Faisal Islam: The tariff wars have begun – buckle up

Such a radical idea comes with risk and already simply with the tariffs, there is a danger for the White House that the US overplays its hand.

Mark Carney, who is frontrunner to replace Justin Trudeau as Canadian Liberal Party leader, and as Prime Minister, at least until an election, has a rather unique approach.

The former governor of both the Bank of England and the Bank of Canada decided to come out punching, ridiculing the fentanyl rationale and telling the BBC that Canada would retaliate “dollar for dollar” and that Canadians would “stand up to a bully”.

He said that the tariff move would rebound on the US economy itself by fuelling inflation, forcing the Federal Reserve to raise interest rates and crippling the ability of the US to sign trade deals, given they would have effectively ripped up their biggest – the United States-Mexico-Canada Agreement (USMCA) – just a few years after the president had personally renegotiated it.

Mr Carney then publicly suggested that Canada removes a subsidy from exports to the US of its oil, and stressed that Canada’s green investments might need to be protected from US carbon emissions.

For those countries like the UK trying to avoid tariffs, he had a simple message: “Good luck”.

The clear sense was that from his own experience of having dealt with Trump at the G20, the way to deal with him was to show strength.