FIRST READING: Canada where Trump’s ‘hardball’ strategy failed hardest, says analysis

Prime Minister Mark Carney and President Donald Trump are pictured in this file photo. Photo by POSTMEDIA NEWS ARCHIVES

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First Reading is a Canadian politics newsletter curated by the National Post’s own Tristin Hopper. To get an early version sent directly to your inbox, sign up here.

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The basic premise of U.S. President Donald Trump’s trade war on Canada was simple: The massive U.S. economy could dictate favourable terms to a smaller and more dependent neighbour.

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Instead, the Canadian economy proved more resilient to U.S. tariffs than almost anyone expected. The Canadian electorate went all-in on a strategy of retaliation. And now, with tariffs threatening several key Senate races in U.S. border states, it’s the Trump White House that is now backing down on some of its Canadian trade barriers.

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Add it all together and, according to an analysis published Wednesday by the U.S.-based Council on Foreign Relations, Canada is where Trump’s “hardball” approach to trade has gone sideways the most.

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Trump’s White House confused “economic size with bargaining leverage,” it says. As a result, the U.S. is now “mired in a losing trade war with its economically much smaller and militarily much weaker neighbor to the north.”

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The analysis cites the 1977 book Power and Interdependence, which devotes an entire chapter on how, despite its small size, Canada held a curiously large amount of leverage in its past dealings with Washington.

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The authors examined 50 years of international disputes between the two countries – ranging from liquor taxes to lumber duties to fishing rights – and were surprised to find that Canada usually came out on top.

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While the U.S. could obviously impose great pain on the Canadian economy, Canada’s enmeshment with the U.S. gave it a unique ability to do the same in return.

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“And she (Canada) was often willing to do that because of asymmetrical salience: The relationship was more important to Canada than to the United States,” reads the book, written by the American political scientists Robert Keohane and Joseph Nye.

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Power and Interdependence also pointed out that Canada has a political enmeshment with the U.S. unlike any other country. It cited Canadian data from 1968 tracking 6,500 cross-border visits by government officials from both countries, the vast majority of whom were low-level federal and provincial bureaucrats, rather than diplomats.

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“The classical image of governments interacting through their foreign offices is clearly inappropriate in the Canadian-American case,” it read.

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Wednesday’s Council on Foreign Relations article noted that Canadian exports to the U.S. are also disproportionately comprised of raw materials that are critical to the U.S. economy, such as oil and potash.

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“Given such complex relationships, there are sharp limits to how far any U.S. administration can push Canada around,” it reads.

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While Canada has been one of the most conspicuous targets of U.S. tariffs, it has been a general tactic of the Trump administration to threaten punitive tariffs against all its trade partners in exchange for new terms more favourable to the U.S.

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And for the most part, such hardball trade tactics have generally worked.