Trade talks with the Canadian government collapsed yesterday, with both sides accusing the other of making unacceptable demands at the last minute. Based on Trump’s history as a negotiator, the Canadian claim is far more credible.
Now the question is whether Trump will chicken out or double down. Our experience with Trump 2.0 is that he always doubles down unless he is faced with a foe that he even admits he can’t master, such as China or the bond market. Canada doesn’t meet that standard, so expect him to escalate as soon as possible.
This dispute is, of course, more about asserting dominance than making money for Americans. Does Trump think that driving up prices and inviting retaliation against American producers is a good idea a few months before the election? Most likely, he simply doesn’t care; showing the Canadians he’s the boss is far more important to him than winning the midterms.