Canada Defends Its Sovereignty. Europe Sells Its Out.
How Mark Carney confronted Trump’s trade bullying while Ursula von der Leyen accepted a one-sided deal that left Europe weaker and Washington emboldened.
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A Power Play Against Key Allies
A new trade dispute stems from the Trump administration’s decision toabandon the United States–Mexico–Canada Agreement (USMCA)—a dealTrump himself negotiated and praised during his first term as “the best andmost important trade deal ever.” Upon returning to office, however, Trumpdeclared the agreement insufficient, threatened high tariffs on Canadianproducts, and demanded an entirely new deal.
This aggressive approach reflects Trump’s characteristic negotiating style:announce an agreement, then issue last-minute demands designed to bullythe other side into granting major concessions. Canadian Prime MinisterMark Carney, a former central banker and Goldman Sachs executive, sharplycriticized the tactic as a “power play” that undermined the reliability of anyagreement. Carney argued that the United States had “asked too much andoffered too little,” portraying the demands as a direct attack on Canada’ssovereignty.
Unlike European Commission President Ursula von der Leyen, who had capitulated to Trump’s pressure and accepted an unfavorable agreement, Carney—an elected Canadian leader—chose to defend his country’s sovereignty. His response underscored a fundamental contrast: Canada confronted the bullying, while the European Union rewarded it.
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Europe’s Unfavorable Deal
The European Union’s agreement with the Trump administration has drawncriticism because it offered Washington substantially more than it secured for Europe. Under the framework, the United States imposed a 15 percent tariff ceiling on most European exports, while the EU agreed to eliminate tariffs on US industrial goods and provide expanded access for American agricultural and seafood products.
Although the arrangement restored some predictability for Europeanexporters, it did not establish genuinely reciprocal terms. The EU largelysurrendered its tariff leverage while accepting a broad new burden on its ownproducers.
The agreement also included significant purchasing and investmentcommitments. European countries pledged to purchase an estimated $750billion in US energy products and invest an additional $600 billion in theUnited States by 2028. The EU also committed to buying roughly $40 billionin American artificial-intelligence chips and to substantially increasing itsprocurement of US military and defense equipment.
European officials have described many of these figures as aspirationalrather than legally binding. That distinction may offer little protection,however, if the Trump administration later treats any shortfall as grounds forimposing higher tariffs. In practice, the agreement is committing Europe to financing the American economy while continuing to expose European exporters to substantial US trade barriers.
Observers have therefore described the deal as economic submissiondressed up as stability. France’s prime minister called it a “submission,” whileGerman officials warned that the arrangement could impose serious costs onEurope’s industrial base and public finances. The agreement also accepts Washington’s premise that the United States may abandon its World TradeOrganization commitments in pursuit of a more “balanced” trade relationship.
In return, Europe received tariff relief compared with some other US tradingpartners—but not free trade and not equal treatment.
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EURACTIV reports that Kathleen Van Brempt, vice-chair of the European Parliament’s international trade committee, delivered a blunt assessment: “It’s not a trade deal… This is not a good deal. It is neither fair nor balanced.”
The imbalance is particularly apparent in strategic sectors. Europeanmanufacturers still face substantial US tariffs on machinery, electricalequipment, steel, aluminum, and related products. In some cases, effectivetariff rates on important European exports remained close to or above 14percent even after the agreement took effect. The deal therefore did noteliminate the pressure on Europe’s industrial exporters; it primarily placed aceiling on how much further Washington could escalate.
This is why the comparison with Canada is politically important. Mark Carneyrejected the idea that Canada should surrender control over its trade policy,critical minerals, language protections, or economic future in exchange fortemporary relief from American tariffs. Instead, he responded with reciprocalmeasures and a strategy of diversification.
Von der Leyen, by contrast, negotiated on behalf of the EuropeanCommission, whose president is not elected by European voters. Analysts explain that she viewed Trump’s threats more as a reason to give in than as a challenge to be resisted. Instead of responding to American pressure with coordinated European countermeasures, the agreement obligated Europe to unilaterally open its market, purchase vast quantities of American energy, invest hundreds of billions of dollars in the US economy, and accept a tariff system that continues to disadvantage many European exporters.
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Body language reveals who’s in charge: Ursula von der Leyen and Donald Trump in the White House
The European Commission defended the agreement as the best available option to prevent a wider transatlantic trade war and to ensure predictability for European companies. This rather weak argument refers to the agreement, which limited tariffs to 15 percent and included mechanisms that allowed the EU to suspend concessions if Washington failed to meet its commitments.
Nevertheless, the political reality remains uncomfortable. Europe paid a highprice to obtain protection from a crisis that Washington itself created, whileCanada chose to confront the pressure and effectively defend its sovereignty.
The contrast could hardly be clearer: Canada viewed Trump’s demands as an unacceptable attack on its independence, while the EU saw them as an opportunity for negotiation and ultimately accepted a one-sided agreement that was detrimental to European interests. Carney’s reaction showed that resistance was possible. Von der Leyen’s approval underscored the consequences of capitulation.
Unreasonable Demands: EconomicColonialism
The specific demands made by the US government to Canada at the last minute were astonishing and led many observers to conclude that they were attempts at economic colonialism:
Restrictions on trade agreements: The United States demanded thatCanada agree not to pursue trade deals with other countries, effectivelyattempting to dictate Canada’s foreign-trade policy.
First right of refusal on critical minerals: Washington insisted onpriority access to Canadian critical minerals, which could have forcedCanada to sell to the United States regardless of competing offers.
An attack on French-language protections: The United States demanded that Canada weaken or abandon the protection of French, an official language central to Canadian identity and particularly important in Quebec. US corporations rejected the protection of the French language, citing alleged trade barriers, as it actually increased their product packaging costs.
These demands angered the Canadian government and helped uniteCanadians across the political spectrum. Premiers from different politicalparties, including those of Quebec and British Columbia, publicly condemnedthe US actions as an attack on Canadian sovereignty. The premier of BritishColumbia went further, warning that such demands could reduce Canada to“the economic equivalent of the 51st state.”
That sentiment echoes Trump’s own rhetoric. He has repeatedly referred toCanada as the “51st state” and even posted altered images depicting Canadabeneath the US flag. Canadians have not taken those threats lightly: pollinghas reportedly found that three-fifths now view the United States as thegreatest threat to their country.
US Transportation Secretary Sean Duffy added fuel to the fire by threatening a potential military conflict with Canada, absurdly claiming that Canada “has no military” while simultaneously ridiculing its universal healthcare system. Ironically, according to his logic, Canadians would be better off than Americans, who lack this system and cannot afford adequate healthcare.
Canada’s Leverage: The Oil Card andBeyond
Despite Trump’s claim that “we don’t need Canada; they need us,” Canadapossesses significant economic leverage. Trump has also exaggerated theextent of Canada’s dependence on the United States, claiming that 95percent of Canadian business is conducted with the US. The actual figure forCanadian exports is closer to 64 percent.
Canada’s greatest advantage may be its energy relationship with the UnitedStates. Although the US is the world’s largest oil producer and a net exporter,it cannot produce enough heavy sour crude—a type of oil required by manyAmerican refineries, particularly in the Midwest. Canada, especially Alberta,is a major supplier of this resource.
Canada is by far the largest provider of crude oil to the United States,supplying roughly 60 percent of US crude imports in 2023, up from 33percent a decade earlier. Because of this energy relationship, the UnitedStates runs a trade surplus with Canada when oil is excluded.
That vulnerability is particularly serious amid the current global energy crisis.The world is experiencing one of the most significant oil-supply disruptions inmodern history, much of it linked to the Trump administration’s illegal and unprovoked military and economic war of aggression against Iran. USstrategic petroleum reserves are reportedly at their lowest level in fourdecades, and Trump himself acknowledged in June that global oil suppliescould last only “four weeks.”
With the Strait of Hormuz shut down—a vital oil-transit chokepoint—anydisruption to Canadian oil supplies could prove catastrophic for the UnitedStates. Gasoline prices could soar just months before the midterm elections,creating a major political liability for the Trump administration.
Beyond oil, Canada supplies the United States with other essentialresources, including potash, aluminum, and auto parts. Saskatchewan aloneholds more than a third of the world’s potash supply, making Canadaindispensable to US agriculture and industry.
Canada Fights Back
Unlike the European Union, which largely capitulated to Trump’s previoustrade demands, Canada has chosen to resist. Prime Minister Carneyannounced that Canada would match US tariffs “dollar for dollar,”demonstrating a level of resolve that was completely absent from the EU’sresponse.
Carney has also challenged the assumptions behind the rules-basedinternational order, calling it a “fiction” in which the strongest countriesexempt themselves from the rules. “When the rules no longer protect you,you must protect yourself,” he has argued.
That position has encouraged Canada to diversify its trade relationships andreduce its dependence on the US market. During a historic trip to China inJanuary—the first visit by a Canadian prime minister in nearly a decade—Carney announced a “new strategic partnership” focused on trade, energy,and agriculture. The goal, he said, was to build “a stronger, moreindependent, and more resilient economy.”
Carney has warned that the United States is “weaponizing trade” and that itsagreements can no longer be trusted. By standing up to Washington ratherthan yielding to intimidation, Canada is attempting to transform a moment ofvulnerability into a long-term strategy for economic independence.
Why the Trade War Could Backfire on theUnited States
Major US media outlets, including Fortune, have warned that the United States is “unlikely to win its dumb trade war with Canada.” Several factors support that assessment:
Legal challenges: The US Supreme Court has previously ruled againstTrump’s unilateral tariffs, asserting that Congress—not the presidentalone—holds the constitutional authority to impose them.
Economic vulnerability: The United States depends heavily onCanadian oil, critical minerals, and industrial components, leaving itexposed to reciprocal tariffs and supply disruptions.
Political fallout: A sharp rise in gasoline prices caused by energy-supply shocks would be a serious political liability for the Trumpadministration, particularly before the midterm elections.
Canada’s resilience: Canada’s efforts to diversify its trade andstrengthen its economic independence have left it better positioned towithstand US pressure than in the past.
Historical precedent: Trump’s previous trade war with China, whichultimately failed to produce the promised victory, demonstrates thataggressive tariff tactics do not guarantee success.
Conclusion: A Risky Gamble
The Trump administration’s trade war with Canada is a risky gamble, drivenby aggressive negotiation tactics and disregard for established agreementsand international norms. Although the conflict poses real challenges for theCanadian economy, Canada’s strategic leverage—particularly in energy—combined with its determination to defend its sovereignty and diversify itstrade relationships, could allow it to withstand US pressure.
The contrast with Europe is striking. Ursula von der Leyen, a president of the European Commission not elected by European voters, shamefully bowed to American pressure and accepted a bad deal. Mark Carney, on the other hand, was elected to represent the Canadians – and chose to defend their sovereignty rather than surrender it.
In a world already grappling with geopolitical and economic instability, the deepening oil crisis and the estrangement from a key ally appear less like a sign of strength and more like a self-inflicted failure on the part of the United States. Europe, meanwhile, having relinquished much of its sovereignty and grown increasingly weaker, has largely lost its significance on the world stage anyway.
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Felix Abt is an entrepreneur, author and travel blogger, living in Asia.
With his articles, he tries to make a modest contribution to debunking the omnipresent propaganda of the mainstream media for those who don’t have the time (and that’s most people) to do the research to see through it.
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