Sunday, March 16, 2025 | 2 a.m.
President Donald Trump has promised a massive escalation of his global trade war on April 2, when far-reaching tariffs will be imposed on nations around the world. The rest of the world has been preparing retaliatory tariffs. Unless there’s a change, American consumers and businesses are about to be crushed by our peculiar president’s adolescent need to feel tough.
While Trump’s legal authority to impose such tariffs is dubious, we have little reason to believe that the GOP-controlled Congress will act to prevent the trade war’s escalation or the subsequent powerful tilt toward economic recession.
Canada and Mexico are our largest trading partners. Because they are our neighbors and friends, over the past 40 years the economies of the three North American nations are integrated in ways unlike any other.
Trump negotiated the current U.S.-Mexico-Canada Agreement (USMCA) in his first term, and he made no mention of tariffs against our neighbors on the campaign trail, so everyone assumed those trade relations were stable. When he made the surprise announcement of 25% tariffs on Mexico and Canada earlier this year, it sent shock waves through all three countries’ economies.
To give a sense of the stakes, consider these numbers. In 2024, the trade relationship between the U.S. and Mexico reached an estimated $839.9 billion, with exports to Mexico totaling $334 billion and imports from Mexico amounting to $505.9 billion. Meanwhile, U.S. total goods trade with Canada was estimated at $762.1 billion, with exports to Canada reaching $349.4 billion and imports from Canada totaling $412.7 billion. Notice that imports and exports with both countries were fairly balanced, which is remarkable when you consider the U.S. has a much larger population.
Combined, these figures indicate a total goods trade volume of approximately $1.602 trillion, with some states disproportionately tied to trade with our neighbors. Montana has the highest dependency, with 93% of its imports coming from Canada and Mexico in 2024. Other border states like Maine (72%), North Dakota (71%) and Vermont (71%) also show high reliance on imports from these nations. Michigan, with its deeply integrated automotive manufacturing sector, sources 69% of its imports from the two countries. Worth noting as well, these figures don’t include electricity purchased from Canada by border states likeMaine, Michigan and New York.
Put simply, a sustained trade war with our neighbors would derail our economy. Yet from this self-made disaster, there is a remarkable opening for Trump to emerge from this debacle as a winner.
With Canada and Mexico both under new leadership — Mark Carney was sworn in as Canada’s prime minister last week while Claudia Sheinbaum became Mexico’s president in October — Trump has a golden opportunity to renegotiate the USMCA and reset relations with America’s two largest trading partners before diving into a global trade war. This would salvage 60 years of economic relationships and ensure that our North American trading bloc, which underpins America’s prosperity, is on stable ground.
America is the world’s most powerful nation, but no nation is strong enough to wage global economic war without destroying its own economy. The history is clear: Nations that isolate themselves economically make themselves poor. That’s what China did from 1949 until 2001, when it was among the least developed nations in the world. With its admittance to the World Trade Organization in 2001, China was no longer an isolationist nation and began to prosper.
Trump’s isolationist tendencies threaten to impoverish Americans and break our ability to trade globally, possibly for decades to come. And ironically, today China would love to fill that void we are about to create. If the U.S. is to win what The Wall Street Journal has called “the stupidest trade war ever,” it is imperative that it end quickly.
To ensure a stronger hand globally and a fast resolution with other nations, Trump’s smartest move would be to operate from a position of greater strength, and forging an agreement with our neighbors is key.
During his first days in office, Trump invoked emergency powers that allowed him to threaten 25% tariffs on imports from Canada and Mexico. In response, Canadians engaged in boycotts of American products, with some provinces even removing American alcohol from store shelves. Ontario also threatened to cut off electricity exports, leading Trump to double down with threats of a 50% tariff, before cooler heads prevailed.
Mexico has threatened similar retaliatory tariffs but has thus far staved off Trump’s worst impulses by making improvements related to immigration and drug trafficking. However, market uncertainty is ever-present, especially as April 2 draws near.
Beyond North America, the European Union, China and other trading partners have retaliated against Trump’s tariffs and tariff threats with targeted measures of their own, shrinking foreign markets for U.S. goods. Consumer sentiment has dropped and economists, investors and financial advising firms have raised fears of an impending recession.
Simply put, the U.S. economy cannot afford an unchecked trade war — not when inflation is still above target, not when markets are faltering and certainly not when economic uncertainty threatens to dampen consumer spending.
Both Canada and Mexico have signaled they would embrace a fast renegotiation of the USMCA, which would provide stability for industries that rely on cross-border trade, restoring confidence to farmers, manufacturers and investors.
A stronger USMCA would also help Trump fulfill his pledge to secure a better deal for American workers, securing jobs by ensuring that U.S. labor and environmental standards are competitive.
Finally, securing a renegotiated trade deal would strengthen Trump’s political legacy. By showcasing his ability to broker a deal that benefits all three nations, Trump could position himself as the leader who restored economic unity in North America while standing firm on U.S. trade interests.
Conversely, if Trump proceeds with his planned escalation of tariffs April 2 without first addressing the North American trade crisis, the consequences could be severe. A deepening dispute with Canada and Mexico while also waging a global trade war could disrupt supply chains, leading to job losses in key industries while increased tariffs on imports would inevitably be passed down to consumers, fueling inflation and eroding American purchasing power.
Despite appearing to confuse naked bullying as dialogue, Trump has often portrayed himself as a dealmaker, someone who can negotiate to achieve the best outcomes for the American people. Now, he has a chance to prove it by securing a durable victory that ensures North America’s economic stability, safeguards American jobs and reinforces the continent’s competitive standing.
This is a moment for pragmatism over confrontation. If Trump wants to make good on his promise to fight for American workers, he must first protect the trade relationships that matter most. Before launching a trade war with the rest of the world, the president should first win the one that is closest to home.