Political advertisements might project heroic defiance, but on the ground, the reality of dealing with former US President Donald Trump's trade policies is far more sobering for Canada. A recent gathering of Canadian business leaders and politicians revealed a pragmatic, and often worried, response to Trumpian threats that are actively reshaping North American trade dynamics.
The Provocation: An Ad, A Reaction, and Real-World Fallout
The immediate flashpoint was a television advertisement commissioned by Doug Ford, the Premier of Ontario, in late October. The ad, borrowing words from Ronald Reagan to warn against protectionism, drew a fierce reaction from Trump. On October 23, Trump denounced it as "fake," falsely claimed Reagan "loved tariffs," and used it as a pretext to terminate trade talks with Canada. He then added a 10% tariff hike for good measure.
While the ad's public message was one of defiance—using the hockey cry "Elbows up!" popularized by current Prime Minister Mark Carney—the private sentiment in Canadian corridors of power is different. Behind closed doors, Ford's attempt to lecture American Republicans is seen as ineffective. "Republicans know that Mr Trump is traducing Reagan’s legacy," scoffs one CEO, adding, "You don’t need to remind them."
The Corporate Dilemma: Hedging Bets and Shifting Ground
The core issue is the future of the USMCA (United States-Mexico-Canada Agreement), the trade pact Trump himself negotiated to replace NAFTA. Its stability is now in serious doubt. Publicly, it is undermined by American tariffs imposed under national security grounds on Canadian aluminium, cars, and energy. Privately, Trump aides warn the US may seek separate, annually reviewed deals with Canada and Mexico.
This uncertainty is forcing Canadian businesses to act. A CEO who recently lobbied in Washington reports a disheartening consensus: while Congressmen from both parties call USMCA a good deal and express love for Canada, they privately advise appeasing Trump, as he holds all decision-making power. "They are not willing to stand up to him," the executive sighs.
Consequently, corporate hedging is underway. An executive estimates that 30% of Canadian firms, especially those with cross-border operations, have started or are planning to shift production and investments to the United States. A manufacturer of outdoor goods confirmed plans to move more production to the US, closer to customers, citing unbearable uncertainty despite current tariff-free access. "The American market is irreplaceable," he stated, underscoring Canada's precarious position.
Two Canadas: Traditional Industries vs. Global Future
A clear divide is emerging in the Canadian business landscape. One camp, including traditional commodity producers in aluminium and timber, is deeply tied to the US, which takes three-quarters of Canada's merchandise exports. For them, the US is akin to a home market. A Canadian politician somberly notes that Ford's defiant ad ultimately reflects a deep-seated fear. With Trump openly wanting Canadian car factories to relocate, and some automakers already announcing new models will be built in the US, "Ontario is going to have to reinvent itself."
The politician also highlighted the startling self-harm in Trump's strategy. The US produces only 16% of the aluminium it uses, relying on imports from Quebec. A 50% tariff on Canadian aluminium thus hurts America as much as it hurts Canada. "We didn’t vote for it, but Canada is living through North America’s own version of Brexit," the politician lamented.
The second camp consists of advanced industries with global supply chains. These firms have more options and are critical of decades of reliance on the "lazy" comfort of the US market. While Trump's policies are causing an investment slump in Canada, these global companies are not pinning hopes on a stable deal with Trump. One boss points out that annual pact reviews would inevitably lead to worse terms for Canada due to America's greater clout. Moving entire production to the US is also not a perfect solution, as another CEO grumbles that America "does not have the people it needs" for advanced manufacturing. For them, the ten-year project of finding new markets in Europe or Asia is becoming unavoidable.
The conclusion from Canada is stark: Trump's aggressive trade tactics command fear and force short-term compliance from today's industries. However, this very aggression is pushing the most forward-looking Canadian companies to reduce their dependence on the United States, potentially weakening America's economic grasp on the future.
