The sombre mien—that’s what stayed with me. On Saturday, Mark Carney looked less like a prime minister briefing media on trade negotiations than a wartime leader telling his country a feared turn had finally arrived and preparing them for a long ordeal. The intense, all-out effort to stop crushing new tariffs had failed, with Carney grimly explaining that the United States insists on “short-term transactions” rather than “long-term partnerships” and that its commitments could no longer be assumed to hold.

American demands reportedly went well beyond tariffs, market access, and sectoral protections. They targeted Canada’s freedom to set domestic cultural policy, interpret agreements it had already signed, and conduct trade relations with third countries. The loss of our sovereignty was too high a price for preserving economic integration. What prime minister would accept Canada becoming a vassal state on his watch? With the collapse of talks, and Carney describing the country as being “attacked,” it’s hard not to feel like we have crossed into a different moment—that we are living in a slightly darker reality.

Throughout the weekend, The Walrus spoke to economists, policy experts, and political observers about what exactly has changed and what this new period might demand of Canada.

Their responses follow, sometimes edited for length and clarity.

“Greed and a fixation on security dominance may prove the downfall of the American economy.”
Erin O’Toole
President of ADIT North America, distinguished fellow at the Hudson Institute, and former leader of the Conservative Party

Hold fast. That was the message I posted on social media when news broke that trade talks between Canada and the United States fell apart, imposing $28 billion worth of new tariffs on Canadian exports.

Hold fast is an old naval term. When you heard the order, you needed to hold on to your sailing ropes to help the ship maintain course through a storm or battle and to avoid being swept overboard yourself. What I actually posted was the phrase tattooed on the knuckles of two gripped hands: a screenshot from a favourite film, Master & Commander: The Far Side of the World. Hold fast was a talisman for sailors of that era. They believed hard resolve and good fortune would help them survive whatever they faced on a voyage.

Since it appears the good ship Canada is heading into a trade war with the US, it is important to hold fast to our country and to one another. There is a second lesson we can take from the movie. The ship HMS Surprise was being pursued by a larger, faster French privateer ship called the Acheron. Captain Jack Aubrey (played wonderfully by Russell Crowe) decides to take on the more formidable vessel and gives a speech to rally his crew. “The Acheron is a tough nut to crack,” he says. “They mean to take us as a prize. And we are worth more to them undamaged. Their greed will be their downfall.”

It was appropriate for Canada to walk away from these talks. The Trump administration means to take us as a prize by brutally targeting our auto, manufacturing, forestry, and agricultural sectors with tariffs, while trying to leave other parts of the Canada–US trade relationship that benefit them undamaged. They want to maintain their unlimited, tariff-free access to Canadian oil, gas, uranium, potash, and other resources to help drive their policy of “energy dominance” but are unwilling to bargain fairly for it. Energy exports from Canada account for the trade imbalance Trump officials often gripe about.

They also rail against dairy and unfairness in agricultural sectors, but that ignores the reality of modern food security. Every country supports its farmers; the difference is largely in how. Canada uses risk management and supply management programs, while the US relies on crop insurance, direct subsidy, and food assistance programs. The Organisation for Economic Co-operation and Development ranks Canada and the US at broadly similar support levels: 8.2 percent versus 7 percent, respectively. Both are well below the global average of 13.2 percent.

Canadians also hear that “only China and Canada” have imposed retaliatory tariffs in response to President Trump’s actions. But this is misleading: China did not have a free trade agreement with the US to begin with. Canada has struck deals from the Auto Pact of the 1960s to the Canada–United States–Mexico Agreement—negotiated by the first Trump administration and praised by Trump at the time. This administration now wants to ignore agreements it signed, impose tariffs on industries deliberately built around North American supply chains, and dictate every aspect of its relationship with Canada. This is not only unfair. It is unwise.

Greed and a fixation on security dominance may prove the downfall of the American economy. There are already warning signs. In recent weeks, long-term US borrowing costs have risen sharply—historically, an indicator of pending recession. Tariffs are adding to inflationary pressures. National debt levels are soaring. The still-raging war with Iran is dangerously depleting American military inventories. As the US economy turns from dominant to stagnant, voters will weigh in later this year. Smoother seas are visible on the horizon: hold fast.

“It will get a lot worse before it gets any better.”
Fen Osler Hampson
Chancellor’s professor and professor of international affairs at Carleton University and co-chair of the Expert Group on Canada–US Relations

“They asked too much and offered too little,” Prime Minister Mark Carney said on Saturday after negotiations with the United States to avoid a new round of tariffs broke down. Make no mistake about what comes next: a full-blown trade war. Donald Trump is imposing 50 percent tariffs on $28 billion worth of Canadian exports, on top of already punitive duties on steel, aluminum, lumber, and autos. Carney is threatening to strike back “dollar-for-dollar” with tariffs of his own on US goods. Trump, in turn, has warned that any Canadian retaliation will be met in kind.

This path goes only one way: escalation. It will get a lot worse before it gets any better. It is also a war with no winners, only losers. American producers and consumers will face even higher prices from Trump’s new tariffs. So, too, will Canadians as Carney’s counter-tariffs take effect. Our producers and small- and medium-sized businesses will also take a big hit. Plant closures and job losses will mount. Trade in manufactured goods could cease altogether. It is not just the undoing of forty years of integration; it is the end of an open border.

Polls show that Canadians don’t want to make trade concessions to Trump. But their threshold for pain is about to be severely tested as escalating tariffs take a real bite out of their pocketbooks. Ottawa can provide some relief to affected businesses, but there simply isn’t enough money to go around if this trade war drags on.

Worse still, it is hard to see how it ends any time soon. Talks broke down allegedly because of a last-minute intervention by Howard Lutnick, Trump’s commerce secretary. The US withdrew some of the concessions it had earlier offered on autos. With the breakdown of trust, there is little appetite among Carney’s team to go back to the negotiating table.

The light also appears to have finally gone on in Ottawa that it cannot sign the death warrant for large parts of our manufacturing sector. Ever since that ill-fated November 2024 dinner with Prime Minister Justin Trudeau at Mar-a-Lago—where the president joked that if Canada couldn’t survive threatened 25 percent tariffs, it could become the fifty-first state—Lutnick and Trump have made it clear that they want all high-value auto manufacturing to return to the US. It is the only point of consistency in an otherwise erratic and unpredictable administration.

With the auto sector lying at the heart of the Canada–United States–Mexico Agreement, a deal on American terms, and our rejection of it, means that CUSMA is dead.

“The more important test is to accelerate the construction of a country strong enough that no single foreign government has the capacity to dictate its economic choices.”
Ann Fitz-Gerald
Director of the Balsillie School of International Affairs

The most important question after the sudden unravelling of Canada–US negotiations is not who walked away from what on Friday night but what Washington does next. The White House already has a narrative shaped around Trump’s public message that a deal with Canada was effectively in hand and that Canada was being offered favourable terms. Prime Minister Mark Carney says last-minute American demands were unfair, uneconomic, and challenged Canadian sovereignty. What we should watch is which interpretation of events shapes the next American move.

There are several possible paths, including a rapid return to negotiations, a cooling-off period, an effort to reconstruct the deal through US trade representative Jamieson Greer, or further escalation. Based on patterns emerging from the White House to date, I would prepare for the last of these.

Trump may well broaden the tariff pressure before returning to the table. But his room for manoeuvre will be conditioned by factors such as inflation and affordability in the US; political pressure ahead of the midterms; opposition from governors, senators, and businesses exposed to integrated North American supply chains; and, critically, the behaviour of other countries watching whether Canada’s refusal to accept a deal at any price produces better terms. Recent criticism from political and business leaders in US border and manufacturing states is therefore worth watching.

Mexico’s position also matters, as Washington has deliberately pursued separate negotiations with Canada and Mexico rather than treating North America as a single bargaining space. That creates opportunities to play one partner against another. Canadians should therefore watch not only what Trump asks of Mexico but whether Ottawa and Mexico City increasingly recognize a common interest in preventing the gradual bilateralization, and weakening, of North American trade.

There is also a larger strategic context. Trump’s vision of economic interdependence means that access to the American market becomes something for which allies are expected to pay politically as well as economically. That makes this trade dispute about more than tariffs and includes questions of culture, language, critical minerals, digital policy, supply management, and Canada’s freedom to trade with third countries—all touch upon sovereignty. Mark Carney’s decision to walk away should be understood in this wider frame.

The second thing to watch is Canada itself. The encouraging development of the past several days has been the degree of national solidarity around the principle that economic pain cannot automatically justify surrendering policy autonomy. Canada has extraordinary tangible assets, including energy, critical minerals, food, capital, technological capacity, and equally important intangible assets, like trusted institutions, human capital, our data, and an international reputation for reliability.

The task now is to convert these advantages into greater economic resilience, stronger internal trade, diversified markets, and higher domestic productive capacity—and to bring these intentions together in a visionary national strategy.

There will no doubt be difficult months ahead. But Canadians should resist measuring success by what happens tomorrow. The more important test is whether this episode accelerates the construction of a country strong enough that, ten years from now, no single foreign government has the capacity to dictate its economic choices.

“What comes next will require strength, focus, and discipline.”
Marco Mendicino
Former federal prosecutor, cabinet minister, and chief of staff to Prime Minister Mark Carney

Prime Minister Mark Carney was right to draw a line in the sand. There were, during the most recent round of trade negotiations, reported eleventh-hour changes to the American position that significantly threatened our auto and cultural sectors and that sought to handcuff Canadian foreign trade policy. There was simply too much of a delta between the two sides.

But the real crux of the problem was not with one specific file but instead a steady erosion of confidence that any agreement would be enforceable. A deal “signed in pencil” is indicative of a revocable transaction, not a long-term relationship, as the prime minister suggested.

The history of trade between Canada and the United States has been marked by periodic incidents of brinksmanship in an otherwise harmonious economic union that has produced unprecedented growth, jobs, and prosperity for both countries. However, it has been a tumultuous year since President Trump unleashed his “Liberation Day” tariff hikes on the world, with Canada being hit by one punitive measure after another—now culminating in 50 percent tariffs on our appliances, beer, and electronics.

What comes next will require strength, focus, and discipline. Ahead of Parliament’s return this fall, the prime minister must galvanize the country and hit the accelerator on major energy projects, defence, electrification, the removal of internal provincial barriers, and more diversified trade abroad.

This agenda was never Plan B in the event we failed to negotiate a new partnership with the US. Building Canada’s domestic economic capacity has been Plan A since the day Carney took office. Recalling his negotiating team from Washington, DC, on Friday was proof of his confidence in it.

“Canada walked into the stadium without studying the game film of the opponent.”
Carlo Dade
Director of international policy and head of the New North America Initiative at the University of Calgary’s School of Public Policy and member of the Expert Group on Canada–US Relations

Over the past year, the Trump administration imposed negotiations for new trade rules in exchange for not imposing threatened extortionate tariffs, including with countries that already had full free trade agreements with the United States. In five cases, talks came undone at or after the last minute. Yet in all but one case (Vietnam has talks still pending), negotiations were resurrected and deals finalized within weeks.

Each collapse was preceded by what Canada saw this month: demands to reset agreed trade rules to favour the US, demands for influence over future negotiations with other countries, settlement of long-standing irritants, and petty personal grievances.

None of this is new. Yet Canada, writ large, walked into the stadium without studying the game film of the opponent. Had we done so, little of what just transpired would have come as the surprise it apparently is. We would have known that the Americans would slip in an amped-up no-trade-with-China poison pill. We would have been prepared for it to arrive at the last minute, and we’d be working on contingency plans. Businesses could have readied (stockpiling goods, for instance). The media would have known, and they’d be hyperventilating less. Instead of a shock, it would have been a known worst case. We wouldn’t feel singled out. Our reaction would be calmer—we got punched when we weren’t expecting it, and we’re upset.

In this light, how Canada resolves the immediate crisis is, counterintuitively, the smaller point. The tariffs are the noise; the signal is the pattern—coercion telegraphed in pronouncements and rehearsed in other countries first. Canada has missed it twice: the fentanyl tariffs were announced sixty-eight days before they landed, and, by January, the administration had already identified Section 338 of the Tariff Act as a fallback authority should its preferred legal route be struck down, as it ultimately was.

There was also useful evidence in what and how other countries dealt with the US before it was Canada’s turn. With CUSMA now on annual reviews until 2036, paying attention to the bigger global picture of an administration rewriting global trade rules becomes even more important.

My advice to Ottawa: communicate to the public. We can’t have national unity undermined by misinformation which benefits the Americans and weakens our hand at the negotiating table. The nationalist, hit-back response—“we’re at war”—is based on emotion, not reason, and that plays into the Americans’ hand.

There is a Haitian proverb: après moun, gagne moun. After mountains come mountains. In a long, protracted conflict, preparation and good intelligence become as important as winning the tactical skirmishes.

“What’s been missing, so far, is a strategy for technology and digital goods.”
Vass Bednar
Managing director of the Canadian Shield Institute

It was a relief to hear Prime Minister Mark Carney say, “We were attacked.” The breakdown in trade negotiations will be economically painful for many Canadians, but there’s also a strange sense of clarity. We’ve sloughed off the veneer of taking the Trump administration’s antics seriously and dispensed with the optimistic language of “partnership.” And for good reason: we are dealing with a berserk bully, and we can now finally hear our leaders call it like it is.

What’s striking is where we’ve taken that diagnosis and where we haven’t. Our broad policy response has leaned hard into the old economy: energy, ore, steel, aluminum, critical minerals. That all makes sense, because we can sell that stuff to anyone. Canada genuinely “has what the world wants,” and diversifying those buyers is legit leverage.

What’s been missing, so far, is a strategy for technology and digital goods. It’s great to diversify trading partners, but what do we do about the fact that Canada remains almost entirely under the thumb of American Big Tech? Our cellphones are dominated by Apple and Google. Cloud computing is dominated by Google, Amazon, and Microsoft. Online advertising is dominated by Google and Meta. We may consume these services in Canada (and sometimes even via servers located here), but the companies controlling the technology are overwhelmingly foreign.

Without a cohesive strategy for digital sovereignty, we’ll win some room in the low-margin part of the economy and continue to concede in the high-margin part permanently—the IP, platforms, software, data, and infrastructure where economic value increasingly accumulates.

Canada already constrained a lot of ability to govern the digital realm in the CUSMA trade agreement that we originally signed with Donald Trump back in 2018. Canada agreed, among other things, not to generally require foreign firms to locate computing facilities here, to protect cross-border data flows, and not to demand access to proprietary source code as a condition of selling software in Canada. There are exceptions, but Canada typically has to design digital policy inside a trade framework built explicitly to minimize barriers facing cross-border technology companies. Not easy!

In the past eight years, Big Tech has only gotten capital-B bigger and more extractive. The business model has increasingly shifted from selling us useful products to owning digital toll booths. Amazon takes a cut from merchants trying to reach customers, Microsoft rakes in recurring rents from institutions that cannot easily leave its ecosystem, and the cloud giants make themselves expensive to switch away from just as they become the gateway to AI.

If Trump is now ripping up our trade agreements and attacking us, we should be looking at a full rollback of the CUSMA digital chapter. It’s time to reclaim the policy space we gave up, like the ability to decide when sensitive Canadian data must remain under Canadian jurisdiction or using public procurement to build domestic cloud and software capacity.

Carney’s message on digital policy should be just as clear as his message on trade: the era of a deeply integrated, lockstep relationship with the United States is over. Bye, Felicia.

“In a nutshell, they are asking us to give away the essence of sovereignty.”
Peter Jones
Professor in the Graduate School of Public and International Affairs at the University of Ottawa.

Commentary and analysis on the trade talks, which collapsed on Friday night, has largely and rightly focused on the economic aspects of the discussions. But there is another aspect lurking quietly in the background: defence and security. US trade representative Greer made passing reference to it when he catalogued the dizzying array of “benefits” Canada passed up by walking away from the table, including, “A historic economic and national security partnership.”

Just what exactly this “historic national security partnership” would have entailed has not been fully spelled out in the various leaks and statements that have made it into the public view, but there are hints.

At one point, for example, sources say that the US was insisting that Canada complete its full purchase of eighty-eight F-35 fighter jets and join the Golden Dome missile defence plan as part of this “trade” deal. Other reports spoke of an American insistence that Canada abandon its purchase of SAAB GoldenEye early warning aircraft in favour of the American E7, manufactured by Boeing; that Washington had “explicitly linked the procurement of U.S. radar technology and defense systems to potential tariff relief across major Canadian industrial sectors.” Elsewhere, we hear that the US demanded a veto over Canada’s ability to forge relationships, economic and otherwise, with third countries on things like the critical minerals which are increasingly essential to defence manufacturing and production.

What these hints, if true, point to is that the US sought to leverage its economic might to force Canada into a defence arrangement whereby Canada would have bound itself ever more tightly to the US, giving up the ability to buy equipment and deepen ties with other countries without explicit US “permission.” This is a corollary to what they supposedly demanded on economic matters, such as them having a right of refusal over where we could sell our energy and minerals, so it is not a stretch.

In a nutshell, they are asking us to give away the essence of sovereignty—the ability to decide for ourselves what weapons we buy, who we buy them from, and which countries we choose to do business with. And they are using the threat of ruinous trade penalties to coerce us into this new dependency. As an added bonus, the president’s signature on any deal, which would have enshrined these things, would have been written, as Carney says, “in pencil.”

If these various reports are true, the American view appears to be that this is no longer an alliance between equally sovereign nations. For that reason, if no other, Canada was right to walk away.