going from crisis to crisis. 

“Those are the things that long-term are actually going to sustainably help manage a transition away from our overdependence on trade with the United States,” she said. 

Cool-Fergus says Canada’s economy relies heavily on trade, specifically in unsustainable natural resource extraction, and that needs to change. 

“For us to be so overdependent on this one trading partner and one way of structuring our economy just doesn’t make sense,” Cool-Fergus said.

“(The United States) is not accountable to Canadians, so if we want to have a real democratic system that is responsive to our needs, we need to make sure that we have a certain amount of sovereignty.”