Earlier this week, it appeared as if the Trump administration was going to follow through on its threat to impose a sweeping 25 percent tariff across the board on Canadian exports to the United States. Canada owes the United States “a lot of money, and I’m sure they’re going to pay,” President Donald Trump claimed. “We may have, short term, some little pain, and people understand that. But long term, the United States has been ripped off by virtually every country in the world.” Ottawa was sent scrambling for a response and announced a set of retaliatory tariffs, targeting $150 billion on an array of U.S. products, including appliances, machinery, and agricultural goods. “Tariffs against Canada will put [U.S.] jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities,” warned Canadian Prime Minister Justin Trudeau.

After a series of calls with Trump, however, Trudeau was able at the last moment to secure a 30-day pause on tariffs. (Mexico, which faced a similar threat from Trump, also won a reprieve.) In exchange, Trudeau offered a suite of measures to shore up the Canadian border, including a variety of previously announced investments on increased manpower and surveillance capabilities aimed at curbing illegal immigration and combating the flow of fentanyl.

The pause is good news, especially for Canadians, who would have suffered immediate economic harm had Trump followed through. But in other ways, the damage is already done. Trump’s decision to penalize a neighbor, an ally, and one of the closest economic partners of the United States in a manner more commonly reserved for adversaries is an unprecedented move that signals a fundamental shift in Washington’s approach to alliances. The treatment he has doled out to Canada is a harbinger of what is to come for U.S. allies in Europe and Asia. In recent days, Trump has chastised Taiwan for its trade surplus with the United States and warned the European Union that tariffs could be “coming soon.”

The Trump administration’s doctrine of brute-force economic coercion—executed through tariffs, executive orders, and the wielding of Washington’s financial hegemony—threatens to transform transatlantic and Indo-Pacific relationships into almost purely transactional affairs. The results will hurt everyone involved—and help American adversaries such as China and Russia. In the short term, the most pragmatic approach for Canada (and other U.S. allies, as their turns come) is to respond to Trump’s threats in a calibrated and clear-headed manner. This is easier said than done, however, as domestic politics often incentivize responses driven by pride or nationalism. Canadians and others must resist the temptation to lash out. Countermoves and retaliation are necessary, but overreactions will only hurt Canada’s economic and security interests in the long run.

Transaction man

Trump’s approach to foreign policy is rooted in a zero-sum, dealmaking mentality, in which economic leverage represents the primary tool of statecraft. Traditional diplomacy and alliance management are relegated to the sidelines in favor of an aggressive, protectionist agenda that prioritizes immediate economic gains over long-term strategic stability. Although many American allies have become accustomed to criticism from Washington over trade imbalances and defense spending, Trump is the first U.S. president in the contemporary era to translate those grievances into direct economic warfare against partners—using weapons generally reserved for Washington’s foes.

Trump’s rhetoric makes clear that his administration views all economic relationships, including those with allies, as inherently adversarial, requiring constant renegotiation under the threat of financial penalties. This approach creates uncertainty among U.S. partners and raises concerns that Washington’s commitment to collective security and economic cooperation is contingent on short-term transactional benefits. Trump’s defenders argue that his approach is necessary to address trade imbalances and force allies to take their security commitments more seriously. But the long-term consequences of his economic belligerence have been largely negative for all involved. Steel and aluminum tariffs the Trump administration placed on Canada in 2018, for example, prompted retaliatory measures that harmed American businesses and consumers while failing to yield significant strategic gains.

Carrying out economic warfare on allies sows distrust and risks fracturing the transatlantic and Indo-Pacific security architectures that have underpinned global stability for decades.

The fallout, however, goes far beyond the bottom line. Carrying out economic warfare on allies sows distrust and risks fracturing the transatlantic and Indo-Pacific security architectures that have underpinned global stability for decades. If Washington imposes tariffs on European and Asian allies, it will create a wedge that adversaries such as China and Russia will eagerly exploit. Beijing, for example, is seeking to drive a deeper divide between the U.S. and Europe by presenting itself as a more reliable economic partner. For its part, Moscow is capitalizing on transatlantic tensions to weaken NATO cohesion. The growing strategic partnership between these two powers—cemented through military cooperation, economic agreements, and shared hostility toward the West—represents a direct challenge to the U.S.-led global order. By undermining trust with allies through indiscriminate economic aggression, Washington risks isolating itself at a time when maintaining strong, unified alliances is more critical than ever.

Hard truths

Trump’s transactional approach to alliances may be shortsighted and counterproductive, but his broader critique of burden sharing is not without merit. Many of Washington’s allies have underinvested in their own defense, relying on U.S. military power as a security blanket. Canada is a clear example, with a defense budget hovering around 1.4 percent of GDP and a military that has been consistently malnourished and unable to fulfill its obligations on continental security, let alone make sustainable contributions beyond. In the Indo-Pacific, key U.S. allies such as Japan have historically constrained their military spending and capabilities, despite facing direct threats from China and North Korea. The most glaring example of this imbalance, however, is the NATO alliance: until recently, most member states, like Canada, failed to meet the alliance’s target of spending two percent of GDP on defense.

Meanwhile, a number of revisionist states are cooperating and coordinating more deeply than ever before, making it easier for any one of them to threaten their adversaries and for the broader collective to challenge the U.S.-led rules-based order. This should be a wake-up call for U.S. allies to do more to bolster their own security. The era of guaranteed American military supremacy, capable of underwriting global stability at little cost to its partners, is over. U.S. allies must recognize that investing in their own defense is not merely a concession to Washington’s demands but a necessary adaptation to an increasingly dangerous world. For Canada, this means considering national security and defense as top-line items, not budgeting. Ottawa needs to modernize its capabilities, particularly its naval assets and surveillance capacities in the Arctic, to demonstrate its reliability as a frontline defender of North America’s northern flank. Other allies need to take similar steps. European countries must accelerate their efforts to modernize their militaries, enhance force readiness, and reduce their reliance on American forces. In the Indo-Pacific, countries such as Australia, Japan, and South Korea must deepen security cooperation and build up their own forces to ensure regional stability.

The need for greater burden sharing extends beyond military spending. Allies must also strengthen economic resilience against coercion from hostile states, which goes beyond the kind of bullying Trump favors. U.S. allies must reduce their dependence on Chinese supply chains, diversify their energy sources, secure their critical infrastructure from cyber and espionage threats, and coordinate their responses to economic pressure tactics used by Beijing and Moscow.

Ottawa can start that process by taking several key steps for its own security. First, while discussions with the Trump administration on trade and the border (particularly on combating the trafficking of fentanyl) will continue, it’s important to remember that the schism now between the two countries is about more than just trade, and Ottawa will have to boost defense spending to bolster its credibility in Washington. But the trade war that nearly broke out this week—and might break out next month—is a wake-up call to Canada and other U.S. allies that they need to get creative when it comes to trade alignments and geopolitical positioning. For all of them, the United States remains an existential economic and security partner. But that does not preclude U.S. allies, including those in Europe and the Indo-Pacific, from pursuing partnerships on energy, agriculture, and security that don’t involve Washington at all.

In an ideal world, the United States would encourage its allies to meet or exceed their defense commitments through diplomatic engagement, security incentives, and joint investment in defense technologies rather than through punitive economic measures. That, however, is not the world Trump seeks to bring about. Canada is the first ally to get a taste of what he intends. But it will not be the last.

(Source: Foreign Affairs)

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