Canada has limited resources to fight an escalating trade war, but Prime Minister Mark Carney is trying to hit President Donald Trump where it hurts: in the ballot box.
Trump fired the first salvo, raising tariffs on the vast majority of imports from Canada, excluding only strategic goods such as energy and rare-earth minerals. The Canadian response was more targeted. On face value, the products selected seemed random: stuff like processed cheese, shellfish and washer-driers. It did not take economists long to figure out the logic, however. Processed cheese is to Wisconsin what oil is to Texas. And lobsters are to Maine what cheese is to Wisconsin. Washing machines are a big issue in Kentucky, which houses one of the largest remaining General Electric appliance plants. And what do all these states have in common? They all have tight races for Congress and state houses in the midterms.
“We are being wise and strategic,” Industry Minister Mélanie Joly said at a news conference, in a self-assessment that had a certain amount of Trumpian bluster and a certain amount of truth. (After resistance from its own lobstering fleets, which are integrated with Maine fishermen, Canada dropped its seafood-tariff threat.)
Canada is not the first country to go after political-wedge products in a trade war. The northern nation is taking a leaf out of the Chinese playbook. Ahead of the first Trump-era midterm election in 2018, China targeted the lowly soybean. Soybeans, which require less fertilizer than corn, had quietly become a dominant crop throughout the U.S. farm belt following China’s admission to the World Trade Organization. Production and acreage of the feedstock had shot up in swing states such as Iowa and Indiana.
As in the Canada fight, the first Trump administration came out swinging, tolling Chinese steel, aluminum and manufactured goods in the opening salvos of the trade war. Beijing’s principal comeback was a 25% tariff on soybeans. That hefty tariff rendered the crop almost worthless by opening up cheaper alternatives to Chinese importers. As a result, thousands of farmworkers lost jobs.
Retribution, as ever, came at the polls. A statistical study published in the Journal of International Economics in 2024 indicated that Republican candidates in districts affected by the Chinese retaliatory tariffs lost votes because of the trade war. In Iowa, for example, Democrats picked up two House seats, with Republicans only retaining one out of the four contested in 2018.
Canadian tariffs could also hit Iowa because local factories could be affected by duties on agricultural machinery.
The soybean fight might be one reason that China — once a primary target of Trump-aligned trade warriors such as Peter Navarro — seems to have moved down the administration’s list of trade enemies, at least for now, with midterms looming. In one of his Orwellian pivots, Trump now talks about China as a strategic trade partner who should be treated with respect, kind of like he and other presidents used to talk about Canada.