Trump Administration Imposes 50% Tariffs on Canadian Goods, Straining U.S.-Canada Trade Relations

JUANA SUMMERS, HOST: The Trump administration is at it again. Late yesterday, the White House imposed 50% tariffs on a wide variety of Canadian goods, citing what it calls Canada's discriminatory treatment of American products. Chrystia Freeland knows a thing or two about the impact of tariffs. She was Canada's finance minister from 2020 to 2024, and she joins me now to talk through this latest turn in the tariff battle between the United States and its neighbor to the north. Welcome back to the program.

CHRYSTIA FREELAND: Great to be with you, Juana.

SUMMERS: So we'll get to the specifics of the latest tariffs that President Trump is trying to impose in a moment. But you spoke to my colleague Mary Louise Kelly earlier this year, and you made the case for the importance of the U.S.-Canada trade relationship. For people who might not understand, what do you believe it is that Canada gets out of a healthy trade relationship with the U.S.?

FREELAND: Well, I think both Canada and the United States have stronger economies when we work together. Trade is the cheapest way to grow your economy when it's trade between comparable partners who have similar labor and environmental standards, as Canada and the U.S. do. And something that Americans often don't realize about Canada because we're so much smaller than you are is how important we are as an export market for the U.S. Canada is the largest export market for the U.S., larger than China, Japan, the U.K. and France combined.

SUMMERS: If you're taking stock of this moment in Canadian and U.S. relations, how significant of an impasse is this?

FREELAND: I think that this is the worst the Canada-U.S. relationship has been probably at any time. I would say at any time since the War of 1812, except Canada wasn't a country then. What's really, I think, hurtful to Canadians is the disrespect, the fact that Canada's sovereignty is openly and repeatedly challenged, the fact that Canada is being accused in this seemingly random way of unfair trade practices when actually our trade is governed by a trading relationship whose negotiation I led and which Donald Trump signed off on. I was there when he signed our current trade deal that he is currently violating, and he called it the best trade deal ever.

SUMMERS: In your opinion piece for the Financial Times, you make the case that the best strategy for a country that's targeted by Trump's tariffs is to hold the line, to retaliate, not negotiate. Tell us why.

FREELAND: I didn't say not negotiate. I think you should always negotiate. But my view when we negotiated the current trade agreement - the USMCA - was we do not escalate, and we do not back down. You don't start a fight, but if the Trump administration starts a fight with you, you have to hold the line. And that's what I think Canada should do.

SUMMERS: President Trump would argue that Canada is treating American products unfavorably. How would you respond to that?

FREELAND: It's just not true. The fact is that with the initial imposition of tariffs when President Trump was elected the second time, the U.S. violated its trade agreement with Canada. This escalation is coming from out of nowhere. And, you know, what it shows to Canadians and, I think, to the world is that even if you have a deal with Donald Trump, it doesn't matter. It doesn't count.

SUMMERS: What would your advice be to Canadian leaders who are looking to figure out how to respond in this moment?

FREELAND: I think that now is the time for strength. Now is the time for dollar-for-dollar retaliation. I think Canadians are ready for that. Regular Canadians are already of their own volition choosing to boycott the U.S. Canadians are voting with their feet and not going on holiday in the U.S. Canadians are voting with their wallets and not buying U.S. goods. I think Canadians would support a strong position from the government of Canada.

SUMMERS: Now, in your article, Chrystia, you lay out some lessons that the rest of the world is now learning as it relates to these tariffs. In your view, what's the message to other nations here?

FREELAND: I think that they have to recognize that appeasement doesn't work with the Trump administration. You may think that it's worth making some concessions, that it's worth, you know, eating some humble pie, it's worth excessively flattering President Trump because you think that if you do that, you will sort of escape his attention and get a deal. But I think that what we're seeing from President Trump is no deal is permanent. He rips things up, and he only really respects the counterparties that respond with strength.

SUMMERS: If no negotiation's reached in the next 30 days, what could that mean for consumers in both countries?

FREELAND: You know, what it will mean for sure for the U.S. and for American consumers is higher prices. Tariffs are a tax, and right now there is an affordability crisis in the United States. Inflation is actually pretty high in the U.S. That means that there is a danger that interest rates go up as well. So, you know, this policy is sort of doubly absurd because it's harmful for Americans and it hurts the Canada-U.S. relationship. And, you know, my message to your listeners is, if America can't get along with Canada, who can you get along with? America is the world's biggest economy. It has the world's biggest military. But I think even America needs friends in the world, and your government is doing a really good job of alienating all of your friends.

SUMMERS: Chrystia Freeland, former deputy prime minister of Canada and minister of foreign affairs. She's a writer and resident fellow at Harvard's Institute of Politics. Thank you.

FREELAND: My pleasure.