Just over a year ago, British Prime Minister Keir Starmer was quite chuffed.
After Donald Trump announced punishing tariffs on goods from America’s major trading partners, Starmer became the first to strike a deal with the U.S. president. In exchange for substantial new access to the U.K. market for American agricultural exports, Trump agreed to lower tariffs on British goods to 10 per cent, down from 25 per cent.
At the time, some Canadian commentators praised Starmer’s decisiveness in protecting the U.K. economy. In contrast, Canada’s approach — a blend of retaliation and protracted negotiation — had achieved nothing but pain for our most targeted industries.
A year later, Canada still has no deal with Trump. Indeed, the U.S. refusal to extend the Canada-U.S.-Mexico Agreement (CUSMA) to 2042 has left the deal in place but in the purgatory of annual renewals, creating prolonged uncertainty when business craves just the opposite.
With hindsight, however, Starmer’s gambit looks even worse.
Peace with Trump didn’t last. The president still wields tariff threats whenever the U.K. displeases him, which is often, such as when it opposed U.S. annexation of Greenland and military action in Iran, and imposed a digital services tax on American tech giants. But what about the U.S.-U.K. trade deal? It “can always be changed,” Trump declared.
Starmer — now on his way out of office — would have done well to heed Winston Churchill’s warning that appeasing an aggressor is like feeding a crocodile, hoping it will eat you last.
For Canadian leaders and trade negotiators, there are other lessons:
Understand the speed limit
With Trump, the fastest deal is likely the worst deal. If anything, high inflation, weak job numbers and his growing unpopularity ahead of November’s midterm elections may weaken his hand further. This may create an opportunity for a deal to mitigate Trump’s sectoral tariffs. Until then, governments will need to continue short-term supports for our affected industries.
Use pencils, not sharpies
Negotiators sometimes refer to Trump’s preferred trade agreements as “sharpie deals”: they’re short documents, signed for the cameras, lacking detail, enforcement provisions or dispute resolution mechanisms — which means they’re easily revoked, changed or ignored. “Pencil deals,” in contrast, are like CUSMA: finely crafted, and far more enforceable and resistant to unilateral change. When negotiating with a partner whose word cannot be trusted, that is what Canada needs.
Make no unilateral concessions
Last year, Prime Minister Mark Carney rescinded Canada’s digital services tax as a goodwill gesture — and got nothing in return. Now, the U.S. ambassador is pressing Canadian provinces to put U.S. liquor back on store shelves — another unilateral concession. When concessions are one-way, Canada’s answer must be ‘no way.’
Open multiple fronts
Recently, we have heard a rising chorus of U.S. business and bipartisan political leaders in favour of CUSMA. In past trade negotiations, Canadians have enlisted powerful allies by leveraging their abundant relationships across America. Progress will not come from Canadians persuading Americans; it will come from Americans persuading Americans.
Negotiate from a position of strength
With slow productivity growth and an overreliance on one market, Canada was woefully unprepared for this trade war. In the last 18 months, provincial and federal leaders have worked to lower business costs, improve our investment climate, reduce barriers to trade within Canada, and build infrastructure to stimulate the economy and diversify our global trading relationships. The early results are encouraging: outbound trade with other markets is growing, as is inbound investment.
The unavoidable reality is that even as Canada becomes a stronger, more diversified trading nation, we will always need the U.S.
It’s equally true, however, that the U.S. needs Canada: for the energy that fuels their cars and heats their homes; the fertilizer that grows their crops; the lumber to build their houses; and the metals and minerals essential to their defence.
Canadians are also Americans’ biggest customers, with some eight million U.S. jobs relying directly or indirectly on trade and investment with Canada.
That means Canada can neither give in nor give up.
As Trump grows weaker — and likely more volatile — our negotiators must be both patient and persistent. And since Trump routinely breaks his own agreements, our businesses must continue to invest in productivity and diversify their trade and supply chains.
We must remember that the Canada-U.S. relationship will long outlast Trump.
Most Americans want stable, secure trade with Canada. That makes this a relationship worth preserving.
