The Real Risk of a Trade War With Canada: America Needs Its Neighbors to Counter China

By Chad Brown, Senior Fellow, Peterson Institute for International Economics
Foreign Affairs News
September 1, 2026
Category: Business & Politics
Region: Canada, United States

The more the United States undertakes comprehensive efforts to reduce its vulnerability to Chinese economic coercion, the more important it becomes for Canada and Mexico to align their own policies. Misaligned tariff rates across the three countries incentivize the transshipment of Chinese goods to U.S. consumers. …Fundamental differences among the three countries allow for specialization based on what workers and companies in each do best. …Trump’s 2025 and 2026 tariffs pursued too many contradictory objectives. Beijing’s economic coercion clarified the most important task: to quickly create new sources of supply outside China. The ongoing USMCA negotiations present a political opportunity to pursue that objective by better aligning the countries’ tariff policies along three dimensions. …Then, Canada and Mexico need to raise some of their tariffs on China. …The most immediate need is for the Trump administration to stop implementing policies and circulating rhetoric that undermine North American unity.

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