Think tank economist says key to winning Canada-U.S. trade war is not retaliating; advises Carney to outlast Trump, who may be lame duck after midterms

Vincent Geloso, a senior economist at the Montreal Economic Institute, argues that Canada should refrain from retaliating against U.S. tariffs, emphasizing the importance of patience in trade negotiations.¹²³⁴

“Eventually, there’ll be an opportunity to act at the right time in the right way,” Geloso stated, advocating for a strategy that avoids escalating tensions.

The Carney government faces significant challenges following President Donald Trump’s imposition of 50% tariffs on various Canadian goods, effective August 22, after trade talks faltered. In response, Carney announced counter-tariffs set to begin on September 8.

Geloso reflects on historical precedents, noting that counter-tariffs in the 1930s, implemented by Canadian leaders like Mackenzie King and R.B. Bennett, failed to impact the U.S. economy while harming Canada’s. “In the ’30s we did counter-tariffs... which did absolutely nothing,” he remarked.

He believes that the resolution of trade disputes often hinges on changes in U.S. leadership, citing Franklin Delano Roosevelt’s election and his pro-free trade policies as pivotal moments. “Naming Cordell Hull in that position was about as radical of a pro-free trade signal (Roosevelt) could have sent at the time,” Geloso noted.

Geloso advises Carney to exercise restraint, suggesting that the prime minister can either “play the jingoist card or the adult card,” with the latter being the more prudent choice. He predicts that Trump’s declining approval ratings may lead to a “lame duck” presidency post-midterms.