Trump Mugs The Neighbors
February 3, 2025
Donald Trump launched his geo-economic world war this weekend by mugging his neighbors, including friendly Canada, with a population of 40 million polite and compliant people. It was a classic bully move. Instead of taking on the most significant, meanest kid on the block – Russia – or the biggest, most successful foe – China -- he picked on the scrawny, nice kid north of the border who never causes trouble. By slugging Canada so mercilessly and abrogating a trade agreement forged in Trump’s last presidency, he has successfully sent shivers down the spine of all nations that trade with America. And at the same time, he also launched a war against fentanyl by deploying tariffs. "The President will be implementing tomorrow 25% tariffs on Mexico, 25% tariffs on Canada, and a 10% tariff on China, for the illegal fentanyl they have sourced and allowed to distribute into our country, which has killed tens of millions of Americans," stated the White House.
It’s not an imagined problem. Large volumes of fentanyl cross the heavily fortified Mexican border into the US, and smaller amounts cross the undefended Canadian border. Still, both boundaries must be shut down, or smugglers will shift activities to Canada; thus, both countries are being penalized. Last year, 110,000 Americans died of fentanyl overdoses, and the drug’s usage has become a significant social problem across America. It’s also not coincidental that both Trump and his Vice President J.D. Vance have made this a priority because addictions have tragically afflicted both their families. Further, the fentanyl crisis is a national security issue because China has weaponized it into an epidemic. Beijing subsidizes companies that make and ship the ingredients to North America, according to Congressional investigations. Chinese officials encourage the production of precursor chemicals by giving "monetary grants and awards to companies openly trafficking illicit fentanyl materials… The fentanyl crisis has helped [Chinese Communist Party-linked] organized criminal groups become the world's premier money launderers, enriched the [Chinese] chemical industry, and has had a devastating impact on Americans.”
Mexico’s cartels turn precursors into pills and then smuggle these into the United States. In Canada, gangsters and Chinese gangs called triads are behind fentanyl formulation and trafficking into America. Then, in October, one of Canada’s most prominent banks — TD Bank — was fined $3 billion for laundering the proceeds made by Chinese entities from fentanyl proceeds. US Deputy Treasury Secretary Wally Adeyemo stated: “TD Bank facilitated over $400 million in transactions to launder money on behalf of criminals that were selling fentanyl and other deadly drugs that are poisoning our neighborhoods.”
Trump’s tariffs will damage all three economies and their ongoing relationships for years and be complicated. Their supply chains are integrated, and tariffs will force them to undertake the economic equivalent of unscrambling an egg. Branch plants in each country will close and move back home. Companies and consumers in all three countries will be damaged as 25% tariffs increase the price of goods and services, stoking inflation. Canada and Mexico announced measured retaliatory tariffs against American exports in response. This will bring about job losses, lower profits, and inflation in American regions, greatly dependent on the three-way relationship. Then, a large portion of American states depend on trade with China.
An American backlash is starting to build and will grow. The venerable Republican Wall Street Journal has already blasted the whole exercise in an editorial on January 31. “The dumbest trade war in history… for no good reason…Mexico and Canada. They’ll get hit with a 25% border tax, while China, a real adversary, will endure 10%. White House press secretary Karoline Leavitt says they’ve `enabled illegal drugs to pour into America.’ But drugs have flowed into the US for decades and will continue to do so as long as Americans keep using them. Neither country can stop it.”
The adverse knock-on effects will have dire consequences for all. Canada will be “devastated” economically, but Mexico may be bankrupted. Trump has earlier announced he will take on Mexico’s cartels directly (having declared them as “terrorist organizations”). These vicious organizations control and have corrupted the entire country, and America will likely end up sending special forces to take them on. The tariffs will also bring about the “reshoring” or relocation back to America of thousands of American companies located along Mexico’s border. Tariffs will also impair Mexico’s agricultural base, supplying American and Canadian consumers with fruits and vegetables.
Mexico will become a basket case as it is forcibly deindustrialized and impoverished. Canada, likewise, will suffer as U.S.-owned branch plants shutter their operations and move back home. Roughly half of all foreign direct investment in Canada is American, and Americans control the country’s two most significant export sectors: automobiles and oil. Estimates show North America’s auto industry may shut down within a few days to restructure itself and reduce the damage caused by tariffs. At the same time, many American states heavily depend on exports or imports from Canada, as illustrated above.
Another underlying motivation for Trump’s geo-economic war is that America now bears nearly 40% of all the world’s military costs to guard wealthy regions like Europe, Canada, Mexico, Israel, oil-rich Arab nations, Japan, and South Korea. America has also racked up unsustainable trade deficits with countries, hovering around $1 trillion annually. He wants countries to pony up more for their defense and the world’s and to grant other concessions involving trade or access to natural resources. (Interestingly, Trump pulled his punches concerning Canada by lowering his tariffs on Canadian oil to 10%. This was to avoid higher pump prices for American gasoline because Canada supplies roughly half of the oil the United States consumes. Without Canada’s oil, the United States is not energy “independent”.)
As pushback grows and if crackdowns against fentanyl and illegal migrant smuggling occur in Mexico and Canada, Trump will back off. But he now hints about annexation, a threat designed to obtain concessions. Canada, for instance, will have to guarantee access to oil and other essential resources that America needs. It will have to agree to defend its entire perimeter, meet its NATO commitments, and protect its Arctic, none of which it can afford. Mexico will have to dismantle its cartels, root out corruption, and stop the immigration mess, no matter how difficult or costly. Each nation will also be required to fork out billions to defray the cost of continental defense (by building an Iron Dome and contributing more to alliances like NATO or NORAD). Both must declare war against the drug cartels that operate in their countries. If they do little or nothing toward these goals, the three-way trade deal will be permanently dissolved by Trump on April 1.
Long term it might be the best thing that can happen to this country. Maybe it will get Canadians out of our pyjamas and back into our work clothes. We need intelligent people to lead us into a new world. We need to do smarter things rather than just merely hitting back with more damaging tariffs.
We can complain all we want about Trump but it appears he was democratically elected by a majority of his fellow citizens and he is doing, rightfully or wrongfully what is best for his citizens. Biden didn’t exactly roll back any of Trump’s first term tariffs when he was elected so these new ones may exist for a long time.
Excellent column once again Diane!
This is unimaginable but yet this is happening. As a retired CPA, I can only say that tariffs have never been used successfully. Most american people dont even understand how tariffs operate and will soon find out their effect. Our Canadian plan to strike back makes some sense but I think that in the coming months all provinces will pull the blanket in their own direction and this will cause even more confusion and stress on people. Our confederation will be shaken. The Fentanyl epidemic invoked by the White house makes no sense and Diane has described very clearly. In my view, the intention behind this crazy trade war is to bring us down to our knees and take over Canada. We no longer have a friend or commercial partner and we need to quickly find a way to move on, I know its easier said than done but I wonder if our relationship with the USA can ever be repaired as people will always remember this vicious attack. And get prepared because Trump is also prepared to hit Europe next..he says that Europe has been very bad to America. watch out its coming... Thank you Diane...