I do not expect our current tariff spat with Canada or Mexico to last very long. Neither do I anticipate that we will return to an unpopular nineteenth-century tariff regime. Rather, I expect Canada and Mexico to make concessions on immigration, drug trafficking, and in the case of Canada, NATO contributions.
According to NATO, the United States contributed 3.38% of Gross Domestic Product (GDP) to defense in 2024.* Only Poland and Estonia spent a larger economic share than the USA. Canada reluctantly paid 1.37% of GDP on defense last year, which is fifth-to-last place behind Spain, Slovenia, Luxembourg, and Belgium. There are 26 nations that dispense a greater economic share in support of NATO than Canada. In fact, only eight nations fail to meet their 2.0% of GDP pledge. They are Croatia, Portugal, Italy, Canada, Belgium, Luxembourg, and Slovenia.
This is not the time to panic. Trudeau is the lamest of lame ducks and Mexico cannot survive without the billions of dollars in annual remittances that immigrants send home. In the short term, expect volatility accompanied by opportunity.
* https://www.nato.int/nato_static_fl2014/assets/pdf/2024/6/pdf/240617-def-exp-2024-en.pdf