The Canadian trade officials continue to misread the room.  Threatening the Trump administration with something the Trump administration benefits from, is not exactly the best trade strategy.

In the background the DOJ has just arrested a woman for her part in a trafficking operation, smuggling Indian illegal aliens into the USA through Canada {citation}.  Simultaneously, a petition within Canada to remove U.S. Ambassador to Canada, Pete Hoekstra, is gaining support because Hoekstra is focused on American best interests and not looking out for the best interests of Canadians {citation}.

On the economic front, Canadian trade minister Dominic LeBlanc met with U.S. Trade Representative Jamieson Greer for the third time in three weeks. However, it’s Canada’s Chief Trade Negotiator Janice Charette, who also participated in discussions, making headlines with threats.

Janice Charette is telling the Canadian public that formal trade discussions with the USA will end if President Trump and USTR Jamieson Greer trigger the 50% tariffs against Canadian goods which are scheduled to begin on August 19th.

President Trump and USTR Greer announced last month the U.S. would begin 50% tariffs on a range of Canadian products. the tariffs are intended as reciprocal action for Canada’s counter-tariffs on U.S. automobiles and steel, as well as decisions by Canadian provinces to boycott American alcohol. {CITATION} According to USTR Greer the tariffs will affect approximately $20 billion in Canadian imports, representing around 5.2% of the $383 billion in goods the United States imported from Canada in 2025. USMCA covered products would not be exempt from the tariff.

Ms. Charette is reported to have made it clear if the U.S. goes through with the tariffs, the Canadians will pull out of USMCA discussions and walk away from renegotiating the trilateral trade agreement.

This is apparently the threat from Canada.  However, when contrast against the intent to eliminate the multilateral trade agreement, the threat carries terms completely acceptable to the Trump administration.

CANADA – Canada’s lead trade negotiator with the U.S. Janice Charette has warned her American counterparts that if the White House imposes new 50 per cent tariffs on Aug. 19, it could put further trade talks at risk.

Industry sources tell CTV News there was no ultimatum given to U.S. Trade Representative Jamieson Greer, but that he does understand the reality of the situation.  Charette’s comments were first reported by The Globe and Mail on Wednesday.

According to one industry source, it was conveyed to Greer that there is no way the federal government can push the provinces to return U.S. alcohol to store shelves without comprehensive and meaningful tariff relief for affected industries like steel and aluminum. (more)

As previously noted by USTR Greer the Canadians are applying two separate metrics within their trade agreement with Europe and the USA.  Toward Europe there are no limits and quotas on dairy products, toward the USA there are severe limits and quotas applied by third party brokers (co-ops owned by Canadian dairy farms) leveraged by the Canadian government.  This is one example of Canadian duplicity.

Additionally, by the various provincial governments of Canada banning the import and/or sale of U.S. products, and with Canada putting caps and limits on automobiles, these USA trade actions are being confronted by the 50% countervailing duties against Canadian imports.

♦ Canada has no leverage.  Trump wants Canada to expand its trade partnerships with other countries.

President Trump wants Canada to diversify. Both U.S. Ambassador Pete Hoekstra and President Trump have said, repeatedly, President Trump wants Canada to go make other bilateral deals with other nations.

Why?

Two main reasons:

• First, if Canada has to enter a bilateral trade agreement with another country, suddenly they learn what reciprocity means. They will have to give something in order to get trade benefit.

Reciprocity is a completely new concept for Canada who have taken advantage of the USA for a long time with ZERO reciprocity in mind.

This is what former Prime Minister Justin Trudeau was talking to Trump about in Mar-a-Lago (December ’24).

In essence, Donald Trump wants Canada to go and try to cut more favorable trade deals, so they will learn how good they had it.

Right now, Canada is like the teenage daughter who has all her bills paid by daddy and is angered that she isn’t getting the benefits of unlimited spending.  Daddy is saying go find a job or better option.

Second, if Canada cuts a trade agreement with, say, Europe, the terms of that free trade agreement (FTA) become the baseline standard for Canada in all their trade allowances and agreements.

This baseline then permits team USA to turn to Canada and say, “we want the same terms, or else.”  We might even ask for most favored nation terms due to scale and scope of their dependency.

Canada is not prepared for this type of bilateral relationship at all.  The CUSMA trade negotiator Dominic LeBlanc discovered the problem following the current Canadian effort to diversify FTAs with deals toward China and Europe.  LeBlanc admitted quietly and internally to Prime Minister Carney they factually have no response to this approach.

For around 40+ years (USTR Greer would argue 60+ years) Canada has benefitted from the U.S. economy purchasing their goods, allowing their businesses unlimited access to the U.S. market and yet simultaneously restricting the Canadian market from similar reciprocity.  Those terms are no longer acceptable.

Prime Minister Carney and his trade delegation have only one card to play, political pressure and support from within the U.S. congress; Carney is relying on Democrats to support him.

The threat from Canada’s Chief Trade Negotiator Janice Charette to walk away is, well, structurally a little funny.