Should Carney cave?

Will Trump TACO on punishing nasty Canada next week?

Speculation grows he will, with insane new 50% tariffs threatened for implementation a week from Wednesday. After all, they’re unwarranted, capricious, injurious, would cascade atop existing dumb tariffs and are a further abrogation of the trade deal the guy signed with us in 2018.

Last week Trump took a podium to tell an audience Canada is nasty. The crowd (Las Vegas businesspeople, who rely on Canadian visitors) cheered. They’re all nuts.

Our trade guy, my pal Dominic LeBlanc, has been shuttling back and forth to DC negotiating with people who don’t seem to give a whit. As you know, the first Trump tariffs were all about Fentanyl – a non-existent and fabricated issue. Still, Ottawa (under Trudeau) committed $1.3 billion to the ‘problem’ and appointed a Fentanyl Czar. (Nobody has heard from him since.)

We caved. We got played.

Then Trump complained about the digital services tax Ottawa placed on social media companies and other platforms operating in Canada. More tariffs. So the feds scrapped the tax.

We caved. We got played.

Now Trump rages over the removal from stores (except in dodgy Alberta) of US booze, our millionaire protectionist dairy farmers (cue Cow Man) and some tariffs on autos in retaliation for American levies. Trying to wreck the $6-billion bridge we built between Windsor and Michigan wasn’t enough. Now we have the mother of all tariffs coming next week.

Should we cave?

Media reports are that the Carney crew is willing to bend on booze (if the provinces agree), bend on dairy and car taxes if the Yanks TACO on the new tariffs and remove some of the old ones on steel, aluminum and lumber. Meanwhile we’re supposed to be renegotiating the big CUSMA trade deal, but the White House won’t even talk about that.

“Canada should hold resist short-term deals,” warns Bay Street economist Derek Holt. “Canada holds most of the cards.”

Indeed. Days ago this pathetic yet Goose-and-Moose-friendly blog recalled how much energy we ship south, in the form of oil and electricity. A mess of states are quite dependent on us to keep the lights on and Air Force one full of jet fuel. We also have a fifth of the world’s fresh water reserves, at a time when large sections of the US face drought and bottoming rivers. And polling shows 80% of Canadians have a favourable view of Canada while less than 30% approve of their president.

But wait. Holt the economist also throws out these reasons why Canada should not cave:

• The US faces midterms that have Trump and the GOP on the run whereas PM Carney holds a majority until no later than October 2029.
• Canada’s economy and labour market are roaring ahead as punctuated by the latest jobs report. The US labour market is stumbling.
• Tariffs and wars have been contributing factors to the US administration’s affordability woes before voters and some of the special interests most affected by Canada’s retaliation may rejoice should a deal be struck.
• The US war with Iran has benefited Canada in terms of buoying commodities and therefore driving improved terms of trade with trickle down effects through the economy.
• Our dollar has depreciated by about a couple of dimes to the dollar since 2021 to offset more than the tariff shock.
• Canadian fiscal policy is on the verge of sustainably adding to growth potentially for years to come while US fiscal policy is turning restrictive.
• Canada is dangling major projects that will be attractive to big investors at home and abroad and it’s in US interests to participate in potentially trillions of dollars of such projects over time.
• Foreign direct investment into Canada is on a tear with countries other than the US leading. A part of this is that Canada is raising spending on defence with major contracts like military jets yet to be decided upon.
• Canadian exports are trending up for several quarters and diversifying away from the United States
• Canadian financial markets are also doing rather well with lower bond yields, tight credit spreads and one of the few global stock markets to outperform the US since the day before the US election in 2024.

As we’ve discussed here, Canada has lower inflation, lower mortgage rates, higher wage gains, larger equity market returns, better GDP growth and more robust job creation than the USA. Plus no war. No Trump. And we have Michael Buble from Burnaby. (They can have Drake.)

The US president has nothing to gain treating Ottawa like Beijing.

Our guy has nothing to gain by caving.

Yeah. Let’s be nasty.

About the picture: “Here’s a photo of our Grandson’s 3 year old dog, Echo,” writes Barb, “who seems happiest indoors during the Okanagan’s heatwave and recent smoke.  We hope you’re fully mended, Garth, and wonder if your attacker has seen any justice since that horrible event.” 

To be in touch or send a picture of your beast, email to ‘garth#@garth.ca’. 

Source: https://www.greaterfool.ca/2026/08/10/should-carney-cave/