America’s 51st state? How Canada would possibly tackle Trump – DW – 01/10/2025 | EUROtoday

“Blame Canada!” goes the satirical music from the 1999 animated comedy movie “South Park: Bigger, Longer & Uncut,” the place a mom rallies her small Colorado city to confront youth degeneracy.

The music humorously shifts blame to America’s northern neighbor reasonably than United States authorities insurance policies, parenting failures, or media affect, declaring, “We need to form a full assault  — it’s Canada’s fault.”

Decades later, US President-elect Donald Trump seems to be channeling an analogous power, blaming Canada for unlawful migration and drug trafficking throughout the northern border.

Weeks after successful a second time period within the White House, Trump threatened to impose 25% tariffs on all Canadian imports — together with vehicles and automotive elements — ranging from his first day in workplace.

He has since stepped up his rhetoric, joking that Canada may even be annexed because the 51st US state. He even mocked the Canadian Prime Minister Justin Trudeau — who resigned final week amid plummeting approval rankings — by calling him the “Governor” of the “Great State of Canada.”

Trump bombast or risk to be tackled?

While some analysts imagine the rhetoric is typical Trump bluster, his remarks have been extensively condemned by Canadian politicians and economists as Canada wasn’t a significant goal for the Republican candidate throughout the US election marketing campaign — in contrast to China, Mexico, BRICS and NATO.

“It came like a bolt from the blue,” Douglas Porter, chief economist of the Bank of Montreal (BMO), advised DW, referring to Trump’s assault. “There was no groundswell among his supporters that saw Canada as a big villain … so I find this one a bit more unnerving.”

Porter mentioned Trump’s reasoning seems to be altering as he prepares to take workplace on January 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,” he mentioned.

Despite championing and signing the United States-Mexico-Canada Agreement (USMCA), which took impact in 2020, Trump now says Washington’s neighbors have failed to fulfill key phrases in the accord, from border management to commerce. The deal is up for evaluation subsequent 12 months.

Trump “is known to rip up his own deals to secure even better deals,” Tony Stillo, Director of Canada Economics on the financial advisory agency Oxford Economics, advised DW. “Even though he helped negotiate the USMCA that replaced NAFTA (North American Free Trade Agreement), he’s now calling it the worst deal ever.”

The US does, nonetheless, have far worse commerce imbalances with China, Mexico, Vietnam, Germany, and Japan than with Canada, which was almost $55 billion (€53.6 billion) final 12 months, in accordance with the US Census Bureau.

By comparability, the US-China commerce imbalance was virtually 5 instances larger, at $270.4 billion. The US-Canada commerce imbalance has fallen by almost 30% over the previous two years. However, it was a lot decrease earlier than the pandemic and the USMCA took impact.

Canada getting US subsidy, says Trump

Trump wrote on his Truth Social messaging platform this week that the imbalance is successfully a US subsidy to Canada, saying the world’s largest financial system “can no longer suffer the massive Trade Deficits that Canada needs to stay afloat.”

US-Canada commerce is among the most intensive and built-in partnerships on the earth. Last 12 months, $699.4 billion of commerce was carried out. Canada is the biggest marketplace for US exports, forward of Mexico, Europe and China. US exports embody vehicles, vans, vehicles and auto elements in addition to fossil fuels.

The US can also be Canada’s prime export vacation spot, with greater than three-quarters of outbound Canadian items and companies heading throughout the southern border. For comparability, 53% of Germany’s exports go to different European Union nations.

Crude oil makes up 1 / 4 of Canada’s exports southward, which in July 2024 reached a file 4.3 million barrels per day, in accordance with the US Energy Information Administration (EIA).

Thanks to surplus US processing capability, the US refines the crude oil into gasoline, diesel, and jet gasoline for home use and re-export — a few of it again to Canada.

Trouble for oil and auto sectors

Danielle Smith, the premier of the oil-rich Canadian province of Alberta, warned the US can be taking pictures itself within the foot if Trump makes good on his threats, penning this week on X that: “Any proposed tariffs would immediately hurt American refiners and also make consumers pay more at the pumps.”

Trump’s ire has additionally focused Canada’s automotive trade, which the president-elect says has shifted manufacturing throughout the northern border lately, leading to layoffs for American employees.

However, North America’s auto sector is deeply built-in and elements and automobiles usually cross the US-Canada border a number of instances throughout manufacturing.

Canadian auto executives have warned that tariffs may disrupt advanced provide chains, resulting in elevated prices and inefficiencies — spiking costs for brand new automobiles in each nations.

“If you tariff at 25% every time it [an auto part] goes across a border, the costs become ridiculous,” William Huggins, assistant professor at McMaster University’s DeGroote School of Business, advised DW.

Canada’s BNN Bloomberg this week cited economists as saying the US tariffs may shrink Canada’s gross home product (GDP) by 2-4% and should tip the financial system into recession.

Ottowa readies tit-for-tat measures

Canada’s ruling Liberal Party will not elect Trudeau’s successor till March 9. While his departure leaves his nation politically rudderless, Canadian policymakers have devised a listing of US imports which may face retaliation if Trump proceeds together with his tariff plan.

The Global & Mail newspaper reported this week that Ottowa is contemplating tariffs on US metal, ceramics, glass, flowers and Florida orange juice, amongst different items.

“They [The Canadian side] have only identified a handful of sectors because they don’t want to put everything on the table yet to undermine their negotiating position,” Stillo mentioned.

But with largely bluster and outlandish threats to go on, Canada’s leaders are but to know precisely what Trump is searching for. Are his tariff threats a negotiating tactic to enhance border management, increase power and automotive cooperation or hike Canada’s contributions to NATO?

“We’re not dealing with an enlightened multi-step US policy,” Huggins mentioned. “We’re dealing with a bully who said, ‘Give me your lunch money,’ so we’re probably going to give them the change in our pockets.”

But regardless of the short-term disruption to each nations’ economies, the McMaster University economist thinks policymakers in Ottowa will look to play the lengthy recreation, for one apparent motive.

“30 years from now, Donald Trump won’t be alive, but Canada will be,” Huggins advised DW.

Edited by: Uwe Hessler