Neither Trump nor Carney believe in free markets. It’s a new world order in which trade and subsidy battles are the never-ending norm that cannot lead to trade peace. Photo by Gavin Young/Postmedia

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The apparent unravelling of the Canada-United States trade relationship should make it clear that it is time to face reality: Under President Donald Trump, the promising era of freer trade is over and this is the beginning of a new post-capitalism economic order.

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As I watched news coverage of the Canada-U.S. trade talks over the past week, there was always one good reason to believe that they would crash and burn. As far back as August 2025, news reports announced that Trade Minister Dominic LeBlanc had held “constructive” talks with U.S. Commerce Secretary Howard Lutnick. The question then and now is: How is it possible to hold constructive trade negotiations with a hardline anti-free trader who in the past has said Canada has been “feeding off of us for decades.”

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Last October Lutnick reportedly said “car assembly is going to be in America and there is nothing Canada can do about it.” Over the past week, Lutnick hovered in the background of media reports on the talks, a red light that should have alerted all to the likely breakdown of negotiations.

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Canada responded with a new tariff threat to expand the trade war. Then along came Trump with another trade bomb, a 50 per cent tariff on all Canadian cars and trucks. And then Carney on Tuesday launched 1,000 tariff drones to knock out $27.6 billion in U.S. imports. On both sides of the border, the tariff wars are being waged by governments that should not be attempting to use trade, tariffs and other tactics to shape corporate market decisions.

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Case in point: The faceoff over heavy-duty trucks produced in Canada. Canada is said to have backed down on the new tariff deal in part because Lutnick and Trump want to maintain a 25 per cent tariff on heavy-duty trucks, including the Ford F-series to be produced at Ford’s Oakville, Ont., plant and the Silverado at  GM’s plant in Oshawa. If Trump were to impose tariffs on F-350s and Silverados, he would be using government force to compete with Ottawa and the provinces for auto plants. Trump wants their production moved to the U.S., while Carney wants to keep the plants operating in Canada using his own anti-market strategies. General Motors, for example, has received $500 million in federal and provincial subsidies for the Silverado plant that Trump wants to hit with tariffs and move to the States.

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The ideas underlying these anti-market interventions are shared by coteries of political and economic figures who argue that the government and not the market should determine and even control economic investment decisions. Each nation should have its own essential industries determined by politicians, not market decisions by investors and corporations. Auto tariffs “are bringing auto manufacturing home” to America, said Lutnick last week.

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That achievement, such as it is, has hit the U.S. auto industry with an estimated US$35 billion in tariff costs since 2025. Lucas Malinowski, CEO of Global Automakers of Canada, estimates tariffs and trade disruptions have added $110 billion in costs to North America’s auto industry over the past year and a half.

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We’ve seen it all before in Canada, which depended on tariffs for most of the past century to force U.S. auto companies to build plants in Ontario and Quebec. The results were high costs and lack of choice for consumers. Much of the Canadian auto industry was established after tariff walls were taken down by the 1965 Canada-U.S. Auto Pact and the 1992 North American Free Trade Agreement (NAFTA).