Perhaps the best news in American politics this week is the glimmer of hope that Congress will rise from its slumber, remember that it exists, and that the Constitution vests it with both power and responsibilities to manage the forms and levels of taxation, very much including international tariffs.
A clutch of Republican senators voted with Democrats to specifically terminate the declared “emergency” being used as a smokescreen to apply tariffs to Canadian goods. That bill isn’t expected to go anywhere in the House of Representatives, for now, but it’s also not the only bill being discussed. A pair of Senators have introduced a different bill that would amount to substantial reversal of current laws which delegate much of Congress’ tariff powers to the president.
Either of those bills might never see the light of day in the House. If they do, they might simply be defeated. Even if they prevail in both houses, they could be vetoed by the President — and then we would see whether Congress rediscovers enough of its backbone to override a Presidential veto. All of that is highly speculative, but events are moving quickly: China has announced retaliatory tariffs on American goods, the European Union is discussing countermeasures with whimsical names like “the big bazooka,” and financial markets are vaporizing trillions of dollars in wealth before traders finish their breakfast Red Bulls.
That the lower house of Congress is still securely on Trump’s side is not a physical law of nature that we can assume will last: the Republican margin in the House of Representatives is so slim that Trump had to pull his nominee for UN Ambassador lest the GOP put their majority at risk. Every single Republican representative (but fewer than half of the party’s senators) are up for re-election next year and many of them are already hiding from their constituents over the chaos and cuts of the Trump administration. We don’t need to assume that there will be a mass breakout of sanity or courage among the Republican party; a handful of self-interested incumbents trying to preserve their own careers will do.
For Canada, this is mostly good news, with a caveat we’ll get to. It’s obviously better for the country if Trump’s ability to do us economic harm is minimized or eliminated as quickly as possible. Ontario in particular needs a measure of clarity and stability for the manufacturing export sector that is deeply interwoven with counterparts south of the border. In much the same way that the point of public health measures during the pandemic was to get life back to normal as quickly as possible, counter-tariffs and other forms of economic and political pressure are intended to get back to the status quo of January 19.
The caveat, however, is that simply returning to the status quo ante isn’t strictly possible. Trump didn’t create Canada’s economic vulnerability to tariffs, but he has certainly revealed it — and there’s no guarantee that future U.S. administrations are going to forget it. A quick return to economic normalcy would be welcome, but it would also likely shut down any debates Canada might have about how we reorient our economy away from dependence on the American market as our customer of first, last, and only resort.
It's not that we haven’t been in this position before. When the U.S. declined to exempt Canada from the global McKinley tariffs in the 1890s, Canada responded by implementing an “Imperial preference” for British goods and lowered tariffs. Canadian exporters found new customers across the Atlantic instead of across the border. But the circumstances of the 1890s really are quite different from where we find ourselves today: Canada had already been pursuing a high-tariff “National Policy” under a string of mostly-Conservative prime ministers starting with John A. Macdonald, and it was relatively straightforward for a primarily agricultural economy to find buyers for its exports. The problems we face in 2025 are radically different.
The policies that could substantively reorient Canadian trade away from our reliance on the Americans would be painful, and they would also need to be in place for years to show results. Politically this might even be possible: a new poll from Angus Reid suggests 61 per cent of Canadians are willing to “play hardball” with America even in the face of a recession. But we can’t just hand-wave away the real costs that would impose.
Between the hope of a quick ending to this trade war or a long, grinding struggle to preserve our national autonomy there’s the basket of policy ideas that would have been fine to pursue yesterday, or last week, or last year, and might as well move forward now: reducing interprovincial trade barriers, getting serious about tackling Canada’s housing shortage, and building more east-west infrastructure. They might not exactly stir the soul of national sentiment, but they’ll do for now.
If Trump’s grip on U.S. trade policy isn’t weakened in coming months we’ll have some much, much harder decisions to make. If the days of an integrated auto sector are over, do we abandon it altogether, a hard choice Australia made in the last decade? Or do we perhaps try and engineer a restructuring with more European and Asian automakers? Either choice comes with enormous costs.
It’s relatively convenient in that sense that both Ontario and Canada will have governments in place that likely have solid four-year mandates ahead of them and will have the political capital to make some big and potentially contentious moves. But it would be better for everyone if America sorts its mess out before any of that is necessary.
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