Canada can ‘afford’ to outlast US trade war: report

While Donald Trump and his Congress continue to claim that Canada is dependent on the US, the facts seem to point otherwise. As Donald Trump has repeatedly claimed that Canada cannot withstand a long-term trade war with the US, two prominent economists have disagreed. In statements released on September 9, 2026, former Canadian ambassador to the United States Frank McKenna and former deputy governor of the Bank of Canada, Paul Beaudry, have both claimed that Canada does have the individual power to withstand Donald Trump's trade war; at least for the time being.

Trade war escalating

On September 8, the trade war between Canada and the US ramped up once again, after nearly two months of stalled negotiations. Canadian PM Mark Carney stepped away from the negotiation table on August 21, after Donald Trump reportedly asked for concessions that impacted French Canadians and the French language in Canada. Since Carney stepped away from negotiations, both countries have slapped new tariffs on different goods. After Carney ended negotiations in August, Donald Trump immediately slapped 50 per cent tariffs on nearly $30 billion in Canadian goods. Now, Carney and Canada have responded.

On September 8, Canada levied nearly $30 billion in counter-tariffs. The tariffs are concentrated heavily on steel, aluminum, dairy, appliances, agricultural equipment, pulp and paper, plastics, and electronics. After the tariffs were levied, Donald Trump announced that the US will be implementing more tariffs to respond to Canada's counter-tariffs.

Economists say Canada can survive… for now

According to Frank MacKenna, Canada is far better suited to stick out its escalating trade war with the US than sign a bad deal that could impact the country for years to come. McKenna, the former Canadian ambassador to the United States and current chair of the Brookfield Corporation, claims that the longer the trade war presses on, the better it may actually serve Canada than the US – despite the two countries' economic imbalance. McKenna, who also served as the Premier of New Brunswick, believes that time actually favours Canada more than it does the US, citing Canada's fiscal position, higher revenues and continued investment as reasons the country has room to absorb more economic damage.

Paul Beaudry, a professor at the University of British Columbia's Vancouver School of Economics and former deputy governor of the Bank of Canada, also commented on how Canada can use time to its advantage. According to Beaudry, while the costs to Canada will be greater than those to the US, Canada is in a position where it can sustain a prolonged dispute with its largest trading partner. Beaudry commented on industries that have been affected by American tariffs, including steel, lumber, automotive, and aluminum, but stresses that giving ground in negotiations is a far worse alternative than the cost of Trump's tariffs.

Beaudry stressed that while the aforementioned industries are being impacted by tariffs, those industries represent a relatively small share of the overall economy. For example, motor vehicle and parts manufacturing and primary metal manufacturing together account for roughly 1.5 per cent of the country's economy, according to Statistics Canada. Beaudry did add that the longer the trade war persists, the greater the potential consequences for investment, particularly in the auto sector. Some automakers, including Stellantis, are already reconsidering or postponing plans to develop automobiles in Canada.

Trade war a bigger story than reality

Beaudry also touched on the sensationalism of the media-centric trade war. He stressed that while the trade war is impacting Canadian goods and consumer pricing, most trade between the US and Canada remains uncontested. According to Beaudry, the automobile industry is the largest industry being impacted by these trade negotiations. Unfortunately, Beaudry is doubtful that the Canadian auto industry will return to the highly integrated, largely tariff-free arrangement that existed before the dispute and predicts that some form of tariffs will almost certainly remain.

Both Beaudry and McKenna expect Canada to return to the negotiating table soon, but both stress that Canada and Mark Carney will not be willing to sign any deal that results in Canadian concessions. Beaudry is not confident that the two countries will reach an agreement before the year's end, but both he and McKenna remain optimistic that Canada will continue to negotiate with other foreign countries and successfully edge away from US trade reliance.