Workers Stand to Lose the Most in Trump’s New Tariff War on Canada

The U.S.-Canada trade war is deepening after talks collapsed without a deal on Friday. Canadian Prime Minister Mark Carney accused the Trump administration of issuing demands that would compromise Canada’s sovereignty and undermine key industries. On Saturday, the United States slapped 50% tariffs on around $20 billion worth of imports from Canada, and Carney announced retaliatory tariffs on $20 billion of U.S. products set to go into effect on September 8.

“Canadians are sick of this,” says Avi Lewis, leader of Canada’s progressive New Democratic Party. He says that while the Liberal government has correctly identified voters’ anger, its policies still favor international investors and the fossil fuel industry rather than truly “Trump-proofing” the economy.

We also speak with trade expert Lori Wallach, who says the U.S.-Canada trade war is pitting Trump’s vision of “oligarchic trade grift” against a dead neoliberal consensus represented by Carney. The two countries have balanced trade, and Wallach says the United States is being far more lenient with China despite Beijing’s much more serious threat to the U.S. and wider global economy through its “beggar-thy-neighbor” policies.

TRANSCRIPT

This is a rush transcript. Copy may not be in its final form.

ANJALI KAMAT: The U.S.-Canada trade war is deepening after talks collapsed without a deal on Friday. Canadian Prime Minister Mark Carney accused the Trump administration of issuing demands that would compromise Canada’s sovereignty and undermine key industries. On Saturday, Trump slapped 50% tariffs on around $20 billion worth of imports from Canada. Carney then announced retaliatory tariffs on $20 billion of U.S. products beginning September 8th. Carney spoke on Saturday.

PRIME MINISTER MARK CARNEY: We’ve been under no illusions. We recognized from the start that America has changed. Early last year, in this room, I observed that the decadeslong process of steadily increasing integration between our economies was over. Our government understood before many that America would transform all of its commercial relationships, that it would put a series of tariffs on its closest allies and use economic integration as a weapon. We recognized that sometimes its signature was written in pencil. …

The gap between partnership and competitor, unfortunately, has remained too wide in recent days. So, last evening, I instructed our negotiators to return to Ottawa. We cannot accept what they’ve offered, and we will not give what they’ve asked.

ANJALI KAMAT: Canadian Prime Minister Mark Carney took questions from reporters after his address.

REPORTER: Why does it feel like today Mark Carney is going to war, trade war, the tone?

PRIME MINISTER MARK CARNEY: Because we were attacked. Like, you’re at war when you get attacked. We got attacked. The U.S. put 50%. We waited until the United States decided to actually implement these so-called 338 tariffs. That’s fine.

ANJALI KAMAT: President Trump responded online, writing, quote, “Canada wants the benefits of being a State, without being one!!! They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!” end-quote.

U.S. Transportation Secretary Sean Duffy appeared Sunday on Fox News.

TRANSPORTATION SECRETARY SEAN DUFFY: We’re great trading partners, right? But — but — but Canada gets the benefit of trading with the U.S. more — way more than the U.S. gets the benefit of trading with Canada. It’s a country that doesn’t have a military. …

We want fairness for the American worker, and some of our best friends are — are the worst offenders, that treat us the worst. And the fact that we provide their security for them and they take advantage of us, I think President Trump was the first one to go, “You know what? That’s not the kind of relationship that friends should have.” And so, the president’s calling them out. I think you’re going to see Mark Carney come to the table very, very quickly, because it’s going to be devastating for his country.

ANJALI KAMAT: On Sunday, the editorial page of The Wall Street Journal ran an editorial headlined “The Dumbest Trade War Revisited: Trump’s decision to escalate a tariff brawl with Canada makes no economic or political sense.”

The tariffs come just 10 weeks before the midterms. Economists predict battleground states, including Maine, Michigan, Ohio and Alaska, could face disproportionate economic pain from the tariffs.

For more on this, we’re joined now by two guests. Lori Wallach is director of the Rethink Trade program at the American Economic Liberties Project and founder and former director of Public Citizen’s Global Trade Watch. Her recent piece for Foreign Affairs is headlined “The Right Way to Balance Trade: What Comes After the Neoliberal Order.” She’s joining us in Wisconsin. And in Toronto is Avi Lewis, the leader of Canada’s New Democratic Party, the NDP. He’s also a longtime Canadian journalist, documentary filmmaker and activist.

We welcome you both to Democracy Now! Avi Lewis, let’s begin with you. Talk about what these talks were supposed to be about and why they broke down.

AVI LEWIS: Well, good morning, Anjali. Hello, Lori. It’s great to be back on Democracy Now!

This has followed a sickeningly familiar pattern with Trump threatening and setting a deadline for devastating — I think the Washington — The Wall Street Journal — rarely agree with The Wall Street Journal, but this is incredibly dumb. It’s also incredibly damaging and dangerous. It’s going to hurt Canadian workers. It’s going to hurt American workers. It’s completely unnecessary. And at the last minute, after negotiations are going on under the threat of these massive tariffs, suddenly Howard Lutnick arrives with a whole set of new demands at the 11th hour. This is the pattern, and we’ve seen it over and over again.

In this case, Prime Minister Carney read the room correctly. Canadians are sick of this. We’re already under punishing tariffs in many of our most important industrial sectors, from automaking to forestry to steel and others, and we simply are not in the mood to grant more concessions. And so the prime minister walked away from the table.

But the truth is, and the wider context of this is, that, unfortunately, Canada has already made a whole bunch of unilateral concessions, and so we’re in a weakened position just in the context of the short-term trade deal. The prime minister gave up the digital services tax without anything to compensate it. That’s seven — modest for Big Tech. That’s a modest tax of about $7 billion a year. It was the only real solid tax we had on the Big Tech billionaire — I guess we have to say “trillionaire” — class behind Trump. And that was at the beginning of this process, something like a year ago.

We’re also — while Canadians are united in this feeling that we’ve gone — we’ve given enough to Trump’s demands, and we can’t concede further without securing protection for our own industries and economy, we’re not all in this together. We have to remember, and Lori and I have been fighting free trade deals between Canada and the United States since the 1980s, because the integration of the corporate classes of our two economies has been achieved at the expense of working-class people in both of our countries, and to the incredible, staggering enrichment of the wealthiest people and corporations in our economy. We are not all in this together when the six big Canadian banks made $70 billion last year. They are not directly affected by tariffs, and they continue to make higher and higher profits every single year. We are not all in this together when the oil and gas sector in Canada, which is majority owned by U.S. corporations, made — is on track to make up to $150 billion in wartime profits this year alone because of the immoral, senseless, illegal attack on Iran by the United States and Israel, $150 billion in profits for this industry that is not affected, that has been spared all of the tariffs, because, of course, the United States needs a huge amount of Canadian oil each and every day. So, we are united as Canadians in rejecting more unilateral concessions; we are not all in this together in terms of who’s going to be hurt.

And we need to build an independent Canadian economy. Mark Carney has had well over a year to get started on that project. He has announced big plans, like buying the oil industry a new pipeline for $40, $50, $60 billion of public money, like major projects that suspend Indigenous rights and environmental protections in favor of largely foreign corporations coming in and buying more of our resources. He’s having an investment summit on September 12th in Toronto to invite BlackRock and Blackstone and JPMorgan. And the prime minister has mused about selling our airports and our ports and privatizing more of our economy to the benefit of foreign investors.

So, we need a made-in-Canada plan to develop our autonomy and double down on the things that unite us as Canadians, like our embattled healthcare system, which is also being privatized these days. But we’re not on track to do that. This is a fork-in-the-road moment for Canada, and we have a completely different progressive vision to offer Canadians, that would help Canadian workers, defend Canadian workers in this crisis, and also get back to work building a truly independent Canadian economy, that would benefit American workers, as well. As we’ll see in this next period, everybody is going to be hurt by this.

ANJALI KAMAT: Avi, these new tariffs affect about 5% of the goods, of Canadian goods that are imported by the U.S. They target about $20 billion worth of Canadian goods. Who is actually hurt by these tariffs? Who are the workers, what are the industries in Canada that would be hurt by these tariffs?

AVI LEWIS: Yeah, I mean, this is — we already have tariffs on the automobile sector of 25%, a major integrated sector between Canada, the U.S. and Mexico. And this deal was only to achieve a lowering of 25% to 15% on auto tariffs. That makes the auto industry in Canada uncompetitive, which is why Lana Payne, the head of Unifor, the largest private-sector union in Canada, said months and months ago that no deal is better than a bad deal. But this is an extension beyond steel and forestry and auto to tariff a lot of consumer goods, everything from furniture makers to apparel to rubber and plastic products. This would bite deeper into the Canadian economy across the economy, a lot of smaller and medium-sized businesses in every region of the country.

But again, it’s not all equally apportioned. It’s always certain sectors and certain regions which are hurt the worst. In this case, my province of British Columbia would be most affected by this latest round of tariffs. Ontario and Quebec, the largest economic provinces in our country, would also be severely, severely damaged by this. And don’t forget that it’s Americans who pay these tariffs, and it’s American workers who are also affected. It’s the cost-of-living emergency, in Canada and the United States, where food prices, where rent, and the cost of putting a roof over your head, and all of the costs of living are going up and up and up in a period where people are really suffering. So, you know, there are corporate players who will make out fine, but it is the working-class people of our continent who are going to be hurt. This may not be the huge proportion of Canadian exports to the United States, in one of the biggest trading relationships on planet Earth between our two countries, but this is a deepening of an attack on Canada and on the American working class, which has been going on since Trump was elected for the second time.

And here in Canada, we need to do something big about it. We’ve got plenty of fantastic proposals about how we could actually protect ourselves. In the short term, we have an unemployment insurance program in Canada that only covers one out of three workers that pay into it, and it only gives you a little more than half of your previous wage or salary when you get laid off. It’s hard to qualify for. It takes too long to kick in. We need immediate reforms to our employment insurance system to cover people with more support faster and to cover way more workers in our economy. Those are sort of the short-term things.

We need emergency assistance for the sectors that are worst hit by this — again, manufacturing, wood products, apparel and furniture and others. But we also need a bigger plan to actually Trump-proof the Canadian economy. We could do things — when we are making major investments of public dollars in oil pipelines, we could use that money instead to build an east-west electricity grid, double down on renewable energy, which is energy independence forever, because the inputs for renewable energy are always free, unlike oil and gas and coal. We could build an east-west electricity grid to trade renewable energy across our country with battery storage and the cheapest-installed energy, solar and wind, on planet Earth today. The world is moving away from fossil fuels in this period, and Canada is being left behind because we are — continue, under the Mark Carney government, to tie our fate to massive military expenditures, massive fossil fuel investments, and all-in on AI, which, despite the prime minister’s excellent words about Canadian independence from the United States, mirror the Trump agenda. And unfortunately, under the surface, we’re seeing an expansion of decades of integration of the corporate class between Canada and the United States. That is not a plan to make anybody safe.

ANJALI KAMAT: I want to bring Lori Wallach into the conversation, director of the Rethink Trade program at the American Economic Liberties Project and founder and former director of Public Citizen’s Global Trade Watch. Lori, building off of what Avi was talking about in terms of U.S. consumers who are hurting, I just wanted to read a couple quotes from politicians from border states. Here we’ve got Minnesota Senator Amy Klobuchar saying on X, “Canada is Minnesota’s #1 trading partner. Minnesotans are paying for Trump’s chaos.” Republican Senator of Maine Susan Collins said the new tariffs would, quote, “increase costs for Maine families, as most businesses will have no choice but to pass on the tariffs to their customers through higher prices.” Your response to what’s happened with the collapse of the trade talks?

LORI WALLACH: So, it is the case that this situation is — again, I don’t typically agree with The Wall Street Journal, but — perhaps the most stupid trade fight in history, in that, yes, if you buy — if you are a purchaser in the U.S. of some of these goods — for instance, hockey sticks, but not pucks — I mean, go figure — you will see higher prices.

But let’s step back at the whole situation. And Avi’s exactly right. You have at this moment this fight between two visions, neither of which are good for working people or for the environment. There is a way to do trade that benefits the majority of people, small businesses, farmers. And in Trump, you have an oligarch-first trade policy. He got elected saying he’d help working people. In fact, what he’s done is make exceptions in his tariffs. Whatever you think about tariffs at this point, 55% of imports into the U.S. have been excluded from tariffs, because Trump gives free entry for his buddies in Big Tech, in chemicals, etc. So, we have a situation where between the disruption of supply chains like the U.S. and Canada, which have been not under the right rules, but united in a way that literally it’s disruptive to U.S. manufacturing when there’s disruption in Canadian manufacturing — you have a situation where the U.S. now is down 75,000 manufacturing jobs since Trump came down, came back to office. We have 30% decrease right now in factory construction since Trump came back the second time, because the chaos, the tariff chaos and malpractice, is so severe.

But the problem is, in Mark Carney, there is sort of the high priest of neoliberalism, a guy who has been going around the world trying to sell the Trans-Pacific Partnership, NAFTA on steroids, extra goodies for Big Tech and for Big Pharma, ways to attack Canada’s wonderful pharmaceutical pricing system that don’t even exist in the old NAFTA, as the replacement for the World Trade Organization, as if that’s not bad enough. And there is something that is neither Trump’s oligarchic trade grift nor the neoliberalism that Carney has in mind, that actually could harness the benefits of trade, but neither of these guys is thinking about that. Rather, they’re having this kind of personal fight, and it’s political. So, Trump can’t bear the thought someone is standing up to him and not just steamrolling him. Folks in Canada are getting tariffed because they had the temerity to stand up and put tariffs in retaliation to Trump unilaterally tariffing them. That is the basis for these tariffs. And the notion that, politically — the U.S., Canada and Mexico right now have the only duty-free trade at all under Trump two. Canada and Mexico still have majority duty-free access. Underlying all of this is: Will we renegotiate, in a way that works for people and the planet. the NAFTA replacement, the U.S.-Mexico-Canada Agreement? And there, I think, are people with a good vision — Avi, for instance; in the U.S., many Democrats in Congress — of how you could fix that agreement and have a lift-up agreement. But instead, with this fight, we’re just heading in the worst direction possible.

ANJALI KAMAT: And, Lori, how have Trump’s economic policies vis-à-vis Canada differed from those, say, with China? And this especially at a time where we’re coming up on what the Trump administration is calling “economic D-Day,” threatening to sanction any country trading with Iran?

LORI WALLACH: So, this is part of the lunacy of the situation. The United States not only has many decades of putting the economies together, as Avi said, not on behalf of working people, but, for instance, the aerospace industry, literally, if you hit tariffs on metal products that are part of the aerospace industry, which is happening, you hurt jobs in the U.S., instead of thinking about how do we make this smoother. And the U.S. and Canada have relatively balanced trade. If you take the crude oil sent to the U.S. to be processed and employ U.S. workers out of the formula, U.S. and Canada have balanced trade. And then tariffs go to 50%, and some products are higher, lower. But targeting Canada is the big problem, when it’s not. Rather, it’s a partner and has balanced trade, versus in China.

China is the source of a ginormous trade deficit with the U.S., but not exclusively, with the world. And it’s because of particular policies that Canada is not implementing, that China uses regularly, often called “beggar thy neighbor,” where you take policies suppressing wages, no independent unions, or no safety net, social safety net. So, you basically suppress consumption. People save a ton, because they’re responsible for everything on their own. They have no support from the government. Or you subsidize at enormous rates. All of those interventions mean China is exporting an enormous amount. And it’s not just hitting the U.S. At this point, countries that were the emerging trade countries, countries like Mexico, like India, like Brazil, are going into trade deficits and are being deindustrialized because of this behavior in China. Trump has cut the tariffs. He feels some friendship with the authoritarian leader of China. And so, he and Premier Xi have had many a happy meeting where they cut tariffs with China, the cause of the trade deficit. And here we have 50% tariffs on Canada. It’s — it is, I would say, something that is more like middle school or childhood playground battles between Carney and Trump, as compared to anything that makes economic sense or geopolitical sense.