Canada’s Reorientation in the Shadow of “America First”: A Nation Redefines Itself

### More than just a dispute: Why Canada no longer blindly trusts the US – and what that means for us ### When the neighbor became a threat: Canada's radical turnaround since the Trump era ### America First, Canada alone? How one president changed the world's closest partnership forever ###

From partner to priority: How Canada was forced to reinvent its own security.

For decades, the relationship between Canada and the United States was considered the gold standard of international partnerships—a deep, almost self-evident interweaving of economics, security, and culture, symbolized by the world's longest undefended border. However, this foundation of cooperation and predictable asymmetry was fundamentally shaken by the presidency of Donald Trump and his "America First" doctrine. What followed was not an ordinary diplomatic dispute, but a tectonic shock that led Ottawa to realize that dependence on its southern neighbor represents an existential vulnerability.

The attack came on all fronts: an aggressive renegotiation of the NAFTA free trade agreement, the imposition of punitive tariffs on steel and aluminum under the humiliating pretext of "national security," and the relentless political pressure on allies called decades of certainty into question. The personal animosity between the heads of state and the dramatic decline in public opinion in Canada toward the US were only the visible symptoms of a deep alienation that shook trust to its core.

This shock forced Canada to engage in a strategic reorientation that goes far beyond short-term crisis management. In response to protectionism, the government initiated a deliberate policy of economic diversification, concluded groundbreaking trade agreements with Europe (CETA) and the Pacific (CPTPP), and defined global markets as a national necessity. At the same time, doubts about the American security guarantee led to the largest investments in continental defense in generations and a renewed focus on sovereignty in the Arctic. The following text analyzes this paradigm shift and shows how the Trump years forced Canada to evolve from a dependent partner to a more strategically autonomous actor that must redefine its place in the world.

The pre-Trump era: A foundation of cooperation and competition

To understand the extent of the disruption triggered by the Trump administration, it is essential to examine the state of Canadian-American relations before 2017. This era was characterized by deep interdependence, but not without persistent challenges. This established "normal" provides the crucial context against which the subsequent disruption appears as a historic rupture.

Economic integration under NAFTA: Prosperity with friction points

The foundation of bilateral economic relations was the North American Free Trade Agreement (NAFTA), which entered into force in 1994 and built on the earlier Canada-U.S. Free Trade Agreement (CUSFTA) of 1989. NAFTA created the world's largest free trade area and led to a tripling of trade in goods between Canada and the U.S. and a tenfold increase in trade with Mexico. Key sectors such as the automotive and energy industries became highly integrated, with complex, cross-border supply chains in which components crossed the border multiple times before reaching final assembly. Around 70% of Canadian goods exports to the U.S. were used as intermediates for American goods, underscoring the depth of this interdependence.

For the Canadian economy, the outcome of NAFTA was largely positive, albeit complex. The agreement promoted productivity gains in manufacturing, opened up new export opportunities, and attracted significant foreign investment. At the same time, it led to a greater concentration of Canadian trade with the United States, whose share of total exports rose from 74% to 85%. Some analyses also pointed to negative employment effects in certain sectors and increased restructuring pressures on Canadian companies to remain competitive. Overall, however, NAFTA provided a predictable and stable trading environment that underpinned Canadian prosperity.

This close relationship, however, was not without conflict. The dispute over softwood lumber exports served as a prime example of these recurring tensions. At the core of the conflict was the US claim that Canadian provinces were subsidizing their timber industry by setting artificially low prices for timber from state-owned forests (so-called "stumpage fees"). This led to a recurring cycle of US tariffs, Canadian lawsuits before NAFTA and WTO bodies, and negotiated compromises such as the 2006 Softwood Lumber Agreement (SLA). The expiration of this agreement in 2015 set the stage for the next confrontation, just as the US political landscape began to change dramatically.

Another example of bilateral friction was the Keystone XL pipeline controversy. The project, which was intended to transport Canadian oil sands crude to US refineries, became a flashpoint for environmental activism and a highly political issue in the United States. President Barack Obama's rejection of the pipeline in 2015, despite support from the Canadian government, highlighted how US domestic political dynamics could overshadow shared economic interests and lead to significant tensions.

The relationship before 2017 can be described as one of "managed asymmetry." Canada was heavily dependent on the US market, but this dependence was managed through a predictable, rules-based system (NAFTA, WTO). Disputes such as the softwood lumber conflict, while acrimonious, were ultimately negotiated and resolved within this established framework. This process, while often frustrating for Canada, provided a crucial degree of stability. However, deep economic integration also created vulnerabilities that were not fully recognized in Canada until they were exploited. The efficiency of cross-border supply chains was a strength during periods of cooperation, but proved to be a critical weakness when threatened with tariffs and disruption, leaving Canada extremely vulnerable to economic pressure.

A common defense umbrella: NORAD, NATO and the “Five Eyes”

The security and defense partnership between Canada and the United States was historically unprecedented. At its core was the North American Aerospace Defense Command (NORAD), established in 1958 during the Cold War and still the world's only binational military command. Its mission is to provide air and space warning and control of the airspace over the continent, led by a U.S. commander and a Canadian deputy, both of whom report to the heads of state and government of both countries. Originally conceived to defend against Soviet bombers, NORAD's mission evolved to include ballistic missile surveillance and, after September 11, 2001, defense against more general air threats. The government of Prime Minister Stephen Harper made the NORAD agreement permanent in 2006 and expanded it to include a maritime warning component.

As a founding member of NATO, Canada has consistently been a reliable partner in collective security missions. While Canadian contributions were valued, defense spending, consistently below the NATO guideline of 2% of gross domestic product, was a source of recurring, albeit mostly behind-the-scenes, friction. The deepest level of cooperation took place within the "Five Eyes" alliance, an intelligence community that includes the United Kingdom, Australia, and New Zealand, in addition to the United States and Canada. This partnership symbolizes the exceptional trust that forms the foundation of the security relationship.

After the terrorist attacks of September 11, 2001, cooperation in border security was massively intensified. This led to initiatives such as the Safe Third Country Agreement (STCA) of 2002 to regulate asylum applications at the shared border and the "Beyond the Border" initiative of 2011 under Harper and Obama. The latter aimed to create a common security perimeter while facilitating legitimate trade and travel.

This security architecture was based on an implicit pact: Canada received unprecedented access to the US defense and intelligence apparatus. In return, Canada offered the US strategic depth and secure northern flank protection, as well as reliable, albeit modestly funded, alliance contributions. This pact presupposed a shared understanding of threats and mutual respect—assumptions that would later be challenged. Even before the Trump era, the need to modernize NORAD had been recognized, as the threat landscape was evolving faster than the defense infrastructure. The North Warning System was outdated, and new threats such as hypersonic missiles were appearing on the horizon. However, the political will and financial resources for a comprehensive overhaul were initially lacking.

Cultural Proximity and Political Tides: Public Opinion before 2017

Political relations at the top were shaped by the respective personalities. The 2000-2016 term encompassed the strained relationship between Liberal Jean Chrétien and Republican George W. Bush, culminating in the dispute over the 2003 Iraq War, when Canada refused to participate without a UN mandate. This was followed by the more pragmatic, businesslike relationship between Conservative Stephen Harper and both Bush and Democrat Barack Obama, focusing on security cooperation and the resolution of trade disputes. The culmination of personal harmony was the close friendship between Justin Trudeau and Barack Obama, which marked a period of great cordiality in bilateral relations.

Canadian public opinion reflected these political tides. The traditionally high approval rating for the United States fell significantly during the presidency of George W. Bush, particularly due to the Iraq War. Under Obama, ratings recovered and reached very high levels again, largely due to his personal popularity. This reveals a central aspect of Canadian perceptions: attitudes toward the United States are strongly dependent on the person in the White House. Polls have shown that Canadians distinguish between the American people, whom they generally like, and the current government, of which they are critical.

Despite the close ties, a growing cultural and value-based divergence became apparent during this period. Studies suggested that Canadians and Americans were diverging on issues of social liberalism, the role of government, and attitudes toward authority. This underlying societal shift would significantly amplify the political and emotional reaction in Canada to the election of Donald Trump. The conflict between Chrétien and Bush over the Iraq War set an important precedent. It demonstrated that Canada was willing and able to diverge from the United States on a key foreign policy issue despite intense pressure. The fact that the feared economic consequences did not materialize at the time was a crucial lesson. This act of political independence served as a historic anchor for the subsequent Trudeau government when it faced its own, even greater pressure from Washington.

Business-to-business (B2B) trading platforms have become a critical part of global trade dynamics and thus a driving force for exports and global economic development. These platforms offer significant benefits to companies of all sizes, particularly SMEs – small and medium-sized businesses – which are often considered the backbone of the German economy. In a world where digital technologies are becoming increasingly prominent, the ability to adapt and integrate is crucial to success in global competition.

More about it here:

• Business-to-Business (B2B) trading platforms

The Trump Shock: A Paradigm Shift in Relations

Donald Trump's presidency marked a fundamental break with the past. His "America First" doctrine replaced traditional alliance policy with a transactional approach that challenged decades of certainties and forced Canada to fundamentally reassess its position.

The attack on free trade: NAFTA renegotiation and the tariff war

The Trump administration branded NAFTA the "worst deal ever" and initiated an aggressive renegotiation. Canada's initial strategy of constructively engaging in modernizing the agreement was met with a series of US demands that Ottawa perceived as "poison pills." These included a "sunset clause" that would have automatically expired the agreement after five years, the abolition of Canada's dairy supply management system, and the elimination of the Chapter 19 dispute settlement mechanism, which was crucial to Canada.

The conflict escalated in 2018 when the US imposed tariffs of 25% on steel and 10% on aluminum from Canada, citing national security under Section 232 of the Trade Expansion Act of 1962. This move was a particular affront to Canada. The implication that Canada, its closest military ally, posed a security threat to the US was perceived as absurd and insulting, shattering the foundations of trust. The use of the national security justification was the real turning point. It transformed a trade dispute into a fundamental challenge to the alliance itself. While previous conflicts, such as the one over softwood lumber, had been commercial in nature, the invocation of Section 232 called into question the entire basis of the partnership and made economic diversification a national security imperative for Canada.

Canada's response was swift, decisive, and strategic. On July 1, 2018, Canada's Independence Day, retaliatory tariffs of the same amount went into effect on US goods worth 16.6 billion Canadian dollars. The list of affected products was carefully selected to exert maximum political pressure in key US states and constituencies while minimizing damage to the Canadian economy. This strategy was a lesson in middle-power statecraft. Unable to win a full-scale trade war, Canada relied on targeted, asymmetric pressure to inflict political rather than purely economic damage, thus influencing domestic political calculations in the US.

The negotiations ultimately culminated in the Canada-United States-Mexico Agreement (CUSMA), also known as the USMCA. Canada was forced to make concessions, particularly regarding access to its dairy market, but was able to preserve key interests, most notably the dispute settlement mechanism and a safeguard clause against future tariffs on automobiles. The steel and aluminum tariffs were lifted in May 2019 as part of the ratification process. However, the tariff war had significant economic consequences. Canadian steel and aluminum exports collapsed, supply chains were disrupted, and costs for companies on both sides of the border rose. The episode left deep investment uncertainty and made Canada's economic vulnerability to unilateral US measures painfully clear.

Canada's retaliatory tariffs on US goods (Selected examples, 2018)

In 2018, Canada imposed retaliatory tariffs on selected US goods: various steel products such as pipes and sheets were subject to a 25% tariff to exert general pressure on the US steel industry; various aluminum products such as bars and foil were subject to a 10% tariff with the aim of hitting the US aluminum industry; food products such as yogurt, maple syrup, pizza, and pickles were subject to a 10% tariff, which was seen as a targeted pressure on states such as Wisconsin (Paul Ryan), Vermont, and others; beverages such as whiskey and orange juice were also subject to a 10% tariff, with an eye on states such as Kentucky (Mitch McConnell) and Florida; and various consumer goods, including lawnmowers, playing cards, and sleeping bags, were taxed at 10% to hit production regions in various US states.

Canada's 2025 retaliatory tariffs on US goods

Canada's customs strategy toward the United States underwent a fundamental shift in 2025. Following intense trade disputes and several escalations, both Canada and the United States significantly adjusted their approaches.

Current customs situation (September 2025)

Repealed tariffs

As of September 1, 2025, Canada has lifted most of its retaliatory tariffs on CUSMA-compliant U.S. goods. This affects over CA$30 billion worth of products, including:

• Food: Orange juice, peanut butter, various agricultural products
• Drinks: Whiskey, spirits, beer
• Consumer goods: washing machines, refrigerators, clothing, shoes
• Other goods: motorcycles, paper goods, cosmetics

Existing tariffs

However, Canada maintains strategically important tariffs:

Steel and aluminum products: 50% (increased from 25% in June 2025)

• Includes various steel products such as pipes, sheets, screws and bolts
• Aluminum rods, foils and derivatives
• Trade value: CA$15.6 billion

Vehicles and car parts: 25%

• Passenger cars, light trucks and non-CUSMA-compliant auto parts
• Trading value: over CA$20 billion

Non-CUSMA-compliant goods: 35% (increased from 25% in August 2025)

• All US goods not covered by the CUSMA agreement

Strategic realignment

CUSMA exemptions as a turning point

The decision to exempt CUSMA-compliant goods from tariffs reflects a strategic realignment. Prime Minister Mark Carney emphasized that "Canada and the United States have now restored free trade for the vast majority of our goods." Approximately 85% of Canadian-US trade is now tariff-free again.

Focus on strategic sectors

Canada is now focusing its customs policy on three strategic areas:

1. steel industry
2. aluminum industry
3. Automotive sector

This focus aims to maintain political pressure on specific US states and industries while normalizing bilateral trade.

Political objectives and regional impacts

Original goals (2018 & 2025)

The original retaliatory tariffs of 2018 and their re-imposition in 2025 targeted politically sensitive regions:

• Wisconsin: Tariffs on yogurt and agricultural products
• Kentucky: Through whiskey tariffs (Mitch McConnell's home state)
• Florida: Through orange juice tariffs
• Vermont: Maple syrup tariffs

Current strategy (2025)

The remaining tariffs focus on:

• Michigan and Ohio: Automotive industry centers
• Pennsylvania and Indiana: Steel-producing states
• Washington and Oregon: Aluminum industry

Negotiation dynamics and outlook

Intensive negotiations

Following a telephone call between Carney and Trump in August 2025, the two countries intensified their negotiations. Canada signaled its willingness to make further concessions on steel, aluminum, and automobiles, depending on the progress of the negotiations.

CUSMA review 2026

The CUSMA review, planned for 2026, is already looming. Both countries are using the current tariff negotiations to prepare for this more comprehensive review of the free trade agreement.

Economic impact

Despite ongoing trade tensions, current developments indicate a pragmatic turnaround. The restoration of duty-free trade for 85% of bilateral trade significantly reduces economic burdens, while targeted tariffs remain a negotiating tool.

Canada's Customs Strategy 2025 demonstrates an evolution from broad retaliatory measures to targeted, strategic tools that maintain political pressure while protecting the economic foundations of North American integration.

The Alliance's stress test: Pressure on NATO and the Arctic

In parallel with the trade war, the Trump administration exerted relentless public pressure on Canada to increase its defense spending to the NATO target of 2% of GDP. These demands, often delivered in acrimonious tones, presented the Trudeau government with a dilemma between alliance commitments and domestic priorities. Although Canada increased its defense spending during this period, it remained below target, leading to ongoing tensions. The US pressure had a paradoxical effect: Rather than simply forcing compliance, its abrasive style reinforced Canada's desire for greater strategic independence. It highlighted the risks of overdependence on a single, unpredictable ally.

At the same time, the unpredictability of the US government created new concerns about continental defense. While direct cooperation continued through NORAD, the strategic context shifted. The growing presence of Russia and China in the Arctic, coupled with an unreliable partner in Washington, lent new urgency to Canadian plans for military modernization in the North. The Arctic was emerging as a theater where Canadian and US interests could potentially diverge. While both countries share an interest in defending the continent, Canada's focus on sovereignty and environmental protection could clash with a more aggressive, resource-oriented US approach.

The emotional quake: political tensions and public opinion

The relationship between Prime Minister Trudeau and President Trump was difficult and publicly strained from the start. From the famous hesitant handshake at their first meeting to Trump's personal attacks after the 2018 G7 summit in Quebec, in which he called Trudeau "dishonest" and "weak," the personal animosity reflected the deterioration of official relations.

These tensions led to a dramatic decline in Canadian public opinion toward the United States. Approval ratings for the United States and its president fell to historic lows. A 2020 poll found that only 35% of Canadians had a favorable opinion of the United States. Trust in the US president fell to just 16-17%. For the first time, a majority of Canadians viewed the United States as the greatest threat to their own country. This decline was not just a reaction to individual policies, but to a perceived violation of shared values. Trump's rhetoric and unilateralist approach stood in stark contrast to Canadian political culture, which values ​​multilateralism, openness, and predictable governance.

US immigration policy also had a direct impact on Canada. The Trump administration's harsh rhetoric and actions such as the threatened revocation of Protected Persons with Disabilities (TPS) for Haitians triggered a surge in irregular border crossings into Canada, particularly at locations like Roxham Road in Quebec. This influx of asylum seekers placed a significant strain on Canadian resources and led to an intense domestic debate about the future of the Safe Third Country Agreement. This migration crisis demonstrated in a very tangible way that Canada could not insulate itself from the consequences of US domestic policy. The border became a conduit of instability, forcing Canada to respond to a problem it did not create.

Canadian public opinion of US leadership in selected years shows the following values: 2016 — under US President Barack Obama, approval was 61% (average), with no disapproval reported (source: Gallup). 2018 — under Donald Trump, approval was 16% (source: Gallup). 2020 — for Donald Trump, two measurements are available: according to Gallup, approval was 17%, disapproval is reported at 79% (2025 value); according to Pew Research, the favorability rating was 35%, disapproval was 64% (2025 value). 2021 — under Joe Biden, approval was 41% (average; source: Gallup).

Canada's strategic response: The search for autonomy

The shocks of the Trump years triggered a fundamental strategic realignment in Canada. These were not temporary adjustments, but fundamental changes in Canadian foreign and economic policy aimed at achieving greater autonomy.

Economic diversification is the order of the day: CETA and CPTPP

In direct response to US protectionism and the associated uncertainty, the Canadian government adopted an explicit export diversification strategy. The stated goal was to increase exports to overseas markets by 50% by 2025, thereby reducing the country's extreme dependence on the US market. This strategy was presented not merely as an economic opportunity, but as a "national necessity."

Two central pillars of this strategy were the major multilateral trade agreements. The Comprehensive Economic and Trade Agreement (CETA) with the European Union gave Canada privileged access to one of the world's largest markets. Even more significant was Canada's decision, following the US withdrawal from the original Trans-Pacific Partnership (TPP), to retain the agreement and push it forward as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This move gave Canadian companies a competitive advantage in 10 other Pacific Rim countries, including key markets like Japan. This made Canada the only G7 country with free trade agreements with all other G7 partners.

The pursuit of CETA and CPTPP was a clear strategic counterweight to US protectionism. It was a geopolitical as well as an economic decision intended to signal to the world—and Washington—that Canada had alternatives. This diversification strategy represents the most significant shift in Canadian trade policy since the original free trade agreement with the US in 1989. It is a conscious attempt to reverse the decades-long trend of ever-deepening North American integration and to shift the economic axis from a purely north-south orientation to a more global, multidirectional basis. In parallel, efforts were made to strengthen the domestic economy by reducing interprovincial trade barriers and through "Buy Canadian" policies in public procurement.

Military modernization and new partnerships

The realization that U.S. security guarantees could no longer be taken for granted led to a reassessment of Canadian defense policy. In 2022, the government announced a massive investment of C$38.6 billion over 20 years to modernize NORAD—the largest investment in continental defense in a generation. The plan includes new over-the-horizon radar systems for the Arctic, modernized command and control structures, and new air-to-air weapons systems. This investment is directly linked to the goal of strengthening Canadian sovereignty in the Arctic. In a world with a less predictable U.S. partner and more assertive adversaries, the ability to monitor and control one's own northern territory became a top priority.

At the same time, Canada consciously sought closer security ties with European allies as a counterweight to its dependence on the United States. This included signing a "Security and Defense Partnership" with the EU and hinting at preferential treatment of European suppliers in future military procurement, such as fighter aircraft. This pivot toward Europe is a classic "hedging" strategy. It provides Canada with alternative partnerships, access to military technology, and diplomatic support, thus reducing the country's isolation and dependence on Washington.

A new foreign policy for a changed world

The economic and military changes fit into a new foreign policy doctrine of "strategic autonomy." Canada's goal is to move from a position of dependence to a position of influence, acting as an independent actor that the United States cannot ignore or override. A key tool for this is the increased use of multilateralism, not out of idealism, but as a pragmatic means of influencing the behavior of major powers and forging coalitions with like-minded middle powers.

The ultimate legacy of the Trump era for Canada is the end of complacency. The long-held assumption that the United States would always be a benevolent and predictable partner has been shattered. This forced a national rethink and the adoption of a more sober, self-interested foreign policy. Implementing this new stance remains a challenge. It requires sustained political will, significant financial investment, and a fundamental shift in national mindset. The deep economic and cultural ties with the United States remain, and navigating this complex relationship while charting a more independent course will be the central challenge of Canadian foreign policy for the foreseeable future.

The old relationship is over: Canada's path to greater strategic autonomy

For Canada, Donald Trump's presidency was more than just a period of strained relations; it was a tectonic shock that shook the foundations of Canadian foreign and economic policy. The stable, albeit asymmetric, partnership that characterized the pre-2017 era was profoundly challenged by the "America First" doctrine. The economic attacks through the NAFTA renegotiation and the imposition of tariffs under the pretext of national security, the military pressure within NATO, and the profound alienation in public opinion forced Canada to respond far beyond short-term damage control.

In response, Canada initiated a comprehensive strategic realignment. Economically, through agreements like CETA and CPTPP, it consciously turned away from its crushing dependence on the US market and sought new partners in Europe and Asia. Militarily, it invested heavily in modernizing its continental defenses and strengthened its Arctic sovereignty to become a more indispensable and thus more equal partner, while simultaneously deepening its security ties with Europe. Politically and socially, the experience led to a more sober and independent view of the world and Canada's place in it.

The Trump presidency thus acted as a catalyst. It forced Canada to recognize its vulnerabilities and take a more active role in shaping its own destiny. The "old relationship," based on tacit acceptance and progressive integration, is over. It has been replaced by a more complex and assertive partnership in which Canada no longer merely reacts but actively seeks to define and assert its interests on the global stage. While this path is fraught with uncertainty and costs, it has produced a more resilient, diversified, and strategically autonomous Canada.

☑️ Our business language is English or German

☑️ NEW: Correspondence in your national language!

 

I would be happy to serve you and my team as a personal advisor.

You can contact me by filling out the contact form or simply call me on +49 89 89 674 804 (Munich) . My email address is: wolfenstein ∂ xpert.digital

I'm looking forward to our joint project.

 

 

☑️ SME support in strategy, consulting, planning and implementation

☑️ Creation or realignment of the digital strategy and digitalization

☑️ Expansion and optimization of international sales processes

☑️ Global & Digital B2B trading platforms

☑️ Pioneer Business Development / Marketing / PR / Trade Fairs