Canada Can Make Trump Regret This Trade War — “You are at war when you get attacked. We got attacked,” Prime Minister Mark Carney said when meeting reporters on August 22 after his decision to end intensive negotiations to avert fresh American tariffs.
So how does Canada fight back? In his fifth-century BCE classic The Art of War, Chinese general Sun Tzu argued that the greatest victories are achieved not by beating the enemy militarily, but by defeating its strategy. This rule holds especially for smaller powers. Fighting a more powerful adversary on its terms is useless. The better approach is to understand what the enemy wants most, how it intends to get it, and the limits of its power—then exploit that knowledge to frustrate its objectives. Most of all, when you are a weak party, survival itself is victory.
Another way to look at this: the stronger party enters any conflict anticipating an easy and rapid win. Crucially, everyone else expects this too. That can be a burden. For the weaker side, there is little, if any, expectation of victory. Thus, simply by denying the stronger side its anticipated easy victory, the weaker side can “win.”
The key is to force the stronger party to expend much more energy and treasure than it bargained for, for much longer, and suffer an unsustainable loss in public confidence both at home and abroad. We are seeing this play out today. United States president Donald Trump has declared victory over Iran more than once (“They have no navy—totally wiped out—they have no air force—totally wiped out”), and yet, the fighting goes on. Iran now has at least a degree of control over the Strait of Hormuz, and Trump seems desperate for a way out. Russian president Vladimir Putin is experiencing a version of this in Ukraine.
While any conflict between a great power and a smaller adversary is fundamentally unequal, the imbalance runs deeper: for the great power, nothing short of abject surrender will do. For the smaller nation, the bar is lower; all that is required is to show they are prepared and able to resist. It may be true Iran’s navy is mostly at the bottom of the Persian Gulf, but it can still fire some missiles and drones at US troops, and it can throttle the global economy by holding the strait hostage. Of course, such resistance carries a high price in terms of civilian casualties and other damage; to persevere, the smaller nation must have the support of its people (Ukraine) or not care how much they suffer (Iran).
The insight that smaller nations can “defeat” bigger ones by wearing them down is not new. America learned it in Vietnam, the USSR in Afghanistan, and France in Algeria. Indeed, the British learned it in America itself in the late 1700s. So why do great powers keep forgetting it? And what might Canada learn from that history as it confronts the US in a profoundly unequal trade war? Canada cannot overpower the American economy. But does it need to? Or does it simply need to make the fight so costly and frustrating that the American people decide it is not worth it?
To bring all of this home to the economic fight Canada currently faces is a stretch but less of one than you might think. If the leaked details of the failed negotiations between Canadian and US trade teams are to be believed and the deeper aim of the Trump administration is to vassalize Canada—strip us of our industries and force us to trade our raw materials only with them and only under their diktats—then our independence really is on the line. Under these circumstances, we are at war and should start acting like it. So, let us determine how to exploit the stronger enemy’s weaknesses to frustrate its objectives and thereby win by not losing.
The first weakness is that the US is terribly divided internally. Ideologically, regionally, racially, economically, culturally, the country is riven: red states versus blue; 1 percenters against the rest; the coasts against the interior; MAGA against everyone else (and even itself, more and more). Its legislative branch is barely functional. If the Democrats win in November, we may see some change. But even then, they may find it hard to achieve any kind of internal unity except to oppose everything Trump wants—which would be fine for Canada but would not strengthen the US one bit.
This is not to say the US is weak, especially relative to Canada, only that the internal cohesion needed to bring about what Trump considers victory is not there. Prosecuting a war, even an economic one, requires a degree of unity and sacrifice. And the fact that overwhelming majorities shake their heads in incredulity every time Trump describes Canada as a threat diminishes any ability he has to rally the country against us.
Canada can help this along. We cannot go toe to toe with the Americans in terms of economic warfare, but we don’t need to; we just need to give the massive centrifugal forces tearing at America a push. Focus retaliatory tariffs on congressional districts, wedge regions and manufacturing groups to accentuate growing differences and splits. If things get bad, raise the costs of key raw materials (aluminum, potash, energy, critical minerals) but do it in such way as to economically hurt people who can politically hurt Trump—and Republicans more broadly.
This strategy will invite retaliation. It will hurt. If an August Leger poll is to be believed, Canadians are willing to endure this—although some of our premiers, such as in Alberta, may be a weak link here. All this will need to be done carefully. We also don’t want to push so hard that we turn Americans against us, and especially those inclined to have a good relationship with us. This would do Trump’s job of unifying America for him.
But if any retaliation we mete out is framed around a “we really don’t want to do this, but your guy is forcing us” narrative, large parts of a divided America might well buy it.
America’s second weakness is that, were it not the world’s largest economy, its finances might look like those of a failed state. This is particularly true of its staggering national debt, which just passed the unprecedented $40 trillion mark. Consider demographics: the US will soon no longer be able to replace its own population naturally; fewer and fewer workers to support and replace an ever-increasing number of older people. And this at just the moment when US politics have made the main source of cheap labour—immigration—taboo. Key entitlement programs required to maintain that aging population, such as Social Security and Medicare, will go bankrupt in the early 2030s. Sooner, if there is a recession.
Indeed, were it not for the immense boom in AI spending, the US might be in a recession right now. If that bubble bursts, or even substantially slows, as technology frenzies are apt to do, the results could be spectacularly bad. Even Republicans are growing increasingly worried at the direction Trump is taking the US economy. A time is quickly looming when that economy could succumb to the forces crushing it.
These pressures expose a vulnerability Canada can exploit. A heavily indebted, aging, and politically divided America has less room to cushion the costs of tariffs, subsidize injured industries, or persuade voters to make sacrifices for a fight many of them never supported. Canada’s overall strategy, then, should be less about drawing blood than outlasting the US. Retaliate selectively and where their dependence on our goods is greatest but also steadily reduce our own dependence on them—we are their largest customer.