To Be Tariff’ed, or Not to Be Tariff’ed: The Second Round

The New-ish Mexican President showing she knows the Art of Negotiation.

The United States’ upcoming tariff regime was planned to take effect on Tuesday Feb 4^th 2025 against traditional NAFTA partners Canada and Mexico, with varying narratives on both sides, many drawbacks, and some breakthroughs. Whether or not either economy would weather a rapid 25% hit remains to be seen, but when taking past measures, it is possible.

Canada’s first major trade agreement came in the 1960s during the auto sector boom in the industrialised border States along the Canada-US border. The Auto Pact linked Canadian manufacturers to the largest auto industry in the world, tying US auto production to Canada as a benefit to Canada’s economy. This agreement ensured a prosperous and peaceful border region between the two countries. While the United States could have kept many of those jobs in the United States, extending economic opportunity across North America made both nations stronger and safer. Previous to the Auto Pact, Canada did have a robust economy that was subject to tariffs, and when the US, Mexico, and Canada entered the NAFTA agreement in the 1990s, the Auto Pact agreements were included in the NAFTA Agreement. NAFTA sought to include many other sectors, sectors that were tariffed before 1994, but sectors that did operate in a profitable position when tariffed pre-NAFTA.

On Feb 3^rd, a discussion between the US and Mexican Presidents enabled a one month pause in Mexico’s tariff threat. While doubted by many, the core of President Trump’s tariff regime is to put pressure on other policies, in this case encouraging the reduction of narcotics trafficking from the Southern and Northern borders into the United States. The solutions do not seem to concern trade issues as much as safety and security issue, issues that were suppose to make North America safer under agreements like NAFTA and the USMCA. In their statements, the United States and Mexican Presidents paused the tariffs in acknowledging the Fentanyl crisis, securing armed military on the border region to address it and cracking down on weapons exports. Both issues help promote safety in both countries, and further agreements should be sought between the US and Mexico, not for the political benefit of each leader, but to the benefit of citizens in both countries.

Canada seems to have taken a different track in dealing with the United States, one that looks more cynical than productive. Upon the rally of tariff threats, the very unpopular Governing party in Canada shut down their Parliament and engaged in a new leadership race only for their party, while keeping the same Prime Minister active and making very consequential decisions after he decided to quit. This is uncommon in the British style Parliamentary System as with no popular support, a Government is suppose to resign and have an election. With this absurd action, the Government has locked decision making powers and the ability to address the tariffs out of the hands of Canadians, and into the palms of an unpopular and unelected cabal of the unwanted.

The weakness of Canada over the last ten years and the immediate collapse of a normal Government in the midst of tariff talks has done more to focus positive attention on the Governing party than to actually avoid tariffs. Actions taken by Canada before the US inauguration came off as dismissive or outright dangerous. The narrative that Canada and known issues within the country could never be a threat to the US does nothing to help Team Canada, but does a lot to shadow real border and safety issues between the two countries that hurt both Americans and Canadians. Inside Canada, one would be hard pressed to find a news story discussing the made in Canada Fentanyl crisis, organised crime and foreign influence, despite it being a major issue tied in with many border communities. If you are unable to acknowledge the problem, you are ill equipped to address it, and the Team Canada approach will not be able to negotiate its way out of tariffs if they will only focus on trade and not safety.

Canadians will not be able to have the ability to push back on the US, or any other country, if they are unable to recognise and address the narcotic and terror threats in their own communities. Team Canada cannot exist simply due to a tariff threat, as fighting for your country when the roots have been rotted by international crime will just degrade Canadian communities. The value of strength should be the common lesson here between all USMCA partners, but it cannot be learned from a position of systemic weakness.