You misunderstand me. I’m not suggesting the tariffs are economically unsound out of some pink and fuzzy rules based world view. If you think I’m still here hanging my hat on the rules based international order and a Canada-US relationship based on principle, you’ve not been paying attention to my posts for the past year. We need to meet ruthless transactional with ruthless transactional. I’m not sure what ‘legacy treaty’ you think we’re foolishly relying on in our trade with the U.S., unless you mean Trump’s own CUSMA from just a decade ago? If there’s something else you think we as a country are inappropriately nostalgic about there, let me know. It’s sadly true though that even his own signed and bragged-on agreements are now so easy to doubt the reliability of. “Signed in pencil” indeed. Even in a transactional, competitive world, agreed upon deals still need to mean what they say they mean, or transactions themselves break down. I’ve said many times now that business can deal with and price around a bad rule set as long as the rules are reliably and predictable enforced. It’s that wild unreliability and unpredictability that is hurting America’s full faith and credit.
Generalized tariffs are stupid because they are stupid. Liberalized trade allows countries to make the most out of their comparative and absolute advantages, and it allows their businesses and consumers to get the most out of their buck. Generalized tariffs add needless friction and cost, and harm your own industries’ competitiveness in world markets. I suspect from our past discussions that you have a somewhat more than passing familiarity with the economic advantages of liberalized cross border trade, and on the straight market economics of this I suspect I’m preaching to the choir.
I understand your reasoning about the power dynamics, and yes, specific tariffs can indeed operate to distort market pricing and, through these inefficient externalities, incentivize growth of domestic industries that would not otherwise be competitive. “We want to have this industry on-shore; we can’t do it as well as the other guy, so we’ll artificially price the other guy out by charging our importers a tax so our own producers have a nice bubble to work in”. If the industry is important enough to have sovereign control over, and if you’re willing to eat above market pricing, fair enough.
So I mean, sure, specific tariffs can protect individual industries or sectors that are deemed to be of national importance. The stupidity of the U.S. position though is in how hamfistedly they’ve applied tariffs as far across the board as existing trade agreements allow, and sometimes even despite those agreements. They’re just taxing the shit out of their own people on a multitude of goods and services that don’t merit such protections.
Ironically, by eroding purchasing power both immediately through price hikes at the docks, and through the resulting inflationary pressure, they destroy some of the very demand these now sheltered domestic industries increasingly rely on. And of course they’re also inviting reciprocal and retaliatory measures that hurt their own industries that do enjoy comparative advantage and will now face less access to external markets.
I understand the concepts of economic nationalism well. They’re just going about it in an incredibly dumb way. Most of what they need to have economic security they could easily just buy from reliable partners if they decide to pay enough to make it worth it for producers. The ones in the administration down there who still have brain cells to rub together are still quietly pushing exactly this approach on things like critical mineral development in partnership with our businesses. But now they’re having to do it sailing upwind against policy Choices that cause the rest of us not to trust them or to want to rely on them.
America could very easily have come out with a strong and coherent policy on certain key sectors, clearly said they were going to use restrictive trade practices to protect and stimulate those sectors, and that otherwise they remain open for business to let their companies buy and sell as freely as they choose. It would have pissed some people and some industries off, but it would have been articulable and reasonable, so long as it involved consciously accepting the inherent inefficiencies of being an economic island in a given sector. But instead they just blindly tariffed everyone including an island full of penguins, and only when things started to bite did they reassess some of their initial rules that had had extremely predictable detrimental impacts on their own people. Maybe that’s when Trump learned how ‘dumb’ is spelled?
Absolutely agreed that we must aggressively leverage our own advantages and reassert that if they want to work with us, it must be a just partnership. We need to heavily build out export infrastructure and continue making advantageous trade deals with other countries and trading blocs, and then the Americans can enjoy competing with other potential purchasers. I remain happy to sell them stuff, but we have a lot of stuff everybody wants, not just them. Our government seems to grasp the importance of policy that makes it easier to sell into the broader world market. We need to keep acting aggressively on that. More trade deals, expanded ports, and expanded lateral infrastructure east to west across Canada, as well as north to where there’s more good stuff in the ground.
I think we’re actually closer on this than it first sounded, but I still think we’re coming at the same problem from different levels.
I’m not defending generalized tariffs as good economics. They aren’t. I understand the argument on comparative advantage, integrated supply chains, retaliatory tariffs, inflation, reduced purchasing power and the damage that policy instability does to investment.
I work in transportation and supply chain; I’m well aware that you can make your own industries less competitive by hammering imported inputs and constantly changing the rules they operate under.
Where I differ is that I don’t think Washington is optimizing for economic efficiency anymore.
I think the U.S. is increasingly willing to accept economic inefficiency in return for greater control over strategic industries, supply chains, energy, critical commodities and the economic behavior of countries within its immediate sphere of influence. That doesn’t mean every tariff is smart. Some of them are obviously ham-fisted. Some probably undermine the very industries they’re supposed to protect. I’m perfectly willing to concede that Trump can identify a real strategic vulnerability and then choose a stupid instrument to address it.
But those are two separate questions.
My point is that the broader strategic shift is real, and I don’t think it disappears when Trump does.
The competition with China isn’t going away. The securitization of supply chains isn’t going away. The push to reshore or friend-shore critical industries isn’t going away. Trade, technology, energy, finance and industrial capacity are increasingly being treated as instruments of state power.
That is the world I think Canada needs to prepare for, and on CUSMA, I actually think your point reinforces mine.
I’m not saying Canada is clinging sentimentally to some ancient treaty. I’m saying that if even Trump’s own negotiated, signed and publicly celebrated agreement can become conditional when Washington decides its interests have changed, then Canada would be foolish to confuse an agreement with a strategic guarantee.
Of course agreements matter. Of course predictability matters. Business can price around a bad rule set far more easily than it can price around rules that change every six months.
But international agreements ultimately endure because the parties still see value in honoring them. No higher authority can compel the United States to comply if Washington decides otherwise.
That is not an argument that treaties are meaningless. It is an argument that treaties are not a substitute for leverage. And that brings me to what I think is
the much bigger Canadian problem.
We keep talking about “leveraging our resources” as though possessing enormous natural resources automatically gives us strategic power.
It doesn’t.
Canada has spent decades failing to build the infrastructure and industrial capacity that would let us exercise that leverage.
Our economy was overwhelmingly developed north-south.
Our pipelines run south.
Our rail networks are deeply integrated with the United States.
Our electrical systems are heavily interconnected with theirs.
Our manufacturing supply chains cross the border repeatedly.
Even western Canadian crude moving into Ontario and Quebec through the main pipeline system has to leave Canada, transit the United States and then come back into Canada at Sarnia. We are one of the largest oil-producing countries in the world and we don’t even have a fully Canadian pipeline connection between western production and eastern refineries.
To me, that's an extraordinary strategic vulnerability.
So whenever somebody says, “Fine, we’ll just sell the Americans less oil and send it to Europe or Asia,” my immediate reaction is:
How?
Through what pipeline?
Through what port?
With what terminal capacity?
On what timeline?
To what established customer?
We cannot just point four million barrels a day in a different direction because Washington pisses us off.
The infrastructure does not exist.
That means much of our supposed resource leverage is theoretical rather than usable.
If your product can realistically reach only one dominant customer, that customer holds enormous bargaining power regardless of how badly it needs what you sell. The problem goes well beyond export infrastructure.
Canada has also spent decades allowing important parts of its primary and secondary industrial base to shrink, disappear or become increasingly dependent on foreign inputs.
Steel, Mining, Oil and gas, Refining, Heavy manufacturing, Shipbuilding, Northern infrastructure.
We have become very good at talking about critical minerals and strategic resources while frequently being much less capable of taking Canadian raw materials all the way through processing, refining and manufacturing into the finished products we actually need.
That distinction matters.
Digging something out of the ground and putting it on a ship is not strategic autonomy if somebody else processes it, manufactures the strategic component and sells it back to you.
Steel is a good example of the contradiction.
Algoma Steel, in the news yesterday, with the Carney Government announcing we were going to build six new ice breakers and Algoma was going to provide the steel.
BREAKING: Algoma Steel to supply plate steel for new icebreakers
Algoma Steel spent more than a century as an integrated steelmaker. Ottawa then provided substantial support for Algoma’s transition from traditional blast-furnace steelmaking to electric-arc furnaces as part of its decarbonization policy.
Algoma Steel has now shut down its traditional blast-furnace and coke-making operations.
At almost exactly the same time, Ottawa is talking about rebuilding Canadian defence-industrial capacity, building new icebreakers, strengthening Arctic sovereignty and sourcing more strategic materials domestically.
I’ve heard an industry rumor that some of the feedstock required for certain Algoma plate production may now have to be imported, possibly from Brazil, processed again here and then used in Canadian projects. I haven't been able to verify that, so I’m not presenting it as fact, and I certainly wouldn’t hang the
argument on it.
But if it turns out to be true, it would be an almost perfect illustration of the larger problem.
Because the verified part is already significant enough.
An electric-arc furnace and an integrated blast-furnace steelworks do not represent exactly the same strategic capability.
Canada has iron ore.
Canada has metallurgical coal.
Canada has enormous energy resources.
And yet we have reduced some of our ability to take those domestic raw materials through the entire primary steelmaking process at precisely the moment when the geopolitical environment is reminding us that industrial self-reliance actually matters.
I’m not arguing that EAF technology is bad. It can be cleaner, more efficient and commercially attractive.
I’m questioning whether we have ever seriously evaluated industrial policy through a national-security lens.
Because this is the recurring Canadian problem.
For decades we optimized around efficiency, emissions targets, cheap global inputs and the assumption that international markets would remain open and predictable. Then the geopolitical environment changed, and suddenly everybody rediscovered words like resilience, sovereignty, strategic industries and economic security.
The problem is that you cannot rebuild industrial capacity with a press conference.
Mines take years.
Steel mills take years.
Pipelines take years.
Ports take years.
Rail corridors take years.
Refineries take years.
Shipyards take years.
Northern infrastructure takes years.
And once those capabilities disappear, the workforce, expertise, supplier networks and institutional knowledge disappear with them.
That is why I think Trump is exposing a Canadian vulnerability rather than creating it.
We built one of the richest resource economies in the world, but we optimized much of it around selling into one overwhelmingly dominant market and assumed that relationship would remain fundamentally predictable.
That was economically rational for decades.
Strategically, it left us exposed.
So when I say Canada needs to become more ruthless and transactional, I don’t mean we should start randomly throwing tariffs around in imitation of Trump.
I mean Canada needs to rebuild national economic power:
- Ports
- Pipelines
- Rail
- Energy infrastructure
- Mines
- Refining and processing
- Steel
- Shipbuilding
- Defence manufacturing
- Northern infrastructure
And, critically, multiple credible export markets on the other end of that infrastructure.
Some of that capacity will look redundant or inefficient if you judge it purely through a commercial spreadsheet.
Build it anyway.
Because redundancy has strategic value.
The ability to redirect trade has value.
Keeping your own economy functioning during a political dispute has value.
The ability to tell your largest customer, “No, we actually have another option,” has enormous value.
I don’t want Canada economically divorced from the United States. That would be ridiculous. Geography guarantees that the Americans will remain our most important economic relationship.
What I want is optionality.
I want the United States to conclude that treating Canada as a strong, integrated and sovereign partner is the best deal available to them, not because we appealed to principle, and not because we reminded them what CUSMA says, but because the alternatives are more expensive.
That, ultimately, is what I mean by a realist Canadian response. We have plenty of resources. What we have lacked for decades is the infrastructure, industrial capacity and political willingness required to turn those resources into power.
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