Laura Brett/Sipa USA via AP Images
Trump has not made any specific demands for what he wants out of Canada, except that he wants to annex it.
One of the factors that worsened the Great Depression was the international retreat from foreign trade. As the global economy collapsed, countries attempted to protect their home markets with tariffs, led by the United States, whose Smoot-Hawley Tariff, signed into law by President Hoover in 1930, touched off a massive trade war. Though this was not the principal cause of the crisis, economists generally agree it made things worse. Instead of protecting home markets, the trade war merely choked off a source of foreign demand for American-made goods and services, shrinking output and causing even more unemployment.
Donald Trump is doing his Hooverian predecessor one better. His on-again, off-again trade war on Mexico and Canada got real last week with the imposition of 25 percent tariffs on most goods crossing the border. Canada retaliated in kind, and the province of Ontario, whose government owns many large hydroelectric dams, imposed a 25 percent tariff on electricity going to the American Northeast.
Things heated up further on Tuesday when Trump announced, as usual by way of an incoherent wall of text posted on Truth Social, that the tariff on Canadian steel and aluminum would increase to 50 percent in retaliation. Ontario Premier Doug Ford had previously threatened to cut off power to the U.S. entirely if Trump kept escalating.
Then, as I was writing this article, Trump reportedly reconsidered his escalation. So far, however, the Canadian national government, for entirely understandable reasons, has said it will keep its tariffs up until Trump stops with the syphilitic emperor routine.
Unlike Smoot-Hawley, the Trump tariffs, even if they don’t escalate continually, might single-handedly cause a severe recession in America or even the world.
It is (yet again) almost impossible to describe how deranged Trump’s behavior is. Back in the 1930s, hundreds of economists did warn Hoover he was making a mistake. But the Depression was an unprecedented crisis, and the economics profession had seriously discredited itself by failing to predict the crash or come up with a consensus solution for fixing it. (John Maynard Keynes’s magnum opus The General Theory of Employment, Interest, and Money would not be published until 1936.)
Today, by contrast, America is not in an economic crisis. On the contrary, thanks to Bidenomics, unemployment is low, investment is high, and growth is humming along at a healthy clip—or at least they all were, as economic indicators are nose-diving.
Moreover, great swaths of the American economy have been built around access to the Canadian market. The U.S. gets about 30 percent of its lumber, 11 percent of its steel, 28 percent of its aluminum, 20 percent of its domestic oil supply, and 27 percent of its uranium ore from Canada, along with innumerable other items. Total trade across the border, including both Canadian imports and American exports to Canada threatened by retaliatory tariffs, comes to well over $900 billion.
The American auto industry in particular is centered around a vast complex of parts suppliers, factories, and tooling and assembly facilities surrounding the Great Lakes region, plus parts of Mexico. Various bits of cars can cross the border a half-dozen times before they are placed into a finished vehicle. And that situation—along with the rest of the elaborate supply links between the U.S. and Canada—exists because of trade deals that promised a secure policy baseline, the most recent of which was negotiated by Trump himself during his first term. He has thus far exempted the auto industry from tariffs, but threatened to add them in his most recent post.
The way Trump has treated these tariffs—threatening to impose them, pausing for a month at the last second, imposing them again, and now doubling them out of the blue, only to backtrack within hours—only reinforces the sense of chaos. Businessmen often complain that progressive policy changes will lead to the dread “uncertainty,” undermining investment. Ninety-five percent of the time this is a dishonest pretext covering a dislike of taxation and regulation as such, but it can be a problem, and Trump is creating about the worst uncertainty imaginable.
At least in the 1930s, the tariffs were clearly laid out in a permanent schedule, giving businesses some clarity and ability to plan. Trump, by contrast, has not only broken his own promises for no reason, but also is constantly changing his demands, usually at the last second. Even if Trump eventually backs down and ends his tariff war entirely, you’d be a fool to be inking some kind of business deal dependent in any way on trade with Canada at this time. Such an unstable and erratic person might change his mind again with no warning.
Finally, Trump has not made any specific demands for what he wants out of Canada, except that he wants to annex it. That is an utter nonstarter for Canadians, and so there appears to be no way out of the standoff so long as Trump remains in office and keeps being Trump. On our current course, sectors heavily dependent on trade, like construction, agriculture, and manufacturing, will be hurt, as will others dependent on the spending of those sectors. It won’t take much of that to touch off a recession, particularly given the brutal austerity being illegally imposed by shadow president Elon Musk.
The voters who swung to Trump in 2024 clearly wanted a return to the economy of 2019. Instead, they got a government out of a dark chapter of the Middle Ages—a senile, power-mad maniac, with an irrational fixation on a very stupid idea, bent on imposing it on his kingdom regardless of law or consequences.
