With no will for political union, Canada should consider economic union with the U.S.

According to an announcement on Friday by White House press secretary Karoline Leavitt, President Dondald Trump will implement a 25 per cent tariff on Canada and Mexico (and a 10 per cent tariff on China) beginning Saturday, Feb. 1.

Over the last few weeks, Canadian policymakers have been rather naïve in responding to Trump’s tariffs threats. They seem not to have figured out what Trump really wants (although perhaps no one knows what he really wants). But the Canadian side has focused on retaliatory measures, lobbying to ensure certain industries are exempt, and an advertising campaign to get consumers to prefer Canadian products—a “Made in Canada” preference.

It’s also been proposed that by lowering trade barriers between provinces, the Canadian economy can offset a trade war with the United States. But this raises the question—why hasn’t this already been done if it leads to such great benefit?

It’s clear that Canadians don’t want to be part of the U.S. However, given Canada’s dependency on the U.S. economy, Canada’s lagging productivity, the inefficiency of separate currencies, and the effect of changes in the Canadian-U.S. exchange rate on prices in Canada, it’s surprising that some kind of economic union with the U.S. is not being considered or even discussed. Or at least it does not appear to be something that politicians north of the border consider.

The post-war European enterprise can serve as a model for how Canada might approach the U.S. In Europe, the Germans remain German, the French remain French and the Dutch remain Dutch. This, despite the fact that the European enterprise has gone well beyond that of economic union. The Maastricht Treaty (1992) created the European Union (EU) by combining the three European Communities—the European Atomic Energy Community, the European Coal and Steel Community and the European Economic Community—into a single entity. While it set the stage for a single currency (the Euro), the Treaty was seen as a first step toward an eventual political union. While the EU has taken large steps toward political union, the enterprise is not going as well as envisioned. The United Kingdom left the EU principally because it did not want to take orders from Brussels. The U.K. was interested in an economic union, but not political union.

The lesson for Canada is clear—we do not want political union, but should be open to economic union with the U.S. This would essentially mean two things. First, eliminating the border with respect to trade in goods and services, and free movement of investment capital. Whether this would include labour would need to be addressed, although economists would argue that, from an efficiency point of view, it should. As a blueprint, one might begin with what’s referred to in Europe as the Schengen Area, which is a group of EU countries that have eliminated all internal border controls and established common entry and exist requirements. This would require that the effective border protects both Canada and the U.S. simultaneously—the northern U.S. border moves to the Pacific, Arctic and Atlantic oceans. If a person qualifies to come to Canada, they automatically qualify to come into the U.S. and vice versa.

Second, monetary union under those circumstances makes a lot of sense. It would be simple to implement. For example, we might say that one Canadian dollar is on par with one U.S. dollar, or that it’s equal to US0.85 or 0.90. The exact value is less important as wages and other costs will adjust with increases in Canadian productivity that will then lead to increases in wages.

Finally, Trump insists that Canada commit 2 per cent of its GDP to defence. I would argue that, given a willingness to negotiate an economic union, and a commitment to increase defence spending to meet the 2 per cent target by 2030, would be sufficient to remove the Trumpian tariffs.

By agreeing to negotiate an economic union, Canada may convince the Trump administration to remove the tariffs. If an economic union were a threat to Canada’s viability, to our Dominion, then we do not deserve to be Canadian. I would venture that our national identity vis-à-vis the U.S. is strong enough to survive an economic union.

Cornelis “Kees” van Kooten

Professor of Economics, University of Victoria

Related Topics:#FraserInstitute CanadaUSEconomicUnion CornelisKeesVanKooten feature TrumpTariffs

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Trump confirms 35% tariff on Canada, warns more could come

Published on July 11, 2025

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MxM News

Quick Hit:

President Trump on Thursday confirmed a sweeping new 35% tariff on Canadian imports starting August 1, citing Canada’s failure to curb fentanyl trafficking and retaliatory trade actions.

Key Details:

In a letter to Canadian Prime Minister Mark Carney, Trump said the new 35% levy is in response to Canada’s “financial retaliation” and its inability to stop fentanyl from reaching the U.S.
Trump emphasized that Canadian businesses that relocate manufacturing to the U.S. will be exempt and promised expedited approvals for such moves.
The administration has already notified 23 countries of impending tariffs following the expiration of a 90-day negotiation window under Trump’s “Liberation Day” trade policy.

Diving Deeper:

President Trump escalated his tariff strategy on Thursday, formally announcing a 35% duty on all Canadian imports effective August 1. The move follows what Trump described as a breakdown in trade cooperation and a failure by Canada to address its role in the U.S. fentanyl crisis.

“It is a Great Honor for me to send you this letter in that it demonstrates the strength and commitment of our Trading Relationship,” Trump wrote to Prime Minister Mark Carney. He added that the tariff response comes after Canada “financially retaliated” against the U.S. rather than working to resolve the flow of fentanyl across the northern border.

Trump’s letter made clear the tariff will apply broadly, separate from any existing sector-specific levies, and included a warning that “goods transshipped to evade this higher Tariff will be subject to that higher Tariff.” The president also hinted that further retaliation from Canada could push rates even higher.

However, Trump left the door open for possible revisions. “If Canada works with me to stop the flow of Fentanyl, we will, perhaps, consider an adjustment to this letter,” he said, adding that tariffs “may be modified, upward or downward, depending on our relationship.”

Canadian companies that move operations to the U.S. would be exempt, Trump said, noting his administration “will do everything possible to get approvals quickly, professionally, and routinely — In other words, in a matter of weeks.”

The U.S. traded over $762 billion in goods with Canada in 2024, with a trade deficit of $63.3 billion, a figure Trump called a “major threat” to both the economy and national security.

Speaking with NBC News on Thursday, Trump suggested even broader tariff hikes are coming, floating the idea of a 15% or 20% blanket rate on all imports. “We’re just going to say all of the remaining countries are going to pay,” he told Meet the Press moderator Kristen Welker, adding that “the tariffs have been very well-received” and noting that the stock market had hit new highs that day.

The Canadian announcement is part of a broader global tariff rollout. In recent days, Trump has notified at least 23 countries of new levies and revealed a separate 50% tariff on copper imports.

“Not everybody has to get a letter,” Trump said when asked if other leaders would be formally notified. “You know that. We’re just setting our tariffs.”

Business

UN’s ‘Plastics Treaty’ Sports A Junk Science Wrapper

Published on July 11, 2025

Todayville

From the Daily Caller News Foundation

By Craig Rucker

According to a study in Science Advances, over 90% of ocean plastic comes from just 10 rivers, eight of which are in Asia. The United States, by contrast, contributes less than 1%. Yet Pew treats all nations as equally responsible, promoting one-size-fits-all policies that fail to address the real source of the issue.

Just as people were beginning to breathe a sigh of relief thanks to the Trump administration’s rollback of onerous climate policies, the United Nations is set to finalize a legally binding Global Plastics Treaty by the end of the year that will impose new regulations, and, ultimately higher costs, on one of the world’s most widely used products.

Plastics – derived from petroleum – are found in everything from water bottles, tea bags, and food packaging to syringes, IV tubes, prosthetics, and underground water pipes. In justifying the goal of its treaty to regulate “the entire life cycle of plastic – from upstream production to downstream waste,” the U.N. has put a bull’s eye on plastic waste. “An estimated 18 to 20 percent of global plastic waste ends up in the ocean,” the UN says.

As delegates from over 170 countries prepare for the final round of negotiations in Geneva next month, debate is intensifying over the future of plastic production, regulation, and innovation. With proposals ranging from sweeping bans on single-use plastics to caps on virgin plastic output, policymakers are increasingly citing the 2020 Pew Charitable Trusts report, Breaking the Plastic Wave, as one of the primary justifications.

But many of the dire warnings made in this report, if scrutinized, ring as hollow as an empty PET soda bottle. Indeed, a closer look reveals Pew’s report is less a roadmap to progress than a glossy piece of junk science propaganda—built on false assumptions and misguided solutions.

Pew’s core claim is dire: without urgent global action, plastic entering the oceans will triple by 2040. But this alarmist forecast glosses over a fundamental fact—plastic pollution is not a global problem in equal measure. According to a study in Science Advances, over 90% of ocean plastic comes from just 10 rivers, eight of which are in Asia. The United States, by contrast, contributes less than 1%. Yet Pew treats all nations as equally responsible, promoting one-size-fits-all policies that fail to address the real source of the issue.

This blind spot has serious consequences. Pew’s solutions—cutting plastic production, phasing out single-use items, and implementing rigid global regulations—miss the mark entirely. Banning straws in the U.S. or taxing packaging in Europe won’t stop waste from being dumped into rivers in countries with little or no waste infrastructure. Policies targeting Western consumption don’t solve the problem—they simply shift it or, worse, stifle useful innovation.

The real tragedy isn’t plastic itself, but the mismanagement of plastic waste—and the regulatory stranglehold that blocks better solutions. In many countries, recycling is a government-run monopoly with little incentive to innovate. Meanwhile, private-sector entrepreneurs working on advanced recycling, biodegradable materials, and AI-powered sorting systems face burdensome red tape and market distortion.

Pew pays lip service to innovation but ultimately favors centralized planning and control. That’s a mistake. Time and again, it’s been technology—not top-down mandates—that has delivered environmental breakthroughs.

What the world needs is not another top-down, bureaucratic report like Pew’s, but an open dialogue among experts, entrepreneurs, and the public where new ideas can flourish. Imagine small-scale pyrolysis units that convert waste into fuel in remote villages, or decentralized recycling centers that empower informal waste collectors. These ideas are already in development—but they’re being sidelined by policymakers fixated on bans and quotas.

Worse still, efforts to demonize plastic often ignore its benefits. Plastic is lightweight, durable, and often more environmentally efficient than alternatives like glass or aluminum. The problem isn’t the material—it’s how it has been managed after its use. That’s a “systems” failure, not a material flaw.

Breaking the Plastic Wave champions a top-down, bureaucratic vision that limits choice, discourages private innovation, and rewards entrenched interests under the guise of environmentalism. Many of the groups calling for bans are also lobbying for subsidies and regulatory frameworks that benefit their own agendas—while pushing out disruptive newcomers.

With the UN expected to finalize the treaty by early 2026, nations will have to face the question of ratification. Even if the Trump White House refuses to sign the treaty – which is likely – ordinary Americans could still feel the sting of this ill-advised scheme. Manufacturers of life-saving plastic medical devices, for example, are part of a network of global suppliers. Companies located in countries that ratify the treaty will have no choice but to pass the higher costs along, and Americans will not be spared.

Ultimately, the marketplace of ideas—not the offices of policy NGOs—will deliver the solutions we need. It’s time to break the wave of junk science—not ride it.

Craig Rucker is president of the Committee For A Constructive Tomorrow (www.CFACT.org).