To the detriment of the US and Canada, China is the big winner in Trump's trade war with Canada.

Please consider the Real Winner of the Trade War with Canada by Chad Bown.

The keenest observer of the all-out trade war between the United States and Canada is surely President Xi Jinping of China. If Washington doesn't change course, he's probably going to be its winner, too.

Mr. Xi already has monopoly power over components that are vital to hundreds of thousands of American and Canadian jobs. His April 2025 restrictions on rare-earth magnets temporarily shut down a Ford Explorer plant in Chicago. In Ontario later that year, Honda briefly reduced and suspended production of Civics and CR-Vs after he closed off access to semiconductors, which disrupted parts supply.

These sorts of attacks and those sorts of vulnerabilities should bring allies together. In a normal world, Washington and Ottawa would be laser focused on how much and how quickly they could manufacture together to prevent that kind of Chinese economic coercion.

Instead, President Trump has framed his tussle with Canada as a fight over how much manufacturing the country should be prepared to yield to the United States. And Mr. Trump wants almost all of it.

Ottawa rebuffed Mr. Trump's latest offer in part because it retained too many of his import tariffs on Canadian cars, heavy trucks, steel and aluminum. With tariffs that high, Americans will eventually stop buying Canadian-assembled vehicles, and Detroit will rework its supply chains to exclude Canadian parts. Cars and parts once moved seamlessly across the U.S.-Canada border between suppliers and buyers, much as they did over the U.S.-Mexico border.

Being shut out of the market next door will devastate the Canadian auto industry. Canada is not close enough to Asia or Europe to survive as part of their supply chains.

We know what will probably happen next based on what took place in Australia after its automakers disappeared. By 2017, Toyota, General Motors and Ford closed their last Australian plants and caved to economic reality: The Australian market was too small and too remote to support the scale needed for globally competitive manufacturing.

Australians at first imported cars from manufacturing hubs across Japan, Korea, Thailand, Europe and the United States. Less than 10 years later, Australia looks very different. Nearly one in three new cars bought in Australia in the first half of 2026 was made in China, up from less than one in 250 back in 2017. (Only one in 50 Australian purchases in the first five months of 2026 was made in the United States.)

Mr. Trump should expect Canadian consumers to go the same route. In January, Mr. Carney announced Canada would allow 49,000 Chinese electric vehicles to be sold in the country — less than 3 percent of new car sales — and would slowly increase that number. Any decision to further open the Canadian market would probably lead to a Chinese import surge.

Why is pure Econ 101. Buying higher-cost cars from the United States is easier to justify politically when there are offsetting benefits to the national economy, such as assembly jobs, profits to domestic parts suppliers and communities built around steel or aluminum plants. If local manufacturing disappears, so will the reasons for Canadians to accept paying higher prices.

Losing Canadian customers to China would be terrible for America for two reasons.

First, the total number of buyers matters for sectors such as automobiles, which have high fixed costs and substantial barriers to new entrants. Having more consumers means companies can learn how to lower costs and offer reduced prices to get even more customers. Losing Canadian car buyers will be one more step toward ceding the global automotive industry to China.