A provocative new book by Ian Lee and Larry O’Brien argues that Canada’s greatest economic vulnerabilities are largely of our own making—and that escaping them will require more than standing up to Washington.
What if Donald Trump has done Canada an enormous favour? Not because of his tariffs, his threats to Canadian sovereignty, or his increasingly aggressive approach to trade. Those have created genuine economic uncertainty and strained a relationship that has been central to Canadian prosperity for generations. But what if Trump has finally forced Canadians to confront something we have been unwilling to acknowledge for decades? That many of our most serious economic problems were not created in Washington.
They were created here at home.
That is the central argument of Trapped in the Shadow of Trump’s America and How We Escape, a provocative new book by Ian Lee and Larry O’Brien, whom I recently interviewed on The Brian Crombie Hour.
Lee, a professor at Carleton University’s Sprott School of Business and a former banker, brings an academic and economic perspective. O’Brien, a successful entrepreneur and former mayor of Ottawa, approaches the issues with experience in both business and government.
Together, they make an argument that deserves serious consideration, regardless of one’s political persuasion: Donald Trump did not create Canada’s dependence on the American economy; he exposed it.
He did not create our internal trade barriers, our regulatory complexity, our difficulties building major infrastructure, or our longstanding disagreements over resource development. Those problems existed long before Trump entered the White House. And they will remain long after he leaves.
For much of the past century, Canada’s economic relationship with the United States has been an extraordinary success. We share the world’s longest international land border, deeply integrated manufacturing industries, extensive energy infrastructure and one of the most important bilateral trading relationships in the world.
The original Canada–U.S. Free Trade Agreement, followed by NAFTA and subsequently CUSMA, helped create an integrated North American economy. Canadian manufacturers gained access to an enormous market. American businesses gained access to Canadian resources, products and expertise. Consumers on both sides of the border benefited. But there was a downside.
We became comfortable.
Too comfortable.
Rather than using our access to the American market as a foundation for developing a truly global trading economy, Canada increasingly treated the United States as its natural—and often almost exclusive—customer. Today, roughly three-quarters of Canadian merchandise exports go to the United States.
That dependence is not inherently a mistake. Geography matters. Integrated supply chains create efficiencies. Proximity to the world’s largest consumer market is an enormous competitive advantage. But economic integration becomes economic vulnerability when your principal trading partner begins treating trade as an instrument of political coercion.
That is precisely what Trump has demonstrated. As Lee and O’Brien argue, Canada’s mistake was not embracing free trade. It was failing to develop enough alternatives.
Canada is among the most resource-rich countries in the world. We have enormous reserves of oil and natural gas, substantial hydroelectric resources, uranium, potash, critical minerals, timber and agricultural products. We have access to three oceans and some of the world’s most sophisticated engineering, financial and technical expertise.
Yet we have repeatedly struggled to develop the infrastructure necessary to bring these resources to international markets. Consider the debate over pipelines. Western Canadian oil and natural gas have historically depended heavily on American markets because that is where much of the transportation infrastructure leads.
Meanwhile, countries in Europe and Asia have sought secure supplies of energy from politically stable trading partners. Canada should be exceptionally well positioned to serve those markets. Instead, major energy infrastructure proposals have become entangled in regulatory uncertainty, federal-provincial disagreements, environmental disputes and political controversy. The abandoned Energy East pipeline is one example.
Lee and O’Brien are particularly critical of federal policies they believe have discouraged resource development and constrained Canada’s ability to diversify its export markets. Their argument is that we have effectively surrendered economic opportunities to competitors while increasing our dependence on the United States.
There is an important counterargument, of course.
Pipelines and resource projects raise legitimate questions about environmental protection, Indigenous rights, climate change, construction costs and long-term commercial viability. Not every proposed project deserves approval, and governments should not assume that every pipeline will generate an acceptable economic return.
But neither should Canada allow regulatory processes to become so prolonged and unpredictable that worthwhile projects are effectively impossible to build. The challenge is to establish clear environmental and economic standards, make timely decisions and provide investors with confidence that approved projects can proceed.
A country that cannot build infrastructure cannot fully control its economic future.
One of the strongest arguments in the book concerns the barriers Canadians have created to trading with one another.
We talk endlessly about free trade with the United States, Europe and Asia. Yet businesses continue to face differing provincial regulations, licensing requirements, transportation rules and professional standards within Canada itself.
A company operating in Ontario may encounter unnecessary complications expanding into Quebec or Alberta. Workers with recognized qualifications in one province can face obstacles practising their professions in another. Businesses must sometimes navigate multiple regulatory regimes to sell essentially identical products across provincial boundaries.
These barriers impose real costs. They reduce productivity, discourage competition, limit labour mobility and make it more difficult for Canadian companies to achieve national scale. And unlike American tariffs, many of these obstacles are within our own power to address.
Removing unnecessary internal trade barriers should not be particularly controversial. It does not require abandoning Canadian sovereignty.
It is an exercise in strengthening it.
Canada should function as one national economy, not as a collection of regional markets separated by regulatory obstacles. If we cannot establish genuinely free trade among Canadians, how can we expect to compete effectively in an increasingly fragmented global economy?
One of the more interesting parts of my conversation with Lee and O’Brien concerned Canada’s highly decentralized political system. Our Constitution divides authority between federal and provincial governments, creating a structure that protects regional interests and recognizes Canada’s extraordinary geographic, linguistic and cultural diversity.
That decentralization has important benefits. But it also makes national economic coordination difficult.
The economic priorities of Alberta, Quebec, Ontario, British Columbia and Atlantic Canada are not always aligned. An energy project that appears essential to Alberta’s economic future may face significant opposition in Quebec or British Columbia. A manufacturing policy designed for Ontario may have limited relevance to Saskatchewan.
Federal governments are often reluctant to confront provincial opposition, particularly when major projects become politically divisive. O’Brien argues that Ottawa has sometimes been too hesitant to exercise its constitutional authority over matters of national importance.
There is a legitimate debate here.
Provincial autonomy is an essential feature of Canadian federalism. Federal intervention can create serious political and constitutional tensions, and it cannot simply override every provincial concern. But the national government also has responsibilities that extend beyond accommodating the preferences of individual provinces.
Transportation corridors, interprovincial energy infrastructure, national trade and strategic economic development cannot always be addressed through a series of separate provincial decisions. At some point, Canada must be capable of acting as a country.
That does not necessarily require reopening the Constitution. It requires political leadership, cooperation and a willingness to identify projects whose benefits extend beyond provincial borders.
Lee and O’Brien offer five principal reforms.
• eliminate unnecessary interprovincial trade barriers.
• reduce regulatory complexity and make it easier to invest, build businesses and complete major projects.
• unlock Canada’s natural resource wealth by improving access to domestic and international markets.
• reform healthcare delivery, including exploring more decentralized approaches to providing services.
• reconsider Canada’s equalization arrangements and the economic incentives associated with federal fiscal transfers.
These are substantial proposals, and they do not all deserve automatic acceptance. I find the first three particularly compelling. Canada urgently needs a more integrated domestic economy, a more predictable investment environment and better infrastructure connecting our resources and industries to international markets.
The final two proposals are more complicated. Healthcare reform must be judged by whether it improves access, outcomes and efficiency while preserving the principles Canadians value in their healthcare system.
Similarly, equalization is not simply an economic transfer mechanism. It is part of the constitutional framework intended to help provinces provide reasonably comparable public services at reasonably comparable levels of taxation. Reforming it requires careful consideration of regional disparities, fiscal capacity and national solidarity.
Nevertheless, the authors deserve credit for challenging assumptions that too often escape scrutiny. A country facing structural economic challenges should be willing to examine its institutions and policies rather than treating every existing arrangement as untouchable.
Although I agree with much of the authors’ diagnosis, I believe Canada’s response needs to be even more ambitious. Removing barriers and developing resources are necessary steps. But they are not sufficient.
We also need a new generation of nation-building projects. At Confederation, the railway connected a vast country and made national economic integration possible. The St. Lawrence Seaway helped connect the industrial heartland of North America to global markets. Our national highway system, hydroelectric projects and energy infrastructure helped create the economic foundations of modern Canada.
What comparable projects are we building today?
I would argue that Canada needs to think seriously about new east-west energy corridors, expanded electricity interconnections, high-speed rail, northern transportation and defence infrastructure, and the development of a more independent digital economy.
We should also recognize the extraordinary opportunity presented by artificial intelligence and electrification. Canada has abundant hydroelectric power, uranium, nuclear expertise, natural gas, critical minerals and a highly educated workforce.
These advantages could position us as a global leader in energy-intensive technologies, advanced manufacturing, data centres and artificial intelligence. But only if we are prepared to build the infrastructure and develop the industries necessary to capitalize on them.
We cannot simply extract resources and hope that prosperity follows. We must use our natural advantages to create higher-value industries, intellectual property, technological expertise and globally competitive Canadian companies.
That is how we diversify our economy while creating the jobs and opportunities Canadians need.
During our conversation, I recalled a comment attributed to former Quebec premier Jean Charest: that Canadians might someday thank Donald Trump for waking us from our economic complacency.
It is a provocative thought.
Certainly, nobody should welcome economic coercion or threats to Canadian sovereignty. And Trump’s approach to international trade has created uncertainty that can damage businesses, investment and employment on both sides of the border. But sometimes an external shock reveals weaknesses that have been allowed to develop over many years.
Canada’s dependence on the United States is one such weakness. Our internal trade barriers are another.
So are our difficulties building infrastructure, our productivity challenges and our inability to agree on a coherent national economic strategy. The danger is that we respond to Trump primarily through anger, patriotic rhetoric and short-term defensive measures.
Those responses may be understandable. But they will not solve the underlying problems. The more constructive response is to use this moment to strengthen our own economy.
• Diversify our markets.
• Remove unnecessary barriers.
• Build infrastructure.
• Encourage investment.
• Develop our resources responsibly.
And create a country that is more productive, prosperous and economically independent.
Trapped in the Shadow of Trump’s America and How We Escape is not a book with which every Canadian will agree. Its arguments about energy policy, regulation, healthcare and equalization will generate legitimate disagreement.
Some readers will believe the authors place too much emphasis on government intervention as the source of Canada’s problems and too little on global market forces, environmental considerations and the economic realities of major infrastructure development. Others will welcome their willingness to challenge policies that have become deeply embedded in Canadian political thinking.
But that is precisely why the book is worth reading.
Lee and O’Brien are asking Canadians to look beyond Donald Trump and examine the decisions we have made ourselves. They are asking whether our economic vulnerabilities are inevitable—or whether they are the consequences of choices we can change. And they are challenging Canadians to think about national prosperity as something that must be built, rather than something we can simply take for granted.
For me, the most important lesson is that Canada’s economic future should not be defined primarily by its relationship with the United States. Our geography will always make America our most important economic partner. That relationship should remain strong. But partnership is not the same as dependence.
A confident Canada should be able to trade with the United States while developing deeper relationships with Europe and Asia.
• It should be able to protect the environment while developing its resources responsibly
• It should be able to respect provincial autonomy while advancing projects that serve the national interest.
• It should be able to preserve the social institutions Canadians value while remaining willing to reform them when they are not delivering the results we need.
Ultimately, this is about something much larger than tariffs or trade agreements. It is about whether Canadians still possess the ambition to build a stronger country.
Donald Trump may have exposed Canada’s economic weaknesses. But he cannot fix them.
That responsibility belongs to us.
And perhaps that is the most important message of Ian Lee and Larry O’Brien’s book.
Canada is not trapped by geography. We are trapped by too many of our own decisions.
The good news is that decisions can be changed. And that means our future is still ours to build.
Background Photo: Daniel Joseph Petty, Pexels
