On April 2nd, “Liberation Day” will occur in the US. This is the day in which the tariffs proposed by President Trump will be enacted, not just towards strategic rivals such as China, but also towards friends and allies such as Canada, Mexico, and the EU. The US, Canada, and Mexico are also linked by a trade agreement, USMCA, which replaced NAFTA, and was signed by Trump himself during his first mandate.
The reaction by the Canadian government has been particularly strong. The new prime minister Mark Carney, who called a snap election in order to get a full mandate after gaining power as a result of the resignation by former PM Justin Trudeau, said in a speech that “the old relationship with the US”, aimed at deepening the integration between the two economies, was “over,” and that Canada will need to start thinking about itself. He also said that Canada will impose retaliatory tariffs aimed at providing maximum damage to the US and minimum damage to Canada. Trump “reached out” to have a call with Carney, whose first foreign trip was to Europe rather than the US. During the call, the two leaders agreed to negotiate on the tariffs, but the tone remained tense.
This response from Canada was mirrored by Greenland, which didn’t welcome the visit by US Vice President JD Vance and his wife Usha to island. Vance only spent three hours in Greenland, all in the US military base there, because he was met with vibrant protests and an active boycott by local shops, which refused to serve the couple.
But the issue of tariffs has now started to become intertwined with another centrepiece of Trump’s policy, i.e. the negotiations between Russia and Ukraine. After conceding to Putin anything he could possibly demand from a negotiation without requiring him to commit anything in return, Trump is saying that he’s now “pissed off” with the Russian president, as Putin is dragging his feet on the deal, refusing to start the ceasefire that the Ukrainians have already agreed to. (Here we can see the good lessons on diplomacy reportedly imparted by British diplomats to the Ukrainian delegation after the Oval Office ambush). So, President Trump said the US will impose secondary tariffs on Russian oil imports (i.e. on countries purchasing Russian oil) if Putin does not agree to a ceasefire immediately.
One can see that tariffs have been used for multiple purposes: as a negotiating tactics, as a pressure/coercion instrument, and – as the ideologue behind tariffs (Peter Navarro) explained – to finance permanent tax cuts, together with a reduction in gasoline prices deriving from an increase in US shale oil and gas production. While Navarro speaks about tax cuts to the middle class, as we discussed last week, this is likely to result in massive wealth transfer from the poorest 40% of the population to the richest 1%, in which the middle class is not comprised (clearly a case of “turkeys voting for Christmas”).
As “Liberation Day” approaches, one wonders if the strategic objectives of the US administration are being met. The Secretary of Defense Pete Hegseth is mired in scandals: after the “Signal chatgate”, it emerged his wife – a Fox News producer – participated in DoD meetings without the necessary security clearing. One can only remember Lord Ismay’s old saying about NATO, which was built to keep the “Americans in, the Germans down, and Russia out.” After the recent concessions to Putin and Germany’s re-armament, it seems that we are now seeing “America out, Russia in and Germany up.” Not exactly the most brilliant outcome.
