Opinion
“Turn your obstacles into opportunities and your problems into possibilities.” – Roy T. Bennett
I am not sure what your plans were for U.S. “Liberation Day,” but I was tied to a TV to listen to what U.S. President Trump was going to say about his tariff strategy.
Through a Canadian lens, I would say that of all the possible directions that President Trump could have gone, this was a real win for Canada. This is two weeks in a row where Canada can feel like it can breathe. And it was another step closer to the “Fortress North America” approach to trade.
There are still some grave concerns related to the auto tariffs, steel and aluminum tariffs, and other tariffs — Canada is still not out of the trade war crosshairs of President Trump. The April 2nd announcement, however, seems to signal that Mexico and Canada are different than the rest of the countries the U.S. is dealing with.
Canada has felt serious heat since President Trump entered the White House for the second time, being treated similarly to nefarious trade actors China and India. In the last two weeks, Canada has fallen back to a more comfortable position of not being an enemy, but an ally in some respects.
It will be a serious gut check for Canadians at a time when the country has “elbows up” and anti-American sentiment is at a generational high. Again, the Trump announcement on Wednesday was a step towards Fortress North America, to borrow the term Doug Ford likes to use, but I am not sure Canadians understand what is potentially in play.
Fortress North America is a concept where Canada and Mexico are more entrenched with the United States than they have ever been. It involves deeply integrated supply chains, shared trade and security interests, regional self-reliance on critical commodities and goods, and mutually aligned trade protections versus economic foes. Whether it is regulatory alignment, stronger border enforcement, or parallel tariff strategies, Canada and Mexico are going to be pushed to think more about North America over the European Union, Asia, or South America over the next four years, and possibly beyond.
Not everyone will agree with this strategy, I am well aware of that. I would put the RealAg audience into four buckets of thought on who Canada should be seeing as its true economic partner.
- The United States and Mexico: We are already in USMCA, but President Trump’s approval is very low in Canada
- Europe: Europeans are polite, nice, and care about similar social issues, plus our government is follows British/European tradition vs American
- China: Could be the new largest economy in the world and buys very large volumes of ag commodities
- Inter-provincial trade barriers just need to be dropped and then we don’t need to worry about exports as much
Canada can attempt all four, but there is one clear priority in my opinion.
This may be the first you have heard this “Fortress North America” term, but it has been around for a while. For many of you, tying Canada into a deeper U.S. relationship fresh off of the 51st state threats seems counterintuitive, but the numbers speak for themselves.
Canada exports just under $600 billion a year to the U.S., while EU buys $35 billion and China buys $30 billion per year — it’s not anywhere close, in dollars. Canada’s first economic priority is securing its strong economic ties to the United States.
Canada is on a trajectory where it is about to be more tied to the United States economically than less. At a time when some Canadians are pushing for deeper trade diversification, Canada is propelling itself toward a decision that will alter its relationship with China and others. In a multipolar world, Canada cannot ride the fence and will be forced, due to its American adjacency to choose its economic partner.
Put simply, Canada must choose: China or the United States, it can’t be both.
I have been talking about this scenario in many of my keynotes when I share this slide. 
If Fortress North America is the reality, there are going to be some moments of adjustment and uncomfortableness for Canadians.
For example, Canadian farmers are upset about the canola meal, canola oil, pea, and pork tariffs placed on Canada by China in response to Canada’s EV tariffs. These tariffs placed by Canada on China are a prelude of what is to come where Canada and Mexico are in step with the U.S. against China. Sorry canola growers, expect more tariffs on China and not less. The Americans already pushed Canada to apply a 100% tariff on Chinese EVs. Consider that after today’s announcement by the President the effective tariff rate for Chinese goods into the United States will be 54%. Will the Americans ask Canada to do the same? Will Canada be asked to charge a docking fee on Chinese ships if the U.S. does? Time will tell, but a theoretical fortress requires walls.
There are risks to Canada in this strategy: a loss in autonomy, a weak U.S. economy or recession that would impact Canada in greater amounts, and possible deterrents to some Canadian trade diversification efforts with U.S. economic foes. To the latter point, this kind of language was written into the USMCA deal in Article 32.10, which requires USMCA countries to notify each other three months in advance if they intend to negotiate a trade agreement with a non-market country, such as China.
Canada is in the middle of an election and no matter which party wins, the new Prime Minister will be charged with the task of maintain Canada’s access in the U.S. economic fortress along with Mexico before any other challenge. It’s the number one election issue and it will be post election as well. Canadians need to be prepared for “Fortress North America.”
