Tariff Turmoil: A Team Canada Response for Economic Sovereignty

Par Laurent Carbonneau
Directeur des politiques et de la recherche de l'ICC

The tariff looming over Canada may prove to be simply a high-octane start to 2025, or the looming trade war may be the defining economic story of the year. What we know is that high tariff walls with the US would be a very big deal for Canada.

The impacts are serious, and they are explicitly a hostile move meant to make us poorer.

As noted by Stephen Miran, the incoming chair of Trump’s Council of Economic Advisers, the goal of these tariffs is to see “real purchasing power and wealth decline” in tariffed countries to strengthen America’s economy.

American consumers will bear much of the short-term cost of higher prices, but we should see this hostility for what it is.

For a few hours on Monday, before Prime Minister Justin Trudeau and President Donald Trump reached a temporary detente, we were able to see different approaches responding to the tariffs.

Ontario Premier Doug Ford ripped up the $100 million Starlink contract (before taping it back together) and pulled American booze from Ontario grocery shelves. British Columbia Premier David Eby announced that the province would stop signing contracts with American companies.

Trudeau announced matching tariffs on American imports, including whiskey and orange juice, with more strategic tariffs on products that would hurt American producers while minimally harming Canadian consumers.

As all these politicians put the retaliatory tools back in the box, (for now) this situation is a clear signal that we really cannot count on America to be a good neighbour in the same easy way we have done in anyone’s living memory. They’ll always be a valued economic partner and a strategic ally of necessity thanks to the law of gravity and the three laws of real estate (location, location, location) – but the post-1984 era of enthusiastic continentalism is likely at an end.

What does that mean for Canada’s future and what we should do to promote growth? We actually need a real Team Canada approach, not just the branding.

The federal and provincial governments need to take the explicit view that economic policy, security policy, and innovation policy are totally inextricable and act accordingly. That means seeing innovative global firms as important strategic assets for Canada, on par with natural resources or our respected educational system.

Innovative firms that operate in competitive global markets create a lot of benefits. They not only create wealth and jobs (much more so than subsidies do) but spread the use of technology and effective management practices through the economy. It’s not a coincidence that so many former BlackBerry and Nortel employees have gone on to start and run their own successful and innovative businesses.

No country has ever developed a highly innovative, world-leading industry in a tradeable sector by total accident and happenstance. As much as firms and entrepreneurs matter enormously, policy is always an important part of the mix.

It’s time to recognize that global firms are capacity assets that give Canada more latitude to act and lead globally than any amount of soft diplomatic leadership. Canada has a lack of large, hungry organizations that operate on a do-or-die basis. The public service, for all its strengths, does not operate that way. Neither do Canada’s cosseted service oligopolies. The skills you get from working in and leading organizations that actually have to compete to survive are badly needed right now.

We’d much rather face the future with strong firms. How do we build those assets from a policy perspective?

Before we develop a strategy, we need to dispense with the tired economic playbooks of yesteryear. Laissez-faire libertarianism would see us become – even more than we already are – a resource colony wholly economically dependent on the United States. The unstrategic jobs-first approach of chasing FDI with subsidies is little better than naked corporate welfare that has resulted in decades of wasteful spending merely slowing the secular decline of marginal industries rather than catapulting us to prosperity.

Neither of these approaches work in an innovation economy characterized by the importance of intangible assets and superstar firms. The federal government and provincial governments need to start taking the task of economic governance much more seriously than they have.

At its best, the U.S. understands that strategic investments and trade policy are too important to leave to part-timers and generalists. When the Biden administration set up an office to administer the CHIPS Act, it brought in semiconductor industry heavyweights who understood the sector top to bottom from both a technical and business perspective. This is not what we do in Canada, but it should be.

A Team Canada approach doesn’t mean cobbling together people haphazardly whenever a crisis erupts — ask our World Juniors team how that approach to building Team Canada has worked out the last few years. Labour and industry both need to be at the policymaking tables, with a very clear understanding that our livelihoods and future as a country are in the balance if we don’t get this right. These things need to build sinew.

One problem that a real Team Canada approach poses is that it is incompatible with messaging-first, hyper-centralized partisan governance that prioritizes announcements and optics over careful analysis and working for results.

An early choice for whomever is running the federal government in a few months is which of those two they’re going to choose. For Canada’s sake, I hope they choose wisely.

--

Laurent Carbonneau is CCI's Director of Policy and Research. He can be reached at lcarbonneau@canadianinnovators.org. Mooseworks is the Council of Canadian Innovators' innovation policy newsletter. To get posts like this delivered to your inbox twice a month, sign up for CCI's newsletter here .