Canada/U.S. Free Trade, R.I.P.

2025-02-03 15:45:00 ET

Summary

• Trump has declared economic war on Canada, and has done so in a fashion that Canadians can no longer take the premise of “free trade” seriously.
• The main immediate victim of these tariffs will be the Big Three American automakers, as they have supply chains that criss-cross the American, Canadian, and Mexican borders. This will also hit their suppliers.
• Canadian crude is heavy crude, and is needed by American refineries to match against the light crude liquids released by fracking. Unless the Americans get really cosy very quickly with Venezuela, those imports will have to keep flowing.

Originally published on Jan 2, 2025

Trump has declared economic war on Canada, and has done so in a fashion that Canadians can no longer take the premise of “free trade” seriously. The tariffs have not yet come into effect, and there is an easy off-ramp for the Canadian tariffs - the Canadian/U.S. border fentanyl trade is nearly non-existent (the formal justification for the tariffs). That said, unless the American stock market collapses, there is no sign that Trump will back off quickly....

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