News Analysis | How Long Will the Canada US Trade War Last? Expert Interpretation of the Canada US Game and Relationship Restructuring

Canada's 15% to 50% retaliatory tariffs on US goods worth 27.6 billion Canadian dollars (approximately 20 billion US dollars) officially came into effect on the 8th. The White House announced on the same day that the United States will ban the import of Canadian alcoholic beverages and other products, and add more products to the list of tariffs. Canadian Prime Minister Carney subsequently mobilized national unity to address the trade war. The trade friction across the North American continent is rapidly escalating.

Is this round of trade friction between Canada and the United States a short-term tariff collision or a deep restructuring of the bilateral relationship? How long will it last? Jiang Wenran, the founding director of the China Research Institute at the University of Alberta, recently stated in an interview with Xinhua News Agency that this dispute is no longer just a simple tariff game, but marks a shift in Canada US relations from "deep integration" to "strategic reconstruction".

The sovereignty red line behind reciprocal countermeasures

In Jiang Wenran's view, Canada's countermeasures this time are a "precise policy calculation". The CAD 27.6 billion list released by Canada strictly matches the scale of US taxation, with three tax rates of 15%, 25%, and 50%, but excludes products closely related to the US supply chain such as seafood and energy products to prevent self harm.

This demonstrates the precise pressure characteristics of the 'surgical knife style' in modern trade wars, "Jiang Wenran said." The US has recently violated the US Mexico Canada Agreement by imposing tariffs on some Canadian goods that comply with the rules of origin of the US Mexico Canada Agreement for the first time under Section 338 of the Smoot Hawley Tariff Act, which has completely undermined the certainty of the agreement.

Jiang Wenran pointed out that the fundamental reason for the breakdown of negotiations between the two sides is not the high or low tariff rates, but rather the violation of the bottom line of national sovereignty. The US is demanding restrictions on Canada's ability to sign trade agreements with third countries, and even putting pressure on cultural protection and automotive clauses. The 'poison pill clause' in the USMCA would erode Canada's sovereignty. The US is no longer satisfied with procedural veto power, but is attempting to control Canada's trade diplomacy. This is not a tariff dispute, but a sovereignty crisis, "he once wrote.

Triple game determines' how long to play '

Jiang Wenran believes that there is a triple game framework of "high-pressure confrontation, negotiation, and long-term reconstruction" in this round of the Canada US trade war, which will determine how long the trade war will last.

Firstly, there is the game of economic resilience. Although the Canadian economy may suffer a greater impact, American consumers will bear the majority of the tariff costs. More importantly, Canada still holds the untapped strategic card of energy. The refineries in the western United States and China are highly dependent on Canadian heavy crude oil, and in the short term, Canada's supply of natural gas and electricity to the United States is also difficult to replace.

Next is the game of political fundamentals. The trade war has sparked unprecedented patriotism in Canada, and the "Buy Canadian Products" campaign has received widespread support, with various parties and provinces forming a rare united front. Meanwhile, as the November midterm elections for the US Congress approach, the damage to manufacturing and agriculture in swing states will pose direct political pressure on the Republican Party.

Once again, it is a negotiation dominance game. As the two countries extend tariff weapons to more industries such as aviation, Canada has initiated a long-term strategic transformation to reduce its dependence on the United States. Canada is accelerating the promotion of diversified diplomacy to break free from the constraints of 'non US'.

Triggering long-term reconstruction of Canada US relations

Regarding the future direction of Canada US relations, Jiang Wenran proposed three possible scenarios: first, a temporary cooling, which may become a breakthrough window before and after the US midterm elections; Secondly, there will be a long-term structural confrontation, and the annual review of the US Mexico Canada Agreement will continue to bring uncertainty. Canada will accelerate the expansion of its economic and trade relations with Europe, the Asia Pacific region, and other regions; The third is a crisis escalation, which means that the US will take action against Canada's automotive or energy industries in the future, and Canada may use its energy trump card to counter it.

Jiang Wenran quoted the theory of international political economist Robert Gilpin that when the cost of maintaining a system in a hegemonic country exceeds the benefits, it will exhibit "predatory" behavior, transferring costs to allies through price penalties, uncertainty premiums, and sovereign discounts, known as "hegemonic taxes".

Don't view this dispute as a problem that can be completely resolved in the short term, "Jiang Wenran emphasized. The paradigm shift in Canada US relations triggered by the trade war will continue for 10 years or even longer. The future North America will no longer be a stable deeply integrated economy, but a "new continent full of uncertainty premiums and forced diversification".