On Friday, Oct. 2 Aronson Center hosted the director of the Center for U.S.-Canada Studies at the Hopkins University School of Advanced International Studies (SAIS), Christopher Sands, as a part of their Fall Speaker Series — Midterms in Focus: Global and Domestic Perspectives. His talk was titled “Trade War with Canada: Is There a Path to a Durable Peace That Can Save the USMCA?”
Sands opened his lecture with an overview of the diplomatic relationship between the United States and Canada. He highlighted the upcoming 100 year anniversary of diplomatic relations between the two nations following the Balfour Declaration of 1926, which increased Canada’s sovereignty as a British dominion.
“Prior to that, we just dealt with the British, and so in a way, that anniversary is significant coming up next year because it's really the beginning of Canada having its own personality and the back and forth relationship,” said Sands. "From the very beginning, the Canadians were friendly with us.”
Sands detailed the complex cultural ties that have resulted from the nations’ historically close relationship. He described how American automobile manufacturers invested heavily in Canada in the early 20th century, which resulted in the beginning of integrated trade between the U.S. and Canada.
Sands shared how as communication technology developed Canadians became increasingly anxious about defining their cultural identity.
“Canadians became worried about their own culture. And if you think about Canadian geography, you kind of see why. Although the country is 10% larger than the U.S. it’s only got about 10% of our population and most of that population, about 90%, lives within 150 miles of the border with the United States. But it's actually because much of their economy is connected to the United States,” Sands said.
As the 20th century progressed, the economic relationship between the U.S. and Canada was formalized with the U.S.-Canada Free Trade agreement in 1989 under President Ronald Regan. Sands explained how this agreement turned into the North American Free Trade Agreement (NAFTA) between Mexico, Canada and the U.S.
“The U.S. had gone through a long period through free trade [with NAFTA] where we made it easier to sell into the U.S. market than it was to sell out of the U.S. market. So we were encouraging countries to export to us where we had the consumer base in order to get richer and felt that that would eventually be better than just offering development assistance,” said Sands. “It sort of hollowed out a lot of Midwestern industrial areas because we're also buying a lot of resources from abroad. It really weakened the American economy.”
Sands argued that the impacts of NAFTA on the American economy created resentment toward the idea of free trade with allies like Canada. Sands further emphasized how politically unpopular NAFTA was in the United States, even across party lines.
“From 1992, when we hadn't finalized the agreement, but we were pretty close, all the way until 2016, every presidential election we had an anti-NAFTA candidate,” Sands shared. “In 2016, we finally got a case where we have both candidates, Donald Trump and Hillary Clinton, who don't like NAFTA. But Donald Trump turned out to be a bit of a surprise because he didn't like NAFTA, but he actually wanted to do something about that.”
During his first administration Donald Trump replaced NAFTA with the United States-Mexico-Canada Agreement (USMCA) in 2020. This agreement got bipartisan support in the U.S. and it included things like a fixed sixteen-year duration after which it has to be renewed and periodic six year reviews of the terms from all three nations.
In his second term President Donald Trump has taken a more aggressive approach to reworking the United States’ international trade and economic relations. Trump levied tariffs against more than 80 countries, Canada included. However, Sands points out that only China and Canada have retaliated.
“70% of [Canada’s] exports come to the United States, and that's less than it was a few years ago, but it's still a substantial portion. So they're super vulnerable to American retaliation. However, they decided to retaliate in the interest of dignity,” Sands said.
With the idea of a trade war between the two nations throughout his talk, Sands stressed how the deteriorating relations may not only have economic consequences.
“This isn't so much a trade war as a trade civil war. Because like a civil war, when you fight with other parts of your same country, everything you destroy, you will have to rebuild or need later. If you lay waste to huge parts of the economy, that's going to be your economy later, and you're going to have all this disaster. If you create bitterness because of the casualties, you have to live next door to the people who are bitter, who lost people in the war,” said Sands.
Sands emphasized the importance of the U.S. and Canada coming to an agreement before Jan. 1, 2027, Trump’s deadline for further escalation. Despite this overt warning over what tariff escalation could lead to, Sands made sure to contextualize the current impacts of tariffs on U.S.-Canada trade.
“Canada-U.S. Trade is $2.8 billion every day. So the trade war right now covers about $21 billion Canadian, so a little bit less than that in American [dollars]. So it's about 20, I don't know, about 10 days worth of trade. That's why we're not panicking,” said Sands.
The event was well-attended by students and local community members. Connor Hartigan, a graduate student at SAIS and a research assistant of Dr. Sands shared his take-aways from the talk.
“I'm optimistic that in the longer term, a younger generation of Americans who have studied Canada and are interested in Canada can forge personal connections with Canadians and rebuild over the coming decades,” Hartigan said.
