The political and economic fallout in Canada following Donald Trump’s imposition of tariffs in 2024–25 highlights how his actions have disrupted trade, strained US-Canada relations, and reshaped Canadian domestic politics. As a policy, the tariffs have destabilised traditional alliances, fuelled internal political upheaval, and forced Canada to reassess its economic dependence on the United States.

Canadians are angry. For several months, since Donald Trump was elected in November 2024, the tariff rumor has been bandied about. Trump himself said as much in social media and elsewhere during the American electoral campaign. Despite an illogical US tariff delivery schedule that confuses both business and government, Canada is now dealing with 25 percent tariffs on steel and aluminum, some auto, followed by lesser levies against oil and gas, including a range of agricultural products. The US administration’s rationale for implementing these specific tariffs is based on a centuries-old emergency legislation that was clamped on both Canada and Mexico as punishment for their “laxism” at the border on fentanyl smuggling.

Americans insisted that the Canadians spend more money to increase border security despite small amounts of fentanyl crossing the border. The emergency rationale applied to Canada was false. Fearful of Trump’s reaction, the Canadian government demurred, thinking that Trump might suspend the tariffs. The urgent need to diversify markets in Asia and Europe, less reliance on America, and rationalising oil and gas pipelines to enhance sustainable domestic industrial growth are now part of the political discourse. Trump’s tariffs are a direct hit on the economy, the consequences of which may burst asunder the Canadian union and alienate Québec. Either way, countermeasures or inaction, Trump gets his way.

Then came so-called American “Liberation Day” on 2 April  when Trump levied customs duties on countries around the world. Canada and Mexico would not face the tariffs alone. According to the Oval Office, these global tariffs are an attempt to ensure tariff reciprocity and bring down the American trade deficit country by country. Trump is aiming at collecting the tariff from American importers to allow for a tax cut for taxpayers. An infusion of new money is required since the American budget deficit is high. Such is the hope of Trump’s Republican supporters as they await what Trump has referred to as the “golden age” of America. In the meantime, American consumers and importers will have to pay the tariffs in addition to dealing with inflationary price hikes, rising unemployment and a failing stock market.

The notion that Trump supporters and theorists have circulated, namely that foreign countries will pay the tariffs in order to finance the domestic tax cut, is false. The advent of tariffs is a direct challenge to the international free trading market economy ushered in after the Second World War. The global nature of the 2 April  tariffs increases the fear that decades of free trade and increasing prosperity will be sacrificed at the altar of national economic particularity.

Comparatively speaking, Canada has every right to feel that 2 April tariffs were a bullet dodged since neither Canada nor Mexico were among the countries listed on Trump’s Rose Garden chalkboard. After all, there is a tripartite trade agreement (United States-Canada-Mexico Agreement – USCMA) signed and negotiated by Trump himself during his first term in office. That the tariffs on Canada and Mexico violate the letter and spirit of the USCMA is revealing. It indicates to what extent the two minor partners feel wronged by the American action. If Trump can violate a trade agreement that he and his officials negotiated and signed in 2017, how can he be trusted to renegotiate the accord? The tariff strategy appears to be the Trump response rather than a negotiation track available to all three partner countries.

From the Canadian perspective, the political and economic damage done since the arrival of Trump has been prodigious. Some of the uncertainty and damage is economic in nature. There is also substantial political damage to relations with the US. The presence of Trump and the tariffs occured at a time when Canada was undergoing a federal election campaign. Events south of the border have changed the 28 April key election issue from one of affordability and inflation to who can best negotiate the tariff issue with President Trump. This has had disastrous consequences for the Conservative Party, ending 18 months of complete domination in the polls. More uncertainty was created just before Christmas 2024 when the Liberal Party caucus upended the unpopular leadership of Justin Trudeau, provoking his resignation in early January 2025.

At its lowest ebb, in December 2024, the Liberal Party (LPC) had some serious challenges: no leader, a minority parliament, very poor polls putting them in 4^th place, and their departing socialist NDP support now with an early deadline in the new year. Trudeau had to go for the good of the LPC and the country. Otherwise, he would have been in the president’s cross hairs jeopardising desperate national appeals for tariff relief. Caucus management, always Trudeau’s Achilles Heel, failed miserably. Prior to the XMAS recess, the long brewing revolt broke wide open led by Finance Minister Chrystia Freeland.

The New Guy

Although Freeland was the trigger for change, she was unsuccessful in securing Trudeau’s job in the race to replace him and become prime minister. Instead, Mark Carney, former Bank of England and Bank of Canada chief, won the leadership by a landslide in February 2025. The dreadful polling numbers and successive by-election defeats in what were considered safe seats testified to the low morale in the LPC.

In the new year, Canada would have to act quickly as the window of opportunity might close before the Trump tariff schedule. Political events materialised at an astonishing pace—a leadership race to become prime minister in a matter of two months, the ongoing Trump tariff threat, and rampant economic uncertainty.

In the shadow of auto, steel and aluminum tariffs affecting the automobile industry in the key Province of Ontario, the provinces decided to move the anti-tariff conversation into the leadership void. Ontario Premier Doug Ford travelled to Washington and the Oval Office with federal ministers to lobby against the tariffs, unsuccessfully. Ontario and Canada even paid for billboard ads in Florida explaining to American residents that tariffs are a tax paid for by Americans, not foreigners. For her part, Alberta Premier Danielle Smith took an opposite approach, attempting to curry the favor of Trump and Elon Musk by attending the Trump inauguration in addition to a private meeting in Mar-a-Lago. Flirting with the Alt-right divides the common front and puts federal Conservative national leader Pierre Poilievre in a difficult position. Running on the affordability issue now takes a back seat to the more pressing Trump tariff issue.

Dr Bruce Mabley is the director of the Mackenzie-Papineau Group think tank based in Montreal devoted to analysis of international politics. Dr Mabley is a former Canadian diplomat and academic who has written a number of analytical and academic texts. In 2002, he was decorated by the French Republic as Chevalier des Palmes académiques.

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