Canada Frustrates U.S. Tariff Policy Like No Other Nation

US Secretary Lutnick launched another attack on Canada’s bilateral trade relationship, citing that Canada was deliberating “slowing down" trade talks with the US, as the “worst strategy I’ve ever heard” and “they suck”. Canadians are no strangers to the long list of President Trump’s complaints, threats and  false accusations when referring to the important bilateral relationship.  While tariffs head the list of Trump's displeasures, others include illegal cross-border migrations and the outlandish claim that Canada become the 51st state. Canadians are used to these threats, and no longer take them seriously. Many think the “emperor wears no clothes”.

Canadians do take seriously, however, the need to divert some trade away from the US to more reliable trading partners over the long term. Given there are decades- long trading patterns, it is not easy to shift suddenly in this highly competitive trading environment. Nonetheless, the Federal government with the aid of the Provincial governments have made a start. For example:

• In 2025 The US accounts for 71% of Canadian exports Canadian, down from 75% the previous year; similarly,

• The share of US imports coming from  Canada has also dropped from 62% to 59%;

• Most notably,  Canadian travel to the US has dropped by a significant 21%, or 4 million visitors in 2025 compared to 2024; states as far as Arizona and Florida have experienced a loss of tourist revenues;

•  Estimated trade loss is costing the US more than $1 billion a month in goods alone, and much more when services are included;

• The Ontario Liquor Control Board, the single largest importer of spirits in the world, refused to stock US spirits, resulting in 80% loss  in California wine exports and 60% drop in  Kentucky bourbon exports; and

• States bordering Canada have experienced a large fall off in cross-border trade in agricultural & industrial products and tourism.

Clearly,  those American interests  that are adversely affected by the drop off in bilateral flows have a lot to lose, while the US  and  Canada play hardball. 

Polling results show that Canadian consumers are very supportive of the Federal and Provincial trade tactics. Canadians no longer feel that tariffs are an existential threat, as they once  believed  in the early days when Trump announced the “day of liberation” in April 2025 . Even those Canadian export sectors facing very high tariffs, such as steel, aluminum and lumber, have adjusted to the new state of affairs and continue to do business with the US, albeit at a reduced level.  Moreover, the  “slow talk" that Lutnick finds “sucks” is precisely the strategy that seems to work well for Canadians and seems to  be a thorn in the side of the Secretary.  

The Canada-US-Mexico Agreement (CUSMA) is due for a mandatory review in 2026. All parties are starting to rev up for those talks. Meanwhile, Canada and Mexico are managing to conduct business and adjust trade relations without a sword of Damocles over their heads, as Lutnick believes.