After spending a few weeks pounding on Canada and Mexico, Donald Trump turned his attention Wednesday to a whole new target: the rest of Planet Earth.
The U.S. president broadened his trade war by imposing the widest set of tariffs in generations, effectively resetting the postwar trading system.
The only good news for Canada, such as it is, is that when Trump came swinging fast and furiously with new tariffs, it took no new lumps.
The good news ends there.
The bad news is that previously announced tariffs will remain in place: potentially devastating auto tariffs that kick in Thursday, steel and aluminum tariffs of 25 per cent, 10 per cent on energy and potash, and 25 per cent on certain other goods.
For Trump, this was a personal Kodak moment.
Trump announces 10% ‘baseline’ tariff
Standing on the White House lawn, he referred to this as the culmination of an old dream, given his decades as a dyed-in-the-wool protectionist.
“I’ve been talking about it for 40 years,” Trump said.
“If you look at my old speeches when I was young, very handsome, in my old speeches… I’d be talking about how we were being ripped off by these countries.”
He added: “It’s such an honour to be finally able to do this.”
And by “this” he meant imposing tariffs ranging from 10 per cent to an eye-watering 50 per cent on some countries — shocking not only markets, but potentially realigning the planet’s geopolitical map, with the U.S. retrenching to this hemisphere.
We’ll see which countries, if any, negotiate a better deal. But the initial pattern is clear: Trump has flipped the tables on Asia.
There, where the U.S. had been cultivating allies against China, trading partners now face tariffs of 46 per cent (Vietnam), 49 per cent (Cambodia), 24 per cent (Japan), 32 per cent (Taiwan), 26 per cent (India) and 37 per cent (Bangladesh). China also got a 34-per-cent tariff.
Anyone selling clothing or electronics into the U.S. now has some incentive to shift production to Latin America, where tariffs are mostly 10 per cent.
“I do think there’s huge geopolitical implications,” said Chad Bown, a trade expert at the Peterson Institute in Washington, and former chief economist of the Biden State Department.
But he added an important caveat.
There’s so much uncertainty about how long these tariffs will last, and it takes time to redesign supply chains, so it’s unclear anyone can make long-term investment assumptions based on Wednesday’s numbers.
Also, elements of the plan appeared hastily slapped together. Trump’s list included several non-countries, such as the unpopulated Heard and McDonald Islands, a barren Antarctic archipelago belonging to Australia that now faces a 10 per cent tariff.
That said, the waves of uncertainty are certainly rippling through Canada. And, within Canada, no place risks being harder hit than auto country.
A tangle of tariffs is set to take effect on Canada’s biggest manufactured product — it’s up to 25 per cent on fully assembled vehicles and some parts, while other parts face none.
A southern Ontario auto worker says his colleagues are afraid to make big purchases now, fearing layoffs.
“It’s going to be a hell of a time,” Jayson Mercier told CBC News. “Here we are again, similar to [the economic crisis of] 2008 — where we don’t know if we’re going to have a job.”
One Canadian-American trade consultant says Canada fared better than most countries in Wednesday’s announcement. But that’s cold comfort for certain sectors, he added.
“Autos is going to be massively impactful for Canada,” said Eric Miller, the Canadian-born head of the Rideau Potomac consultancy in Washington.
“That’s a huge amount of pain for Canada. And you will see a huge amount of restructuring and realignment in the North American auto sector.”
Carney says Canada will ‘fight’ latest Trump tariffs
One industry player put it even more bluntly in a social media post. He predicted an industry standstill within days, and not just in Canada.
“The. Auto. Tariff. Package. Will. Shut. Down. The. Auto. Sector. In. The. USA. And. In. Canada,” Flavio Volpe, head of Canada’s auto-parts lobby, wrote on X.
“Don’t be distracted. 25% tariffs are 4 times the 6/7% profit margins of all the companies. Math, not art.”
Certain goods traded under the rules of the Canada-U.S.-Mexico Agreement face no tariffs, under exemptions Trump announced weeks ago.
Estimates vary on how many goods will face duties, but it appears most of Canada’s exports to the U.S. now indeed face tariffs.
“I’m not sure anybody knows [the exact percentage] at the moment,” Bown said.
In Washington, tariff opponents rained on Trump’s big moment.
As he began speaking, the Republican-led U.S. Senate began hours of debate on a mostly symbolic vote to repudiate his tariffs on Canada.
Some members of Trump’s own party voted with Democrats in a no-hope bid to cancel the first batch of Canada tariffs. It’s a doomed effort, even though it passed the Senate, 51-48. The House doesn’t plan to take it up, and Trump would veto it anyway.
But it was intended to deliver a political black eye to Trump on the day he announced his tariffs, with those on Canada being especially unpopular, according to polls.
The first speaker was Rand Paul, the Kentucky senator who was one of the few Republicans backing the measure.
He tore a strip off Trump’s actions — calling them “crazy.”
Paul ridiculed Trump’s idea that Canada represents a national security threat because of the fentanyl trade. He said more fentanyl comes from the U.S. than the other way, called Canada a valuable trading partner, and said Trump will drive up costs for Americans.
Plus, the libertarian-leaning lawmaker blasted the idea on principle.
He said there’s nearly a millennium-long tradition, going back to the Magna Carta, through the American Revolution, that it should be a legislature to approve a new tax — not just one leader.
That’s exactly what opponents are calling Trump’s plan: the largest sudden tax increase in American history.
“Taxation without representation is tyranny,” Paul said. “Conservatives used to understand that tariffs are taxes on the American people.”
He added: “What happened? Did we all of a sudden give up all the things we used to believe in?”
Lately, for Republicans, there is no authority higher than Trump’s. They could stop this if they wanted to, through the Congress.
It has a constitutional role in international trade, but, over the decades, Congress wrote several laws giving the president new power to impose tariffs by declaring an emergency.
Nobody has used that power, this way. Not until now. Now Trump is harnessing that power in unprecedented ways.
