“Blame Canada!” This is a satirical song from the 1999 animated comedy film “South Park: Bigger, Longer and Uncut”, where a mother rallies her small Colorado town to confront the youth’s downfall.
The song humorously places blame on America’s northern neighbor rather than United States government policies, parenting failures, or media influence, declaring, “We need to go all out – it’s Canada’s fault.”
Decades later, U.S. President-elect Donald Trump appears to be channeling similar energy, blaming Canada for illegal migration and drug trafficking at the northern border.
Just weeks after winning a second term in the White House, Trump threatened to impose a 25% tariff on all Canadian imports, including cars and automotive parts, from his first day in office.
Since then he has intensified his rhetoric and jokingly said that Canada could also be included as the 51st US state. He also mocked Canadian Prime Minister Justin Trudeau – who resigned last week amid falling approval ratings – by calling him the “governor” of the “great state of Canada.”
Trump’s attack or threat to deal?
While some analysts believe the rhetoric is typical Trump bluster, his comments have been widely condemned by Canadian politicians and economists as Canada was not a major target for the Republican candidate during the U.S. election campaign – China , unlike Mexico, BRICS and NATO.
“It came as a sudden shock,” Douglas Porter, chief economist at the Bank of Montreal (BMO), told DW, referring to Trump’s attack. “There was no sense among his supporters of seeing Canada as a big villain… so I find that a little more troubling.”
Porter said Trump’s argument appears to be changing as he prepares to take office on Jan. 20.
“Initially, there were concerns about the border, which I think Canada would be happy to address. Then there was talk about the US-Canada trade imbalance. And in his press conference the other day, Trump talked about imposing economic hardship on Canada. “Talked about.” ” He said.
Despite supporting and signing the United States–Mexico–Canada Agreement (USMCA), which took effect in 2020, Trump now says Washington’s neighbors have failed to meet key terms of the agreement, from border controls to trade. Have failed. The deal is up for review next year.
Trump “has been known to break his own deals to get even better deals.” Tony Stilo, the director of Canada economics at economic advisory firm Oxford Economics told DW. “E“Even though he helped negotiate the USMCA that replaced NAFTA (North American Free Trade Agreement), he’s now calling it the worst deal ever.”
However, the US has a much worse trade imbalance with China, Mexico, Vietnam, Germany and Japan than Canada, which stood at about $55 billion (€53.6 billion) last year. According to the US Census Bureau.
By comparison, the US-China trade imbalance was almost five times larger, at $270.4 billion. The US-Canada trade imbalance has declined by approximately 30% over the past two years. However, this was much lower before the pandemic and the USMCA taking effect.
Trump says Canada is getting US subsidies
Trump wrote on his Truth social messaging platform this week that the imbalance is effectively a U.S. subsidy to Canada, saying the world’s largest economy “can no longer sustain the massive trade deficits required to keep Canada afloat.”
US-Canada trade is one of the most extensive and integrated partnerships in the world. Last year there was a trade of 699.4 billion dollars. Canada is the largest market for US exports, ahead of Mexico, Europe and China. US exports include trucks, vans, cars and auto parts as well as fossil fuels.
The US is also Canada’s top export destination, with more than three-quarters of Canadian goods and services moving across the southern border. For comparison, 53% of Germany’s exports go to other EU countries.
Crude oil accounts for a quarter of Canada’s exports to the south, reaching a record 4.3 million barrels per day in July 2024, according to the U.S. Energy Information Administration (EIA).
Due to excess US processing capacity, the US refines crude oil into gasoline, diesel and jet fuel for domestic use and re-export – some of which is shipped back to Canada.
Trouble for oil and auto sector
Danielle Smith, the prime minister of the Canadian oil-rich province of Alberta, warned that the US would shoot itself in the foot if Trump followed through on his threats, writing this week on X that: “Any proposed tariffs would hurt American refiners. will suffer immediate losses and result in consumers paying more at the pumps.”
Trump’s anger has also targeted Canada’s automotive industry, which the president-elect says has shifted manufacturing across the border north in recent years, resulting in layoffs of American workers.
However, North America’s auto sector is deeply integrated and parts and vehicles often cross the US–Canada border multiple times during production.
Canadian auto executives have warned that the tariffs could disrupt complex supply chains, leading to increased costs and inefficiencies — pushing up prices for new vehicles in both countries.
“If you impose a 25% tariff every time [an auto part] “Once the limit is crossed, the costs become ridiculous,” William Huggins, an assistant professor at McMaster University’s DeGroote School of Business, told DW.
Canada’s BNN Bloomberg quoted economists this week as saying US tariffs could reduce Canada’s gross domestic product (GDP) by 2-4% and push the economy into recession.
Ottawa ready to take tit-for-tat measures
Canada’s ruling Liberal Party will not elect Trudeau’s successor until March 9. While his departure would leave their country politically disoriented, Canadian policymakers have drawn up a list of U.S. imports that could face retaliation if Trump moves forward with his tariff plan.
global and mail Ottawa is considering tariffs on U.S. steel, ceramics, glass, flowers and Florida orange juice, among other goods, the newspaper reported this week.
“They [The Canadian side] They’ve only identified a few areas because they don’t want to put everything on the table right now to weaken their negotiating position,” Stilo said.
But despite mostly cosmetic and outlandish threats, Canadian leaders still don’t know exactly what Trump is trying to do. Are their tariff threats a negotiating tactic to improve border control, boost energy and automotive cooperation, or increase Canada’s contribution to NATO?
“We are not dealing with an enlightened multi-step US policy,” Huggins said. “We’re dealing with a crook who said, ‘Give me your lunch money,’ so we’re probably going to give them money out of our own pockets.”
But despite the short-term disruption to both countries’ economies, the McMaster University economist thinks policymakers in Ottawa will want to play the long game for one obvious reason.
“30 years from now, Donald Trump will not be alive, but Canada will be alive,” Huggins told DW.
Edited by: Uwe Hessler
