Trump has Canada trapped in a corner.
After months of verbal attacks on and public disdain for the Canadian economy, people, and government, Trump has brought the conflict between Canada and the United States to a climax.
By negotiating a separate trade deal with Mexico, Trump effectively killed the North American Free Trade Agreement (NAFTA), at least as a tenable option in the public imagination.
There is no political necessity to keep Canada in the new NAFTA deal. If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off...— Donald J. Trump (@realDonaldTrump) September 1, 2018
Canadian officials are currently scrambling to negotiate a replacement trade deal, though Trump has signalled that he is completely unwilling to compromise. He is intent on forcing Canada into a disadvantageous deal.
But while the Canadian government is in a tough position, it still can make a few power plays.
Here are all the advantages that Canada still has:
The U.S. Congress
Trump will still need the approval of the U.S. Congress for any international treaties or deals. So NAFTA is not officially dead until Congress votes to replace it. American politicians are already skeptical of excluding Canada, the United States' largest trading partner, from a North American economic pact. A repeal of NAFTA is unlikely to pass until Canada is satisfied with a new agreement.
The American people
According to The Star, almost half of all Americans and a vast majority of Democrats view Canada positively and believe in its value as a trading partner. That's enough to sway federal politicians to argue on Canada's behalf.
Dairy is the central issue in current negotiations. Canada's notorious dairy supply management insulates Canadian dairy farmers from American competition. Trump wants access American companies to be able to access the Canadian market. That means that the American trade representative may be willing to compromise on other issues, like Canadian steel, in order to dismantle dairy supply management. Canada has serious leverage here.
Midterm elections are this November in the U.S.. A whole new Congress will take office this January. But after November, the current Congress will be a "lame duck," meaning they are effectively powerless. That gives Trump only two months to finalize NAFTA replacements. Experts predict that Democrats will have a majority in both the House and Senate in the next Congress. All Canada need do is wait.
Ok, Mexico definitely screwed Canada. By agreeing to a separate trade deal with the United States, Mexico delivered Trump tremendous leverage to coerce Canada into an unfavourable agreement. But according to The Globe And Mail, the new deal between the U.S. and Mexico will need Canadian support in order to operate effectively. Trump needs Canadian cooperation.
The American automobile industry
Trump has long threatened to impose debilitating tariffs on Canadian auto-parts if Canada does not agree to a new trade deal. Those levies would likely lead to an economic recession in Canada. But it would also backfire for Trump. American car manufacturers rely on parts from Canada. If the prices of those parts multiply, American workers, corporations, and consumers will see the consequences. This threat is likely bluster.
The possibility of impeachment
Trump's former personal lawyer admitted in court that Trump is implicated in a federal crime. With a Democratic Congress and the release of special counsel Robert Mueller's report on Russian meddling just on the horizon, the impeachment of Trump is becoming more likely by the day.
That puts Trump in a position of weakness. Politically, he cannot afford to abandon Canadian economic cooperation, a move that would have a huge impact on the American economy. Trump needs a show of leadership and strength. That may encourage him to seek a quick deal with Canada.