America and Canada Are Racing to Replace Each Other

At the United Nations, Donald Trump touted a Belarusian potash deal and priced it against Canada ^[1].

The pricing would be for substantially less than we are currently paying to Canada, very good news for our Farmers and Ranchers. — Donald Trump

In Ottawa, Mark Carney is preparing for a different eventuality — what his own government calls "extreme tail risk," up to and including a U.S.-led invasion ^[2].

I think you have a responsibility in these roles to look at extreme tail risk. — Mark Carney

Two allied capitals now plan around each other as hostile strangers. The trade war became that on August 21, when Carney walked away over U.S. demands touching Canadian culture, language, and trade policy ^[3]. What has followed is not a stalled negotiation. It is two economies quietly building to not need each other. Washington's side is a list of moves under a stated mood. Trade representative Jamieson Greer gave the posture its rationale — there is no urgency to restart talks because the oil, gas, and potash Washington wants are still arriving ^[3].

We’re comfortable with where we are. — Jamieson Greer

Commerce Secretary Howard Lutnick put a date on the wait ^[4].

Canada treated President Donald Trump "disrespectfully," but they will change their tune after mid-October "because their elections will be behind them," — Howard Lutnick

Trump's own version is blunter ^[4].

It is very good for Canadian Politicians like Prime Minister Carney to make President Donald J. Trump 'the enemy,' until their Economy collapses. — Donald Trump

The administration is backing the mood with moves. It is negotiating Belarusian potash, backing a $450 million phosphate fertilizer plant — the first built in the United States in more than 40 years, designed to cut import dependence by 48 percent ^[5] — and planning a 750,000-tonne-a-year aluminum smelter to replace Canadian metal ^[6]. Canadian goods have been stripped from the federal procurement system ^[7]. The wait is a bet, and so far it is half-paid. The collapse Washington is counting on has not arrived: Canada's economy grew 3.4 percent annualized in the second quarter, and BMO's chief economist read the numbers straight ^[8].

After all the collective angst about a possible technical recession just a few months ago, it's now clear that the underlying economy is still grinding ahead. — Doug Porter

The squeeze is real, but it is a bleed, not a collapse. Canada shed 42,000 jobs in August against forecasts of gains ^[9]. A KPMG survey found 29 percent of 275 manufacturers have already moved some or all production south, with another 13 percent weighing the move ^[10]. Sleeman will shift U.S.-market beer production by early 2027, Crown Royal already bottles in Alabama, and Rayonier shut a Quebec paperboard mill ^[9]. Ottawa is building the same way. It answered the tariff wall with counter-tariffs on $27.6 billion of U.S. imports ^[9], and 70 percent of Canadians now back EU associate membership ^[11]. Carney is swapping Starlink for Telesat satellites and pushing LNG exports to double by 2030 ^[12]. His framing is resilience, not self-sufficiency ^[7].

The objective is not self-sufficiency. It is collective resilience. — Mark Carney

He concedes no single partner replaces the scale of the American market ^[13]. Washington, meanwhile, keeps taxing every one of these exits — a 50 percent tariff on Canadian luxury outerwear ^[14], a threat of "very serious tariffs" against Europe if the alliance goes through ^[7] — even while Greer waves off the whole sovereignty question as, in his word, a "shtick" ^[1]. Neither replacement exists yet, which is what makes this a race rather than a done deal. The United States still imports 80 percent of the aluminum it consumes, and Canada supplied 1.16 million of the 1.68 million tonnes imported in the first half of the year — the smelter is still a plan on paper ^[6]. The luxury firms Washington is squeezing have nowhere else to sell in volume ^[14]. Both sides have stopped haggling and started scaffolding. The comfort is shakier than the list suggests. The aluminum tariff was tentatively cut from 50 to 25 percent in August only after Canada redirected metal to Europe ^[15] — relief came only once the metal began flowing elsewhere. And while Canada sits frozen out, the administration is closing deals with China and Mexico; the one negotiation it has failed to close is with the neighbor it insists it can do without ^[3]. Six weeks from the midterms, Trump's approval sits at levels compared to Nixon or George W. Bush ^[16]. The resolution of this war is now scheduled on someone else's ballot box. Washington is waiting on Alberta's October 19 referendum ^[17] and a collapse that has not come; Ottawa is waiting on midterms that may not punish. Each capital has staked its comfort on an election it does not control — and both building projects are still scaffolding.