Canada is making the best moves in a bad situation.

Since the announcement that Canada has walked away from trade talks with our increasingly aggressive and self-destructive southern neighbour, Canadians have rallied around the Prime Minister. Not signing a deal that would entrench tariffs of the size that were being proposed, along with the other sovereignty-threatening measures, was certainly the only path left to Canadian negotiators. The support of our government by Canadians in this trade war is critically important and our best defence against American aggression.

Canadian retaliatory tariffs are now in place, having been adjusted quickly after being announced to respond to concerns from the Canadian seafood industry. The latest round of tariffs announced by the US will not garner a response from Canada, being described as modest. The agility showed by the Canadian government to respond to the seafood industry and the maturity shown by not responding to a small countermeasure bodes well for Canada. Canadian policymakers are making the best moves they can in turbulent times.

Prime Minister Carney seems to be following the best course of action for Canada; these steps are worth reviewing.

1. Stick to your principles: If you believe tariffs are a tax on domestic consumers, don’t leave them too high for too long. Canada certainly needs to signal it will not be bullied by the US, but Canadians don’t need the additional economic pressure. Be careful about tariffing productivity enhancing machinery and equipment, look to support domestic producers who can fill this gap and use tariffs in these areas strategically. Abandon dollar for dollar if it means accomplishing our goals with less harm to Canadians. The agility shown in altering the last round of Canadian tariffs and patience shown in not responding to the latest small round of escalation by the US was the best possible response by Canada.

2. Build Economic and Military infrastructure: This is not a short-term problem, so we have time to do this right. Investments have started in our military and ports, that needs to be accelerated, but not to the point where we don’t get value for money. Transportation corridors, rail, road, pipe, power all need to be expanded and upgraded, delivering to domestic refineries and tidewater, not to our southern neighbour. The military partnership announced with Ukraine last week is an excellent example of how Canada needs to prioritize investing in security.

3. International trade relationships need focus. It’s great to have as many free trade deals as you can, but commercial relationships need to be built by individuals. Go with our chambers and businesses to our reliable allies, see what they can sell and what they need, and invite them here to do the same. Where we can enhance trade, we need to focus on the micro as well as the macro, the relationships as well as the overarching free trade frameworks.

4. Energy and critical minerals are a strategic resource; we need to act like it. This point is really about the two above. The fact that we don’t have domestic transportation options for our oil, gas and electricity is a national disgrace that leaves us extremely exposed to our newly hostile US neighbour. There is a natural strategic oil (and gas) reserve in Alberta for all of Canada, in the ground, but we can’t use it because we can’t ship oil and gas across our country. We have some of the world’s best deposits of critical minerals, but not the regulatory infrastructure to get projects approved and therefore not the investment flows to seriously expand mining and processing of our critical minerals. Energy and critical minerals are what our reliable allies will also need to insulate themselves from aggression from powerful actors like the US, China and Russia.  The investment summit is a great place to start, but we need the regulatory environment to attract private capital. CD Howe does a fabulous job of articulating this: https://cdhowe.org/publication/clear-the-way-does-the-building-canada-act-help-canada-build/

5. We can’t just wait out Trump: Americans elected him twice and his many disciples have political power in the US despite their harming of America. We should look to normalize relations, but it would be folly for Canada to ever trust this much again.

Canada has made the best possible strategic decisions thus far in dealing with the latest Trump administration. Let’s get smart, sensible, clear regulation in place to get building and increase trade beyond the US.