Patriotism, dependence, and next steps
Following the unmet August 1 target to reach a trade deal, the United States has increased import tariffs to 35% on Canadian goods not falling under the United States–Mexico–Canada Agreement (USMCA). While USMCA can theoretically cover 85% of exports, it presently only applies to 50% of Canadian goods entering the US. A Statistics Canada report outlines the particular impacts on businesses that export to the US, adding that many are seeking to diversify their customers and have put off business expenses for the time being to counter possible tariff-associated risks. Businesses relying on US imports also face losses as a result of retaliatory tariffs by the Carney government.
Striking the balance between minimising adverse impact on Canadian businesses while ensuring American interests are affected is Carney’s stated approach to the trade war. Although Americans might feel some pressure, research from the Canadian Chamber of Commerce suggests that the GDP impact is expected to be higher for Canadians, especially as a result of retaliatory tariffs. Still, Canadians appear to be generally in support of these responses and of attempts to demonstrate economic independence from the US. According to polling data by the Angus Reid Institute, Canadian public opinion largely favours taking a “hard” stance during negotiations and risking damage to the US–Canada relationship in order to minimise concessions.
As is usually the case with trade wars, patriotic sentiment within the country has risen in the last six months, with calls to “buy Canadian” and limit travel to the US. At Victoria College, students took note of the Canadian flags that went up in April, intended to be a “symbol of national pride,” according to Kambiz Jahromi, the director of campus operations, Infrastructure & Sustainability. Ontario’s Ministry of Colleges, Universities, Research Excellence and Security put in place a policy to limit the use of US-based contractors, impacting construction operations across all campuses.
Of course, while consumer boycotts and the avoidance of businesses with American supply chain involvement may hurt the US, they also impact Canadian workers and business owners. A Guardian report highlighted the fears of a number of people working in sectors such as construction, automotives, tourism, and agriculture. Several are expecting layoffs and disruptions owing not only to US policy, but to the Canadian response and the blanket denunciation of these integrated industries. This integration complicates the effectiveness of sticking to only ‘Canadian’ goods because products are often inevitably associated with the US in some way. Many major Canadian brands have merged with larger American corporations, and many American brand goods are produced in Canada. This suggests that the Canadian response might be more symbolic than effective. Reversing years of established economic dependence is not simply a matter of more patriotic consumer choices.
America holds a long-standing position as Canada’s biggest trading partner. As of last year, 75% of Canadian goods exports and 50% of service exports went to the US, and over 60% of goods imports and 55% of service imports to Canada came from the US. Even with the support of government policy, it is difficult and costly to diversify the economy. Many commentators seem to think this is simply the latest issue in a decades-long saga of Canadian economic dependence on the US. A report from the Canadian Press links this dependence to decisions made in the late 1980s to expand free trade between the countries. This dependence extends past trade and affects geopolitics as well. For instance, Canada’s recent decision to recognise a Palestinian state will impact trade talks, according to Trump. The outcome of this decision in the coming months may be an indicator of the independence level of Canadian policy and demonstrate the capacity of middle powers in relation to their stronger allies.
Canadians are keeping a close eye on trade talks and deliberating the Carney government’s next steps. Prescriptions include increasing investment in domestic start-ups, making concessions to avoid economic devastation, and bearing the expenses of long-term diversification. With many calls for a long-term strategy away from dependence, and a boosted sense of national pride, decisions made in the near future could fundamentally alter the Canada–US relationship, not only in terms of cultural identity, but within the realm of policy as well.