The U.S.-Canada trade war is really about what alignment means – and about China, too

Michael Kovrig is the CEO of the geopolitical research firm Kovrig Group, and a Canadian former diplomat who served in China.

When explaining why trade talks between Canada and the United States collapsed in late August, Prime Minister Mark Carney often cites the U.S. team’s shifting and last-minute demands. Those mattered, to be sure. But what he doesn’t mention is equally important.

In a 2,700-word address on Aug. 22 explaining why we’re in a trade war, Mr. Carney never said the word “China.” In his Sept. 8 Forward Guidance video, he mentioned it once, observing that an Alberta farm can now get better prices for its canola “because our trade diversification opens opportunities with China.” That was the deal he negotiated in January in Beijing, with the benefit emphasized and the price tag removed.

The breakdown of talks can’t be understood without that deal. In fact, Canada’s position actually improves when the China factor is part of the conversation, but saying so requires some awkward truth-telling.

In October, 2024, Ottawa matched Washington with surtaxes of 100 per cent on China’s electric vehicles and 25 per cent on its steel and aluminum. Beijing retaliated hardest against canola seed, with further tariffs on canola meal, lobster, peas and crab. Washington offered no cover, compensation or common front. Donald Trump imposed tariffs on Canadian autos, steel and aluminum anyway, and threatened the industry the surtax was protecting.

Analysis: Trump uses UN address to threaten and deride foes and allies alike, as usual

That’s the strongest point the Prime Minister can make, but it requires acknowledging all of what Mr. Carney did in January: He reversed Ottawa’s surtaxes, introduced an EV quota and cancelled planned duties on Chinese solar panels and semi-conductors. Beijing granted a five-year reprieve on canola seed and 10 months on the rest, which expires Dec. 31. Without an extension, the tariffs snap back. The EV quota is small for now, but unlike China’s reversible agricultural relief, the concession is structural and compounding, rising to 67,000 vehicles a year by 2031. At the Shenzhen APEC summit in November, Mr. Carney will be asking for more – but he will have less to offer.

The Beijing deal reopened the very manufacturing sectors that most preoccupy America’s economic-security policy makers. As Michael Froman, Barack Obama’s trade representative, explained in an August interview on CNN, Washington is “pressing Canada, as well as other countries, to adopt a common approach vis-à-vis China – whether it’s a common external tariff or export controls, or ensuring that Chinese products, inputs, don’t get inserted into products in Canada that will then be imported into the United States.”

Omitting that detail leaves Canadians with the impression this is only a brouhaha about trucks, dairy quotas and Mr. Trump’s animosity, when it is also about our entanglement with China. The market access that China’s firms extracted from Ottawa in January provides a rationale for the American trade measures.

Alignment was not a concession invented at the summer negotiating table. Canadian officials have been suggesting deeper co-operation on security and defence in return for restored trade access for more than a year. Mr. Carney told a summit in May that Canada is “open to deeper integration, including options for Fortress North America in [certain] sectors” – a strategy involving low tariffs within, and aligned tariffs facing out – and “those offers are on the table.” And U.S. Trade Representative Jamieson Greer has said that Washington was ready to “bear hug [Canada] on this idea of Fortress North America.” Ottawa offered to co-ordinate sector by sector, with commensurate American tariff relief.

Open this photo in gallery:

But then, at the 11th hour, U.S. officials demanded “a say in our future trade agreements with other countries,” as the Prime Minister said, and to have this power automatically and indefinitely, overriding existing agreements. The U.S., conversely, would have retained the freedom to tariff us at any time.

Both sides had also agreed the deal would carry a “most favoured nation” clause: If Washington subsequently gave better terms to another country, Canada would get them, too. But when the American draft arrived, that language had been deleted.

That’s not a partnership. It’s a constraint on Canadian sovereignty.

For Canada, alignment was never in dispute: We volunteered it, and the Americans reportedly accepted. But while each side now claims that the other overreached, what Washington ultimately put on the table was not what Ottawa had proposed, and Mr. Carney refused those terms with good reason.

After European Commission President Ursula von der Leyen proposed associate membership of the European Union for Canada on Sept. 16, Mr. Trump said, “If I think it’s at all a hostile act, I will put very serious tariffs or stop trading with Europe on many things.” Washington is forging tools to blunt China’s mercantilism. Mr. Trump might turn them against anyone.

Tony Keller: The upside of a European alternative to Trumpmerica, and the limits

The conflict, then, is really about what alignment means. Here, Canada’s case is stronger than the one our government is making. Canada offered alignment, but the U.S. removed the reciprocity. A common external tariff assumes a common internal market. Washington is effectively asking Canada to close its options on China while closing its own market to Canadian cars. That’s not a fortress – it’s a wall with Canada outside it.

But we can’t make that case while describing our agreement with Beijing as exclusively a success story for the canola industry. Ottawa can build on what Washington’s own think tanks proposed: a North American economic-security committee under the USMCA, publishing its criteria, with each government deciding and none bound alone.

If Washington accepts, this is true co-ordination: alignment with reciprocity, as Canada offered. If it refuses, then what was on the table was never a common front. It was a client-state relationship with a tariff schedule attached.