The situation now seems to be a full-blown trade conflict with the United States, our closest ally and neighbor. Canada, deeply tied to the American economy, has faced tariffs and reciprocated. Despite the Liberal Party’s resurging popularity in polls due to growing anti-American attitudes among Canadians, President Trump keeps urging Canadians to relinquish their independence and become the 51st state of the U.S.

To counter this unprecedented rhetoric, perhaps an equally remarkable action is needed. Trump is known to prioritize trade imbalances, considering a negative balance as favoring another country. Many economists view this differently, arguing that countries with trade surpluses actually benefit the U.S. Why, then, has Trump targeted Canada?

U.S.-Canada trade has mostly been balanced in the past two decades, aligning with what the president claims to desire in all trading partners. The current trade gap of about $45 billion, though influenced by American energy demand in Canada, is comparatively small. The major part of the deficit stems from U.S. imports of Canadian energy, particularly oil in the west and electricity in the east.

A potential solution is Canada eliminating all tariffs, even the retaliatory ones, and promoting unilateral free trade. This move would challenge Trump, who advocates reciprocal or balanced tariffs, potentially leading to U.S. tariff reductions. Subsequently, Canadian living standards would rise as prices fall and protected industries adjust, potentially redirecting savings to boost defense spending.

Despite potential challenges involving national pride and political backlash, prioritizing economic prosperity over mere trade war victories could benefit both Canadians and Americans in the long run.