Is this a hollow threat or does Canada actually have the capability of "landing a blow"?
The scale of our trade with the US definitely gives us the capability of "landing a blow" but the question is do we really WANT to land a blow?
From Google's "AI Overview":
Canada is the largest export market for 34–36 U.S. states. Canada and the United States are each other's largest export markets, and this trade relationship supports millions of jobs in both countries.
Explanation
- In 2022, the U.S. exported nearly $429 billion in goods and services to Canada.
- Canada is the top export market for more than 30 U.S. states.
- Canada is the primary or secondary export market for 45 U.S. states.
- Michigan has been Canada's top trading partner among U.S. states since 1990.
- The U.S. and Canada have the most comprehensive trading relationship in the world.
- Canada is the largest foreign supplier of energy to the U.S.
Clearly we have the economic capability of "landing a blow" in a trade war with the United States.
Is a "war" of any type what we really want with our largest trading partner and the major global superpower? The immediate effects of Trump's planned tariffs will hit hard on both sides of the border and will be quite inflationary for the Americans. Those negative effects when they start hitting US companies, employees and consumers that rely on products and materials coming from Canada will be blamed on Trump and his tariff policy.
Despite Trump's recent rhetoric about Canada taking advantage of the US most Americans think generally positively about Canada and Canadians (when they think about us at all). If however we continue with our aggressive rhetoric and enter a tit-for-tat trade war with the United States then economic nationalism will kick in and Canada will be seen as the cause of their economic pain.
While economic retaliation may result in an eventual resolution to the tariff dispute the likely long term outcome will be that Americans will see how much their economy is at risk from the actions of a (potentially) hostile Canadian government and the natural response by the US will be to eliminate those vulnerabilities by replacing the existing trade links with Canada by on-shoring their supply chains.
Canada is not like Mexico where a large wage gap with the US means that US companies would find it difficult to on-shore Mexican products without significantly increasing their cost. Wages and production costs are similar in Canada and the US so it's certainly not impossible for the US for example to on-shore all of the automotive industry production that currently happens in Canada.
Most of the fuel used in the US midwest refineries comes from Canada and those refineries are set up to run on the heavy crude that Canada produces rather then the light crude produced in Texas. Cutting off Canadian oil exports to the US (or raising the price) would have a significant impact on the price of gasoline in the US heartland. While a US tariff caused increase in prices (from Trump's tariffs) would create political pressure from within the US to change the policy, the effect of Canadian caused price increases may see a push to re-tool the Midwest refineries to use Texas light crude (a significant portion of which is currently exported to countries with refineries designed to use it) in order to ensure American energy security. The ultimate impact for Canada would be that we would potentially lose our largest (and easiest to access) energy export market. The same thing might happen with the electrical grid. Currently they are highly interconnected North to South but threaten the US's energy security and they will be encouraged to nationalize by increasing domestic generation capacity and breaking/minimizing the cross border connections.
In my opinion we need to see Trump as an immediate but ultimately short term (4 year) threat. We need to manage that threat in such a way that we are not also potentially crippling ourselves economically in the long term. We can't change our Geography. Like it our not our future is tied to our southern neighbour. We need to manage that relationship in such a way that we do not damage it and threatening to impose economic hardship on our most important neighbour and trading partner is not a smart move.
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