Canada-US trade war & expat Bangladeshis

The economic ties between Canada and the United States (US) are not just significant, they are among the closest and most important trading partnerships globally. In 2023, the daily goods and services trading surpassed US$2 billion, with the total annual trade reaching a record high of US$900 billion. Canada alone accounts for 15 per cent of US goods, and 75 per cent of Canada’s exports find their way to the US. The automotive, energy, and agriculture sectors are the main players in this bilateral trade, with Canada supplying over 60 per cent of US crude oil imports. 

However, this interdependent relationship is not immune to commercial tensions. These tensions are escalating, fueled by the rise of economic nationalism, industrial restructuring, and shifts in global policy. The recent ‘trade war’ is a stark reminder of the fragility of the liberal international economic system and the resilience of long-time allies’ institutions. The issue of trade disputes between Canada and the US gained prominence after Donald Trump’s presidency.  

Although US-China trade tensions often dominate public discussions, Canada-US economic relations have long been marked by conflicts that did not come to the fore before Trump was elected as president.  Notable examples of these are the so-called ‘chicken war’ of the 1960s and the dispute over long-standing softwood lumber. The period from 2017 to 2020, the era of the Trump administration’s  ‘America First’ economic policy, marked a turning point.  Under Section 232 of the US Trade Expansion Act, tariffs are imposed on Canadian steel and aluminium on the pretext of national security. In response, Canada retaliated, and the dynamics of bilateral trade changed. 

In March 2018, the US administration imposed tariffs of 25 per cent on Canadian steel and 10 per cent on aluminium under Section 232. In response, Canada imposed tariffs on select US products. These measures disrupt existing supply chains and have a significant impact on the economies and politics of both countries, prompting both countries to respond proactively. 

At the centre of the more than four-decade-long dispute is the US allegation that Canada is subsidising its softwood lumber sector. The US has repeatedly criticised Canada’s supply management policy for dairy, eggs and chickens, citing it as a barrier to market access. The tension between the two countries has led to price volatility in steel and aluminium, while tariffs on softwood lumber have increased housing costs in the US. As a result, about 23,000 jobs in Canada were at risk in 2018 alone. The same effect was felt in the US, especially in industries that rely on Canadian intermediate goods. Structural and strategic interests are an emerging factor in the stability and diversification of the Canada-US trade relationship.

The prevalent tension has given rise to economic nationalism. As a result, protectionist economic policies and industry decoupling have intensified in the US since 2016. The ‘buy American’ policy poses a challenge to the North American supply chain integration model. 

Despite these developments, institutional frameworks for dispute resolution—such as the General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), and the North American Free Trade Agreement (NAFTA), later replaced by the United States–Mexico–Canada Agreement (USMCA)—have continued to play a central role in managing and mitigating trade conflicts between the two countries. These frameworks have declared certain aspects of Canada’s quota allocation system inconsistent with the terms of the agreements and have directed policy adjustments. The USMCA introduced stricter rules of origin, a “sunset clause,” and a restructured dispute resolution mechanism. These changes have created new forms of regulatory uncertainty and made strategic realignment essential for economic partners in both countries.

However, multiple dispute resolution processes have not yielded satisfactory results. Instead, as of July 2023, the US has maintained anti-dumping and countervailing tariffs on Canadian softwood lumber, with an average rate of 8.59 per cent. 

Due to the risks posed by policy instability in the US, Canada has intensified its efforts to diversify its export markets and reduce systemic risks, aiming to lessen its dependence on the US. To this end, efforts have continued to increase exports under multilateral, multidimensional, and multisectoral agreements in the Asia-Pacific and European regions through the CPTPP and CETA programs. 

The analysis of the recent Canada–US trade dispute provides some important policy lessons that apply to other countries too. 

The stability of bilateral economic relations is mainly dependent on institutional and rules-based mechanisms. Avoiding unilateral tariffs and dispute resolution processes undermines market confidence and threatens long-term prosperity.

For Canada, strengthening economic sovereignty means prioritising innovation, investing in strategic sectors, and building diverse trade relationships. The challenge for the US is to strike a balance between the need for domestic industrial policy and the efficiency gained from an integrated continental supply chain. 

Even among economically interdependent allies, trade tensions reveal the fragility of the liberal international economic structure. Adaptation, prudent policies, and consistent diplomatic engagement are essential for the stability of this relationship. In the coming days, climate-related trade policy, digital trade, and the geopolitics of critical minerals will test the adaptability of existing institutional structures. Until 2024, both Canadian Prime Minister Trudeau and US President Biden reaffirmed their commitment to bilateral trade cooperation in their official statements, although domestic and global pressures have persisted. Although Canada–US trade relations are often regarded as a model of economic integration, they have evolved through recurring disputes and adjustments. Recent conflicts have revealed both the strengths and weaknesses of North America’s trade framework. For policymakers and researchers, this experience underscores that in an era of uncertainty, strong institutions, evidence-based policies, and forward-looking economic diplomacy are indispensable.

FOBANA, an organisation of Bangladeshis in North America, has organised its 2025 conference in Montreal. The three-day conference began on August 29. The seminar series was scheduled for September 30. The fun-loving Bengalis have kept a part of the conference for seminars and invited professors from various universities in North America or experts at the policy-making level of the government, setting aside the entertainment of songs, music, and dance. This means that the organisers aspire to build a knowledge-based society. The main credit goes to the coordinator of the seminar series, microbiologist Dr Shoaib Syed, who has been doing this difficult task for a long time. But it would not have been possible without the cooperation of the Executive Board of the Conference. President of the Board Ziaul Haque Zia, Member Secretary Iqbal Kabir, Cultural Director Shamshad Rana, FOBANA Central President Atiqur Rahman, Executive Secretary Nehal Rahim, Central Officer Bedarul Islam Babla and many others worked tirelessly to make it a success.  

The topic of one of the four sessions was ‘The US-Canada Trade War in the Age of Economic Nationalism’. In this session, this scribe was invited to give a keynote speech. The session chair was John Galbraith, a professor at McGill University and former president of the Canadian Economics Association.  It indicates that Bangladeshi nationals living in Canada are anxious about the US-Canada trade war. 

This article is part of the keynote speech delivered by this scribe, where he said that this concern is actually a positive sign and advised them to pursue degrees or training at Canadian educational institutions, enter the Canadian job market, embrace the ideals of the state and the values of society, and wholeheartedly become citizens who contribute to Canada. This scribe also suggested that they send money or invest in Bangladesh through legitimate channels.

The Canadian government knows what to do in its trade war with the US. Still, this scribe offered a few suggestions that are often overlooked in policy discussions or planning. Canada needs to build its own industries in every sector. The policy of sharing oil refining or automobile parts with the US should be abandoned. In many sectors, policies that are 50 years old are still being followed. These need to be updated in line with current realities. A policy of encouraging private sector initiatives under public–private partnerships and government supervision should also be adopted.

Dr N N Tarun Chakravorty is Professor of Economics, 

Independent University of Bangladesh. Editor-at-Large 

of the South Asia Journal. nntarun@gmail.com