Zeihan reports that at midnight between the 21st and 22nd, the United States imposed 50% tariffs on a suite of Canadian goods with no plans for future negotiations, confirming the Trump-Canada trade war is alive and well while bilateral NAFTA talks with Canada and trilateral talks with Mexico have not even begun. He argues the US needs to at least double its industrial plant to replace what it will lose as deglobalization hits China, yet more than 8,500 tariff changes have destroyed business trust, with industrial construction spending falling every month of the administration but one. He concludes that 18 months of data show the US has gone “screaming in the opposite direction” from reindustrialization and is farther from clarity now than in January 2025, with agriculture and automotive set to be hit hardest.
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50% tariffs on Canadian goods with no negotiations planned: The new tariffs kicked in at midnight between the 21st and 22nd, and the administration said flat out there are no plans for future talks. These are not NAFTA negotiations, which have yet to start with either Canada or Mexico, leaving the world’s deepest economic integration in limbo.
8,500 tariff changes have evaporated business trust: Zeihan says the constantly changing rules mean no one will invest in North American manufacturing because they do not know the rules of the game or who they can partner with. Industrial construction spending has dropped every single month of the administration except one slight uptick earlier this year.
Reindustrialization is running in reverse: The US must at least double its industrial plant to replace products lost to deglobalization, and doing it without Canada and Mexico means adding the volume of their plants too. He warns the US may not even be functional at its level of two years ago when deglobalization hits hard in the next couple of years.
Agriculture and autos face the worst damage: Farmers’ primary customers are Canada and Mexico, while the average part in an American-built vehicle crosses the border five or six times, or perhaps seven for Detroit-headquartered makers producing in Michigan and the northern Midwest. Anything going to Canada now faces potentially compounding tariffs.
Canadian retaliation in September is unlikely to work: Canada has promised reciprocal tariffs designed to pressure Trump, but Zeihan doubts it, citing Trump ignoring the National Cattlemen’s Association screaming over beef import openings ahead of the midterms. Trump is already a lame duck who does not care about presidential elections, and since three-quarters of Canada’s exports go to the US, any structurally damaging move will hurt Canada more.
