One negotiation with Trump, done. On to Round 2

Score one for all the armchair analysts. For every one of you. Canadians spent months passionately debating about what, exactly, U.S. President Donald Trump wants from us. Is it just some border fixes, or broader economic changes?

As it turns out, both are correct.

A months-long tariff psychodrama has just ended with Canada announcing and re-announcing a bunch of measures Monday aimed at the border and drug-trafficking.

Now, it’s on to the next one. Trump is threatening to reinstate tariffs in 30 days unless he can reach a new economic deal with Canada: “FAIRNESS FOR ALL,” he posted online, in all caps.

It’s a little early to predict his bottom line in the next round of talks, but he’s been talking about dairy, auto parts, military spending, and now, banking regulations.

But wait, there’s more!

Tariffs as negotiating tactic

Trump simultaneously released a formal declaration suggesting a different goal for the next 30 days. He’ll also be watching for progress at the Canadian border, otherwise, take a wild guess about what he’s threatening next.

You guessed correctly: More tariffs. This means that if, and when, Trump threatens economic pain again we can all resume arguing about whether it’s the border or something else.

What’s clear is that an incendiary new element has been added to the already hot political forecast in Canada over the coming months as Canadians will get a new prime minister, then possibly a general election, amid threats from Trump.

He’s talking about a 30-day pause on tariffs — that means early March. His team is also threatening tariffs in April, after it concludes studies on foreign trade practices.

They’re talking about three different reasons for tariffs — to correct unfair trade, raise revenue and negotiate with other countries. It seems the drama we’ve just witnessed was driven by objective No. 3 — negotiation.

Republicans praise Trump

Republicans saluted their leader’s bargaining acumen Monday. 

“We now have a president who is going to use America’s strength to force allies and adversaries alike to pay attention,” Josh Holmes, a former senate aide to Mitch McConnell, communications adviser and podcaster wrote on the social media platform X.

“It’s no longer convenient to ignore American interests.”

Trump detractors were quick to rain on the president’s parade. Most of what Canada announced Monday was already announced in December. It even drew a celebratory reaction back then from Trump’s team. 

To give the president his due, the new elements announced Monday include a vague reference to a new Canadian intelligence directive, which Ottawa did not elaborate on. Canada’s struggle to use intelligence to prosecute gangs is a longstanding source of complaint.

This is all playing out under a persistent drumbeat of insinuations from Trump that he has a more dramatic ulterior motive: Annexing Canada.

About that 51st state thing …

People in Washington mostly assume he’s joking. Sen. Ted Cruz, on his podcast, called it: “An epic troll”; he said he figures he was just, “yanking [Trudeau’s] chain.”

If so, he’s quite committed to the bit. 

Like, in the Oval Office on Monday, a reporter from Bloomberg asked what he’d like to see from Canada, he talked in slightly more granular language about the difficulty in annexing Canada.

“What I’d like to see? Canada become our 51st state,” Trump replied, then suggested Americans would need to accept some turbulence to make it happen.

“Some people say that would be a longshot. If people wanted to play the game right, it would be 100 per cent certain that they’d become a state. But a lot of people don’t like to play the game because they don’t have a threshold of pain. And there would be some pain. But not a lot. The pain would be really theirs,” he said, referring to Canada.

Here’s more good news for Canadians who’d like to keep their country, which, according to polling, is an overwhelming majority. 

Annexation also polls terribly in the U.S., and has nowhere near the support it would need to get through the U.S. Congress — which has enough trouble passing things that are popular.

Speaking of American public opinion, it’s sympathetic to Canada on tariffs. Different surveys show only minority support for these tariffs, even when the survey includes China.

American media and the stock markets appeared stunned at the imminent threat.

It was the lead item on several U.S. newscasts Monday, generating 11 minutes on NBC’s Today Show, and producing above-the-fold stories in The New York Times, Washington Post and Wall Street Journal.

All this in a country that, to put it mildly, has lots of other major things going on in the two weeks since Trump was inaugurated.

With Trump enjoying a mini-honeymoon in public opinion, CNN’s polling analyst said this might be his first major unpopular move.

“Trump has done some fairly popular things in his first weeks in office. This is not one of them — no, no, no. Horrible, horrible, horrible,” Harry Enten said, of big tariffs on Canada and Mexico.

The market sends a message

More importantly, Americans took notice. This was not a given. Americans tend to pay as much attention to international trade as Canadians do to NCAA football, maybe less.

And it’s maybe understandable because trade represents a far smaller share of the economy in the U.S. than Canada, where trade spats are often a top story.

Yet, this week, Google searches for tariffs soared to historic highs in the U.S. 

“You know folks are paying attention when there are more Google searches for that than for Taylor Swift,” Enten said. “I never thought I’d see it happen, but the American people are actually interested in tariffs.”

So is the stock market, it turns out.

There was no telling how the market would react, and whether tariff news would reverse the generally buoyant mood on Wall Street in recent months.

Some analysts have opined that this — the market reaction — is the only guardrail against Trump. Because it’s unlikely the courts or Congress would stop his tariffs.

It turns out the Dow Jones had dropped about two points since the moment last Friday afternoon when Trump promised tariffs were coming — a half-point Friday, and three times more on Monday morning.

Word about the tariff pause emerged, initially with Mexico, and immediately sent markets rebounding and restored hundreds of billions in stock value.

That’s another positive takeaway from this episode, said one Canadian involved.

“We went to the brink, and we learned a few things,” said Flavio Volpe, head of Canada’s auto-parts lobby and a member of Prime Minister Justin Trudeau’s Council on Canada-U.S. Relations.

“The tariff plan was not taken well by capital markets. Before that it was theory.” 

He says it’s now clear the markets will punish tariffs across North America. It’s also clear that Canada might also get some support from important voices.

Volpe mentioned, specifically, veteran Iowa Sen. Chuck Grassley, who pleaded for exemptions to potash, which he noted would be horrible for farmers in his state of Iowa; even the U.S. manufacturers’ lobby opposed the broad tariff.

Trump professed to be unaware of the market gyrations, when he saw reporters in the Oval Office Monday. 

“How is the market doing?” the president asked. 

“I don’t know,” he added. “I don’t think about it.”

He might have been bluffing. Or maybe not. Welcome to our new reality, where we’ll be asking ourselves that question again and again, starting, perhaps, in about 30 days.