The incoming Republican administration of Donald Trump has threatened to impose a 25 per cent tariff on all products from Canada and Mexico on the first day of his presidency — Jan. 20, 2025. Canada says it will continue to work with the United States on trade issues while Mexico has hinted at retaliation.
The tariffs would be devastating to both the Canadian and Mexican economies, which depend heavily on trade with the U.S. for their economic well-being.
The two targeted governments would in fact be forced to respond with retaliatory tariffs targeting American goods, creating economic carnage in all three countries.
Would these tariffs be legal?
“Are these tariffs legal?” is a natural question to ask. Simply put, no.
In a typically hyperbolic, randomly capitalized post on his Truth Social platform, Trump writes that he will impose “a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”
The North American Free Trade Agreement (NAFTA) replacement that Canada, Mexico and the United States negotiated — under American duress six years ago — contains a clause stipulating that the deal doesn’t stop any of the three countries “from applying measures that it considers necessary for … the protection of its own essential security interests.”
But any attempt to invoke that clause would be so obviously a pretext that it’s laughable. As economist Paul Krugman notes, the U.S. Department of Commerce’s rules don’t allow for the clause to be used to coerce other countries into action; the tariffs have to be linked to an effect on a particular industry.
So, no. The tariffs would not be legal. But the question itself is completely beside the point.
It assumes that the North American relationship continues to be rooted in the rule of law and democratic norms that have underwritten North American politics for more than 80 years. Five years ago, the question would have made sense. Now, it’s the wrong question to ask.
THE CANADIAN PRESS/Rob Gurdebeke
Shattered relationship
In his first term, Trump repeatedly threatened tariffs (including the absurd assertion that Canadian aluminum imports represented a national security threat) to browbeat Canada and Mexico on trade and immigration. Back then, we could still imagine that Trumpism was an aberration.
Canada acted appropriately for the time. Threatened with tariffs, Canadian officials responded in kind.
From this perspective, the lesson today for Canada seems clear: don’t panic, don’t be afraid to target vulnerable and politically important American industries and figure out what will make Trump happy.
This approach might work in the short run. But it only makes sense in a specific context. In 2016, it was possible to hope that Trumpism would be fleeting, Democrats would return to power and equilibrium would be restored.
The world can no longer make that assumption. Trumpism has been institutionalized in the Republican Party. Even if — and that’s assuming free and fair elections — the Democrats regain the White House in 2028, the two-party system in the U.S. means the Republicans will eventually regain power.
Chronic, systemic instability in the U.S. is now the best the rest of the world can hope for. But it’s next to impossible to make solid plans on instability.
Canada, for its part, can no longer rely on the rules and norms that have underpinned Canada-U.S. relations since the Second World War.
(AP Photo/Marcio Jose Sanchez)
Abandoning the rule of law
As I’ve written previously, the United States-Mexico-Canada trade deal’s renegotiation clause, embraced by both Democrats and Republicans, deprives Canada and Mexico of the protection from coercion that trade agreements usually provide smaller countries. Such protection traditionally means the larger country cannot use access to its market (which Canada and Mexico depend upon) to force smaller countries to adopt their preferred policies.
But the renegotiation clause of the current agreement keeps coercion on the table, moving North America away from a treaty-based rule-of-law approach to economic relations toward one focused more on raw power.
Read more:
Facing trade renegotiations, Canada can no longer count on free trade to protect it from U.S. power
Trump’s bombastic threats turbo-charge the problem of institutionalized coercion. The trade deal may still be renegotiated as scheduled in 2026, but a treaty violated at will by one party is no treaty at all.
Trump’s willingness to hold the Canadian and Mexican economies hostage for a deal on drug trafficking and migration also shatters another foundational norm.
In a relationship as complex as Canada’s with the United States, there will always be problems. But these haven’t previously paralyzed the relationship because of a tacit commitment between both countries not to link unconnected issues, ensuring one party can’t strong-arm or blackmail the other.
That norm provided Canada with significant protection from its much-larger neighbour. This norm, as well as formal trade rules, gave Canada a degree of autonomy in dealing with the U.S. Despite perennial problems like softwood lumber, it allowed the U.S. and Canada to come to reasonable arrangements supported by a commitment to domestic laws and international treaties.
(AP Photo/Evan Vucci)
Few good options
As the region’s dominant power, the U.S. can remake the broader North American relationship as it sees fit.
This is the third American remaking of the continent in 40 years. The first was its embrace of a globalization-focused free-trade model in the late 1990s, resulting in NAFTA. Then, post-9/11, it unilaterally decided that border security, rather than continental economic integration, was its top priority.
Post-2001, many pundits and analysts, fearful of what this new American focus on security would mean for Canada, claimed that Canada had no choice but to integrate more deeply with the U.S. in case the Americans, in the words of Canadian military historian Jack Granatstein, became “unhappy with us” and “bring our economy to a crashing halt.”
In the end, these fears were overstated. The U.S. did not crash Canada’s economy once the Liberal government of the day opted against following it into Iraq or joining its Ballistic Missile Defence system, two of Granatstein’s imagined red lines.
As I explored in my dissertation on the subject — eventually reworked in my book, Copyfight: The Global Politics of Digital Copyright Reform — Canada was protected by NAFTA and by shared norms regarding the non-linkage of unrelated issues, as well as the shared respect for the rule of law.
(AP Photo/Elaine Thompson)
Asset becomes a vulnerability
Those arguing in favour of appeasement — that Canada must do whatever the U.S. wants to avoid retaliation — should not delude themselves that Canada would be integrating more deeply with a fellow democratic country, protected by shared norms and the rule of law.
To integrate further with a country that has rejected the rule of law would be to surrender Canadian sovereignty. Deep integration with the U.S., once our greatest asset, is now Canada’s greatest vulnerability.
Canada-U.S. relations experts know this relationship is fundamental to Canada’s prosperity and survival. Canada will find a way to manage this relationship because it has to.
But it must do so within a context in which the question “is it legal?” no longer makes sense. Instead, the question confronting Canada is: “How can a liberal-democratic nation survive next to a much more powerful country with no respect for the rule of law?”
The difference between these two questions is the distance between democracy and authoritarianism. It is here that Canada now finds itself.