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International trade talks used to rest on an implicit assumption: that freer trade was the name of the game.

Negotiators haggled over which tariffs to lower and which trade barriers to remove or reduce; that’s why they were in the room. The unspoken shared belief was that freer trade, particularly between advanced economies like Canada and the United States, was a win-win proposition.

Since the Great Depression, the arc of trade history has bent toward lower tariffs and freer trade.

Not any more.

Under President Donald Trump, Washington is chaotically dismantling what it once built.

If your mind is still in the old world, then the past year and a half of attacks on Canada – the latest being the announcement of pending 50-per-cent tariffs on some Canadian goods – is hard to understand. So are Thursday’s sweeping new tariffs on all major U.S. trading partners, including Canada, on the absurd pretext of combating forced labour.

Trump imposes new tariffs on dozens of countries, including Canada

But Mr. Trump doesn’t share the post-Second World War assumptions about the mutual benefits of trade. Recognize that, and things become clearer. He wants to build trade walls, not tear them down.

We don’t know a lot about what’s gone on, or what’s going on, in trade talks between Washington and Ottawa. But a year and a half of statements from Mr. Trump and his chief water carriers on the file leaves little doubt that the U.S. objective is not fewer trade barriers, but the opposite.

Their goal is not a United States-Mexico-Canada Agreement that frees up more trade, but a USMCA that imposes new trade restrictions – on us. Not lower tariffs all around, but instead higher U.S. tariffs.

Not shared industries with production chains snaking back and forth and back again across an invisible border, as in the auto industry, but a thicker border, forcing industries to relocate to the U.S.

And no more seeking mutual trade benefits, but instead aiming for U.S. trade gains paid for with Canadian trade losses.

Mr. Trump’s brain is as disorganized as a library with a scrambled card catalogue, and his unpredictable impulses mean that the day-to-day movements of U.S. trade policy are driven by whim, caprice, ego and what was on Fox News that morning. There’s a lot of noise.

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But beneath it, Mr. Trump clearly feels, to the marrow of his bones, that free trade is for suckers.

He distrusts allies, seeks supplicants and mocks the notion of win-win arrangements. He believes in win-lose, and his bottomless ego requires it.

This is our reality now. The world as it is, not as we wish it to be.

So what does Canada do?

Push back, but don’t overreact

The Trump administration is trying to rewrite trade rules, while ignoring trade treaties it signed. The attempt faces U.S. opposition from Congress, the courts and the public.

At least one house of Congress is likely to pass to the control of the Democratic Party after this fall’s midterm elections. Mr. Trump’s tariff actions, which are unpopular with most voters, tend to make that more likely.

These are Canadian points of leverage.

Editorial: A schoolyard tip for fighting tariff bullying

Canada isn’t big enough to affect the U.S. macroeconomy. But because we are the world’s biggest market for U.S. exports, we can make a lot of noise and have a real microeconomic impact.

For example, Canadians are widely boycotting U.S. liquor, and most provinces have taken American booze off the shelves. That has no impact on the Canadian economy, while delivering pain to U.S. producers, getting the attention of U.S. politicians in states such as Kentucky and generating U.S. news coverage. It forces Americans to notice the cost of the irrational trade war against Canada.

The abrupt drop in Canadian travel to the U.S. has similarly caught the attention of chambers of commerce, politicians and hospitality industry workers from Maine to Miami to Las Vegas.

Trump is not forever. Time is on our side

Control of Congress could flip against Mr. Trump in a few months. Unless he transforms the U.S. into a postdemocratic state, he’s already a lame duck president who has to leave office in early 2029.

Canada need be in no hurry to volunteer to surrender the status quo. Ragging the puck on the penalty kill is always a sound strategy.

If Mr. Trump is determined to demolish USMCA? He can and he will. Major changes to the trading rules may be imposed on us, but we don’t have to pre-emptively agree to them.

The new agreement on the Gordie Howe International Bridge looks like a case of Ottawa making a fast concession, Mr. Trump pocketing it, and then hitting us with new tariffs and new demands. There’s an argument to be made that the Carney government’s emissaries should have politely told the White House, thanks, but we’re fine with the bridge that we paid for remaining closed indefinitely.

‘Everything’s on the table’ if U.S. imposes 50% tariffs, Carney says

The new agreement says that for the next 15 years, half of net toll revenues will go into a U.S. economic development fund run by the Trump administration. That means the repayment period on the debt Canada incurred to build the bridge just got longer.

At first blush, it looks like Canada really ate it.

However, considered more closely, it may be the kind of financial engineering that keeps business humming at your local car dealer. Can’t handle financing a new vehicle on a 48-month term? Look at how much more affordable things are over 84 months!

The customer drives away happy with his new Kia Sportage – and the dealer turns a profit. This may be what our Government by Goldman just did.

I’m not saying that it’s ideal, only that the agreement may not be as bad as it first appears, if the finances are considered over a span of decades.

In any case, the bridge agreement-in-principle – like Mr. Trump’s trade agreements in principle with other countries, or his agreement in principle with Iran, or the USMCA itself – is inherently uncertain, transitory and conditional.

The bridge deal is contemplated to last 15 years, but you might want to go on Polymarket to bet against that.

Tariffs will harm Canada – but not as much as you think

“They need us to survive,” Mr. Trump said earlier this week about Canada. “Without us, there’s no way they can survive.”

He’s said it many times before, and the message is clear: Canada has no choice but to accept Trumpian demands, because without access to the U.S., our economy is toast.

It’s true that the Canadian economy benefits from free trade with the U.S. But our economy does not exist because of free trade with the U.S. Remember, we were already one of the world’s most advanced countries, and quite prosperous, prior to free trade.

Robyn Urback: Like a bad ex, Donald Trump is accidentally making Canada become its best self

A number of economists have tried to estimate the possible impact of various hypothetical tariff levels. The common conclusion is that U.S. tariffs are of course bad for Canada, but the level and duration of pain, even with relatively high U.S. tariffs, would be less than most people assume.

One of the more pessimistic estimates of the impact of tariffs, done in late 2024, came from the economists at Bank of Nova Scotia.

According to them, the impact of an across-the-board, 25-per-cent U.S. tariff on all Canadian exports, with equivalent Canadian retaliation on all U.S. exports, would be a 5.6-per-cent reduction in Canada’s gross domestic product. If the U.S. hit Canada with a 25-per-cent tariff and Canada did not respond, the result would be a 3.8-per-cent hit to GDP.

In other words, Canada would suffer a recession, and it would be a deeper downturn if we retaliated with tariffs of our own. But within a few quarters, the economy would return to growth, albeit from a lower baseline. Our economy would be permanently smaller under high U.S. tariffs, but only marginally, likely amounting to a hit to GDP measured in the low single digits.

And that would be the probable impact of a 25-per-cent tariff covering all Canadian goods – including major exports such as oil, gas, potash and electricity. The Trump administration isn’t eager to tariff those, since the passthrough to American consumers would be visible, swift and politically counterproductive.

Canada’s economy is better off in a positive, free-trading relationship with our neighbour. But until our erstwhile best friend returns to sanity, we need be in no hurry to make concessions, nor should we feel that we have no choice but to wave the white flag.

Canada should keep calm and carry on while the crack house downstairs goes on its bender. Americans are gonna do what Americans are gonna do. And then, in time, they’re going to undo a lot of it.

When they get out of rehab, we’ll be here.