The United States Supreme Court recently struck down President Donald Trump’s sweeping global tariffs imposed under the country’s International Emergency Economic Powers Act. The court stated that the law, intended for national emergencies, does not grant the government the authority to impose tariffs.

In early 2025, Trump invoked the act to impose tariffs on Canada, along with Mexico and China, claiming the countries failed to stop illicit drug trafficking into the United States.

The ruling is the latest episode in a political dust-up between Canada and its neighbour to the south which recently involved the Gordie Howe International Bridge linking Ontario and Michigan.

More than steel or stone, the bridge is a symbol of a shared destiny that both respects and transcends differences. Despite their historical, institutional and political differences, Canada and the United States have bonded economically as neighbours, generating shared prosperity over the past two centuries.

In 2023, I wrote a book chapter Canada and the United States: A Symbiotic Relationship or Complex Entanglement? In that chapter, I posed a question: What if the United States becomes more aggressive and even less open to working co-operatively with Canada? To answer that question, Canada can draw lessons from its centuries-long coexistence with an often-erratic neighbour to successfully navigate the economic volatility of the present era.

While the recent Supreme Court ruling presents a setback for Trump, it is unlikely to stop him from using U.S. economic and military might as leverage against Canada and other countries. As Canada navigates this belligerent U.S. government, a lingering question is whether this history of interwoven reciprocity is deteriorating into a complex entanglement of vulnerability.

Two neighbours, different worlds

In the book chapter, I describe the Canada-U.S. relationship as a complex picture of deep interdependence, marked by significant power imbalances, and the creative ways Canada has learned to adapt and prosper.

The economic and political interests of the two countries have diverged and converged in undulating waves over the past 200 years. The two economies are inextricably intertwined across a range of sectors, from natural resources and agriculture to advanced manufacturing. Around 70 per cent of Canadian exports go to the U.S., and the share of Canada’s merchandise imports from south of the border was around 59 per cent in 2025.

But for Canada, the relationship is more than just economic interdependence. The U.S. has a population of about 342 million and a gross domestic product about 10 times larger than Canada’s. That sets the stage for an asymmetrical relationship whose threads are woven into the fabric of trade and geopolitics.

For Canada, this can sometimes feel like vulnerability. And that vulnerability is increasingly being exploited by the U.S., creating a general feeling of existential crisis and entrapment.

Nevertheless, Canada can draw from its centuries-long experience to navigate the current headwinds. While the smaller of the two neighbours, it is not entirely dependent on the U.S. for influencing global events or harnessing international opportunities.

Canada has been, and still is, an influential power on the international stage. As a G7 nation, Canada is one of the key pillars in the scaffolding of the global economy. This global standing and international influence give it some room to manoeuvre.

Navigating an existential crossroads

First, in the international arena, Canada must diversify economically and geopolitically to build strategic resilience. Prime Minister Mark Carney is already moving on this front by agreeing to ease mutual tariffs with China. With negotiations to renew the Canada-U.S.-Mexico Agreement (CUSMA) slated for this year, a diversified trading economy will give Canada much greater leverage to navigate the vulnerabilities of asymmetry.

Second, Canada should draw from its record of championing a rules-based order. In recent years, the country has had to skilfully navigate the crossroads of projecting and defending its global and liberal-democratic values during periods of U.S. flirtations with populism, isolationism and anti-international rhetoric. As a middle power, it derives its strength from the rule of law and by presenting a united front with like-minded nations. A wider set of partners means more buffers against trade policy whiplashes and geopolitical shocks from the U.S.

Third, domestically, loosening inter-provincial trade flows, updating anachronistic regulatory frameworks and pursuing digital data sovereignty strategies should be high priorities to fire the full engine of the economy.

Similarly, as I’ve previously argued, Canada should use its comparative advantages in natural resources to create a strong, well-connected critical minerals supply chain. This would give it significant strategic leverage in the global economy as the world shifts to electrification and renewable energy.

Over the past two centuries, Canada has mastered the complex dance of asymmetry. However, the current crisis takes on an existential proportion that will require new agility, courage and decisiveness. It is an inflection point that will mark a consequential shift for the next generation.

Canada’s nimbleness and agility in navigating this political moment could be an model for other countries that must manoeuvre a world where the old rules no longer apply. It can serve as an example for small and middle powers who must navigate a world where great powers are increasingly belligerent.