Why Economic War Between Canada and the U.S. Is More Dangerous Than It Looks

As the dust settled in the wake of the Second World War, the architects of European integration confronted a problem that treaties and promises alone had repeatedly failed to solve: how do you stop neighbouring countries from going to war again?

Their answer was remarkably practical.

In 1950, French foreign minister Robert Schuman proposed pooling French and German coal and steel production. Those industries were not chosen at random. Coal and steel were the foundations of industrial warfare. Bind them together, and another war between France and Germany would become, in Schuman’s famous phrase, “not merely unthinkable, but materially impossible.”

What followed eventually went much further as European economies became deeply intertwined. Companies invested across borders, and supply chains ignored national boundaries. People worked, studied, retired, and bought homes in other countries.

Those connections created something that is easily overlooked: millions of private reasons not to go to war. If the CEO of a French company talks to her German counterpart every week because each company depends upon the other, both have a powerful incentive to oppose a government that threatens that relationship. If your children studied in Spain, you holiday every year in Italy, and your sister married a Belgian, those countries are harder to turn into faceless enemies.

Interdependence does not prevent war—history provides plenty of warnings against making that claim—but it makes it unpalatable.

And Canada and the United States are now moving in the opposite direction.

We are learning to live without each other

The immediate effects of the current Canada-U.S. trade war are easy to measure: tariffs, lost sales, disrupted supply chains, and higher prices. However, the longer-term effects may be more important.

On August 22, the United States imposed 50 percent tariffs on $27.6 billion of Canadian goods. Canada has now announced matching countermeasures, due to take effect on September 8. And over the last year, since Trump began his economic assault on their country, Canadians have been changing their behaviour. The Bank of Canada reports that Canadians made almost ten million fewer trips to the United States in 2025 than in 2024, a decline of 25 percent. Spending has shifted towards Canadian travel and away from some American products.

The change has persisted rather than disappearing after the first burst of anger. A recent Angus Reid survey found that 40 percent of Canadian grocery shoppers now check where products come from and try to avoid American goods. More strikingly, large numbers say they intend to continue avoiding American vehicles, alcohol, eggs, and dairy even if trade conditions improve.

I’m one of them. I now routinely pick up something in a supermarket, and if I see it is American, I put it back and look for an alternative. Likewise, I have no intention of travelling south of the border while the current situation continues. And, if I am honest, I am not sure how quickly I will go back afterward.

I don’t think that makes me unreasonable. Canadian consumers cannot vote in an American election. We have little ability to influence Congress, and none to remove a U.S. president. Choosing where we spend our money is one of the few direct forms of protest available to us.

That makes the boycott a rational response to economic coercion, but that is precisely the problem. Every time I reject an American product and find an alternative, the next decision becomes easier. I learn which brands are Canadian. I discover substitutes I hadn’t previously considered. And there is a tiny psychological reward in making the choice: I may have almost no influence over Washington, but I can do this. Over time, “I am boycotting American products because of Trump” risks becoming something subtly different: “I don’t buy American.” It becomes an identity, not a choice.

Businesses and governments can go through much the same process. A Canadian manufacturer facing repeated political risk from the United States finds a European supplier. Establishing that relationship costs time and money, and once it works, why go back?

Governments diversify too. What begins as an emergency response becomes resilience policy; resilience policy becomes strategy.

An American president can eventually remove a tariff with a signature, but they cannot issue an executive order requiring Canadian consumers, companies, or governments to trust America again.

When a trading partner becomes a security problem

As those relationships weaken, something else changes: the way each country thinks about the other.

Canada has enormous reserves of oil, uranium, nickel, potash, and other critical minerals, as well as electricity exports and strategic Arctic geography. In a friendly relationship, those are trade opportunities. In an adversarial relationship, they become dependencies and, eventually, targets.

Ontario Premier Doug Ford has already suggested that electricity and exports, including oil, nickel, uranium, and potash, could be used as leverage if the trade war escalates.

Again, Canada’s response is understandable. If Washington uses economic leverage against Canada, Canadian governments will naturally look for leverage of their own. But notice what happens to the language. “We buy critical resources from Canada” can become “America depends upon a foreign government for critical resources.” That is important because the U.S. administration already explicitly describes foreign dependence on critical minerals and strategic supply chains as a national security vulnerability. In July, the White House said inadequate supplies of critical minerals posed an increasing risk to national defence and that the United States needed to “secure” those supplies.

That does not mean Washington is contemplating military action against Canada, but once an economic relationship is reclassified as a security vulnerability, the range of politically imaginable responses widens.

At what point does maintaining access become securing access?

This is also a NATO problem

It is tempting to regard all of this as a bilateral trade dispute. NATO should not. The North Atlantic Treaty itself recognizes that alliance security is not purely military. Article 2 commits members to reducing conflict in their international economic policies and to encouraging economic collaboration. Article 4 provides for consultation when a member’s territorial integrity, political independence, or security is threatened.

The first problem is straightforward: this trade war weakens NATO cohesion. Canada and the world are learning that reliance on the United States carries strategic risk. Every government that decides it needs to hedge against Washington makes the alliance a little less cohesive and creates opportunities for the external powers NATO was designed to deter.

The second problem is much more uncomfortable. NATO was built around a simple conceptual model: the threat was outside the alliance; the allies were inside it. What happens, however, if one of those allies begins moving in a direction that could eventually make it a threat to another? That question becomes particularly difficult when the ally in question is the United States.

There is a parallel here with the fictional Sentinel Compact in my novel Invasion. When Canada faces its crisis, the Compact does not consciously decide to abandon it. Each member looks instead at its own political interests, domestic opinion, trade relationships, and exposure to American retaliation. Individually, the decisions are rational. Collectively, they leave Canada increasingly isolated.

I see an uncomfortable echo of that now.

European governments may well look at Canada and think, “there, but for the grace of God, go I” (although Denmark, given American ambitions in Greenland, has more reason to understand the danger). But the important question is not: “How do we make sure we aren’t next?” It is: “What happens to NATO if coercing Canada works?”

Collective security can fail one individually sensible decision at a time.

I had to do this in fiction first

When I constructed the political background to Invasion, I faced a plausibility problem. It wasn’t whether the United States could physically invade Canada. It was how an American government could persuade ordinary Americans to support doing so.

My answer required years of separation first. Trade had to collapse, border movement had to diminish, supply chains had to separate, and political hostility had to become normal.

Canada had to become less familiar to Americans before it could plausibly be transformed into an enemy. By 2036, the fictional United States no longer sees Canada primarily as the friendly country next door. Instead, it sees a territory that contains the resources it needs.

I invented that process because I needed an extreme scenario to become believable.

Watching parts of the same mechanism develop in reality is troubling.

Which leaves the most uncomfortable question

How much of America’s disengagement is deliberate?

The least sinister explanation is that Donald Trump wants leverage, concessions, and political victories and either does not understand or does not care about the long-term damage to the relationship.

I would prefer that explanation.

But reducing foreign dependence, reshoring production, and securing strategic supply chains are explicit policies of the administration. A July executive order, for example, directs the U.S. defence establishment to source critical materials domestically or from allied nations and to replace suppliers deemed unreliable. So at least some of the disengagement is deliberate rather than collateral damage.

That still does not mean anyone is deliberately preparing the ground for military action against Canada. There is no evidence for that, and pretending otherwise would turn a serious argument into conspiracy theory.

But consider the consequences. As economic ties weaken and supply chains diverge, Canadian retaliation can be recast as proof of American vulnerability. Meanwhile, NATO becomes less cohesive, and Canada becomes easier to discuss in terms of strategic assets to be acquired rather than shared interests.

Perhaps those are simply unintended consequences of a policy designed to make America more self-sufficient. Perhaps advisers understand those consequences but consider them an acceptable price.

The darker possibility—the one I would very much like to dismiss as tinfoil-hat thinking—is that someone also recognizes their strategic usefulness.

Europe's postwar leaders deliberately built interdependence because they understood that peace required more than armies and treaties. We are now pulling some of those connections apart.

You do not have to intend a war to dismantle some of the things that made one unlikely. The uncomfortable question is how much of that dismantling is deliberate, and whether the people doing it understand what else they are pulling apart.

Invasion is available now: robertchillbooks.com/getinvasion