Protectionism Lost

The free trade debate of 1988 was hardly new. It is foundational to Canada’s very existence, and even predates Canadian Confederation. Resisting economic dominance by the United States was crucial to Canada’s development as an independent nation. And yet, trade with the United States was always going to be inevitable, just as it would be uneven — especially as the Canadian economy developed independently of the United Kingdom. As Canada’s economy grew in size and confidence, it would, ironically, grow closer to, and become increasingly dependent upon, the United States.

If there was any hope that free trade might benefit Canada, it lay in the Canada-United States Automotive Products Agreement of 1965, better known as the Canada-US Auto Pact. The agreement addressed Canadian protectionist concerns while building on existing tendencies toward economic integration that benefitted American automakers. But unlike what the Mulroney government committed Canada to in 1988, the Auto Pact wasn’t a blanket free-trade agreement. It created an integrated and tariff-free North American automotive sector and common automotive market, a rare success for workers and car manufacturers alike.

Donald Trump’s trade war with Canada has not only been the defining Canadian news event of the last year, it’s largely responsible for the defeat of the Conservative Party in last spring’s Canadian federal election. And it has arguably permanently altered Canada-US relations. Though the government of Mark Carney has disappointed economic nationalists and social progressives alike by pursuing a conciliatory tone with the Trump administration throughout much of 2025, Canadians have nonetheless maintained an effective voluntary boycott of American products as well as travel to the United States.

But because Canada’s automotive industry is largely integrated with that of the United States, Canadian autoworkers — and their powerful union — find themselves in an unenviable and awkward position. They are caught between the patriotic call to resist an unjustifiable trade war and annexation threats on the one hand, and the reality that their jobs are entirely dependent on unfettered, tariff-free international supply chains and trade agreements.

Nearly forty years after the free-trade agreement was signed, Canadians discovered in 2025 just how vulnerable they are to America’s fits of populist economic nationalism. Dire warnings from decades ago, long dismissed, about the loss of economic sovereignty leading to the end of political sovereignty are beginning to look uncomfortably accurate.

Caught in the cross fire is arguably Canada’s most important manufacturing sector — and the shining beacon of Canada-US economic cooperation.