The new round of Trump tariffs rolled out in early August. By the time this column appears, the terms and rates may have changed.
President Donald Trump is nothing if not fickle 鈥� he will impose or threaten new tariffs, announce new "deals," backtrack, and change deadlines. The only sure thing is that there tariffs will be used as a bully's bludgeon.
Trump's tactics roil financial markets because the United States is the biggest single economy in the world in terms of nominal GDP. It's about a quarter of the world's total economy 鈥� only India and China even come close, and they each have three or four times as many people as the U.S.
But biggest does not mean majority. A quarter of the world's economy is a big slice 鈥� but it's still just a slice.
Here in Canada, every premier, Prime Minister Mark Carney, and opposition politicians have all talked about diversifying trade away from the U.S. That's a tall order.
Before Trump declared a tariff war on us, 75 per cent of our exports went south of the border. That number almost immediately slumped 鈥� even with exemptions for CUSMA-compliant goods, our steel, aluminum, autos, and lumber are all getting hammered with absurd tariffs.
By this spring, StatsCanada was showing a sudden drop in trade with the U.S., mostly offset with a jump in exports to other countries. We're also importing a lot less from them, thanks to informal boycotts by individuals, businesses, and local governments.
We can't extract ourselves from all trade with the U.S.
But by the end of Trump's term in 2028, we'll be trading less with our nearest neighbour, and more province-to-province and with other nations.
The thing that Trump hasn't realized 鈥� probably will never realize 鈥� is that every other country in the world is doing the same thing. From South Korea to Vietnam, Australia to Nigeria, Germany to Brazil, every country getting hit with U.S. tariffs is asking the same questions: "Where can I find new customers? Where can I find new suppliers?"
Some of those links will prove more expensive or less convenient than trading with the U.S. had been. But they'll be cheaper and easier than navigating Trump's ever-shifting whims.
Some of those trade links will actually be better, or at least as good, as the old U.S. ones. They will endure, no matter who is in the White House next or what their trade policy is.
The United States under Trump is reducing its global trade footprint, something no modern country has ever actually done on purpose.
Since the end of the Second World War, the world's trade has flowed through America and its financial system.
By 2028, a great deal of it will flow around America. The world's biggest economy will be a speed bump, not an on-ramp.
Will China or Europe take the U.S.'s place at the centre of global trade? How will Canada do in this changed environment? Can the U.S. reclaim it's role, post-Trump?
With a change of this magnitude, it's almost impossible to predict what comes next. But it means a weaker U.S.
