Since Donald Trump’s re-election as president of the United States a storm of economic and political turmoil has loomed over Canada and the world, driven by Trump’s determination to impose aggressive tariff policies on America’s friends and allies. The 25 per cent tariffs that went into effect on March 4 on imports from Canada, Mexico, and China — America’s largest trading partners — alongside threats of tariffs against the European Union and other nations, risks plunging the global economy into a deep recession, if not an outright economic depression.
If we take lessons from history such economic upheaval could ignite political instability and possible military conflict, but with the US positioned as the antagonist this time against its long-standing friends and allies.
The historical parallels between Trump’s trade policies and the economic protectionism of the early 20th century are alarming and unmistakable. In the aftermath of World War I, the US enacted a series of tariffs aimed at protecting its economy. The Smoot-Hawley Tariff Act of 1930 raised duties on hundreds of imports, prompting retaliatory tariffs from other nations and severely constricted global trade. These measures contributed significantly to the onset of the Great Depression, which ultimately became a catalyst for protectionism, resulting in the rise of nationalism and fascism, which led to World War II.
The interconnectedness of national economies around the world demonstrated that the economic volatility generated by those tariffs had far-reaching and lethal consequences.
Economists and historians alike agree that historically there has been a clear connection between trade wars and military conflicts. French economist Frédéric Bastiat is often quoted for his insight that “when goods do not cross frontiers, armies will.”
His words resonate today when we consider the possible repercussions of the trade war initiated by the Trump administration. When economic ties fray and nations retreat into isolationism, a vacuum is created, one that can be easily filled by inflamed nationalist sentiments. If we look at the reaction of many Americans on social media to Trump’s denigrating remarks about Canada and his repeated comments about annexing the country as the 51st state, we will find many instances of chauvinistic nationalism with militaristic narratives targeting Canada by Trump’s MAGA loyalists.
Economists have consistently warned that the consequences of Trump’s tariffs will not be confined to the countries directly affected. Increased costs on imports will destabilize local economies, raise consumer prices, and ultimately diminish the purchasing power of consumers both in the US, Canada and any other nations targeted by tariffs. Key industries will find demand for their products from export markets reduced significantly as countries which are their primary foreign markets retaliate with tariffs of their own.
The potential for an inflationary spiral also looms large as tariffs will increase the costs of goods in all sectors of the economy, which will be felt by consumers. Coupled with reduced spending power, this could easily push the American and Canadian economy into recession, and the downturn would ripple through global markets given that the US accounts for 26.1 per cent of the world’s GDP. American families, far from reaping the promised benefits of Trump’s tariff policy, will likely face higher unemployment and suffer a decline in living standards instead.
In addition, one cannot overlook the broader geopolitical implications of Trump upending decades of American foreign policy. While casting traditional friends and allies like Canada in an adversarial role, the Trump administration has extended an olive branch to Russia — a nation that historically embodies potential threats to US and European security and to democracy. This inversion of relationships has created a precarious diplomatic landscape, wherein mutual trust and cooperation have been eroded, and the alliance that preserved peace in Europe since World War II has been shaken to core.
With Trump appearing more inclined to treat Russia as a partner while labeling Canada and its European allies as economic adversaries, the global political order has reached an unsettling and critical inflection point with broad implications for the global political order. Just as tariffs have the potential to economically destabilize countries, the geopolitical tensions resulting from this seismic shift in US foreign policy could eventually ignite conflicts that run far deeper and wider than trade concerns.
This begs the question whether there is a path forward to restore economic stability and the international order that has maintained economic stability and an uneasy global peace since World War II. The answer is that there is and it is the US Congress, which would need to take decisive action to reign in a president who is shredding relationships that have been built over eight decades. Because while Trump may wield power through executive orders to impose tariffs, Congress possesses the authority to repeal the laws enabling such actions. But it will take a united stand by courageous members of Congress and Senators against a president pursuing policies that are contrary to the interests of the US and its allies.
History serves as a stern reminder of the devastation wrought by trade wars. If Trump’s “America first” approach to international trade compels other nations to adopt more protectionist stances, economic systems around the world will destabilize, while political extremism rises, and the spectre of military aggression looms ever larger. The connection between trade and peace has been articulated by thinkers like Immanuel Kant, whose assertion still holds water today, that the spirit of trade is synonymous with prosperity, while the absence of commerce could facilitate war.
If Canada wishes to avert the potential catastrophic outcomes associated with trade wars — outcomes that our history has painfully illustrated — it is imperative for our leaders to recognize the urgency of the moment. As the world stands at an inflection point in history, Canada and its allies need to push back hard against American tariffs, and recommit to diplomacy and trade while opposing division and hostility. Just as the present is informed by the lessons of the past, it is up to our leaders to remember that history and ensure that we chart a course that will avoid a potential conflict which would have global ramifications.
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Nick Seebruch, editor
