Hawley Tariff Act, passed in 1930, allowing the American president to respond to perceived discrimination over trade. Tariffs under that act, unlike the emergency duties struck down by the US Supreme Court in February, need no congressional approval. “This looks a lot like the future of Donald Trump’s trade policy because it gives him flexibility,” says Eric Miller, head of the Rideau Potomac Strategy Group, a trade consultancy in Washington. Mr Trump is using this freedom to put tariffs on $20bn of exports to the United States, 5% of the total sent south every year. These would pile up next to other duties that have hobbled Canada’s car, steel, aluminium, wood and copper industries. Crucially, and unlike the emergency tariffs imposed last year, the new ones also hit goods covered by the United States-Mexico- Canada Agreement (USMCA) on trade. Mr Carney may think he has room to negotiate. He needs it. He was elected last year partly because he stood up to Mr Trump, promising to get “an even better deal” than the USMCA. Yet concession has followed concession. Canada dropped its digital-services tax on mostly American social-media giants, then ended most of its retaliatory tariffs and a different tax on streamers such as Netflix. Mr Trump’s response has been indifference. “We don’t need them,” he said on July 28th ahead of negotiations over the USMCA with Mexico as well as Canada. “The deal is important for them. It’s not important for us.” This bullying appears to be hurting Mr Carney at home, particularly over the Gordie Howe embarrassment. Canada agreed to pay for the bridge in 2012 as long as it took all toll revenue until costs were recovered. After Mr Trump enforced a new deal, Mr Carney claimed repeatedly that Canada’s costs would still be paid first. A crowing tweet from Howard Lutnick, the US commerce secretary, made clear it was untrue. For the first 15 years of operation the United States will take half of net revenue, after operating costs but before debt repayment. This will cost Canada some C$300m. The share of Canadians who say they feel confident that Mr Carney can land a good deal with Mr Trump fell by eight percentage points between April and July, according to Angus Reid, a pollster.
The same poll shows Canadians are still outraged by Mr Trump’s tariffs; almost two-thirds want Mr Carney to hit back with tariffs of his own. But that would only increase Canada’s pain. “You’ve got to realise that punching the bully back here is also going to punch the Canadian people in the guts,” says Justin Wolfers of the University of Michigan. Mr Carney has sent negotiators to Washington to intensify discussions to extend USMCA. Mr Trump’s team declined to do this in early July; there is still a chance he could agree. Mr Carney says he won’t retaliate by playing Canada’s strongest card: curbing exports of energy. In 1930 Canada did not show Mr Carney’s level of forbearance. It retaliated against Smoot-Hawley pre-emptively, launching tariffs of its own on American imports before the bill had even become law. Many other countries retaliated too. Within four years the nominal value of world trade had fallen by two-thirds and the global depression had hit its nadir. Unpleasant as it is, Canadians should hope that Mr Carney’s resolve holds. And everyone else must hope that other world leaders are equally courageous when Mr Trump turns his new tariffs on them. ■ This article was downloaded by zlibrary from https://www.economist.com/the-americas/2026/08/09/donald-trumps-bullying-of-canada- is-endless
Brazil is at last managing to build its own warships That is sensible in a newly volatile hemisphere Aug 13th 2026 Over the past few decades Brazil’s naval shipbuilding efforts have mostly sunk without trace (literally, in the case of one aircraft-carrier, which was scuttled in an effort to hide its uselessness). Since the 1970s the country has launched and abandoned at least three warship programmes. But in April it commissioned a new frigate-class ship, the Tamandaré, the first of four to be built entirely in Brazil. The construction of a second batch of four has been provisionally agreed. The vessel can detect submarines and fire missiles and torpedoes. A helicopter pad allows for wide areas to be patrolled without a fleet of costly destroyers. The craft would be a decent staple for any navy. Thyssenkrupp Marine Systems (TKMS), a German shipbuilding company, agreed to work with Embraer, Brazil’s aerospace champion, to construct the
ships in Itajaí, in the southern state of Santa Catarina. Their successful production is a dramatic improvement for a country that lacks a reputation for military muscle. Brazil has hitherto used second-hand European frigates built in the 20th century. The structure of the project is designed to encourage domestic supply chains and create a skilled local workforce. The country has previously built some small warships at home, but the Tamandaré-class is a big step up. This success marks a broader effort to beef up defence. As a share of GDP, Brazil’s military spending has for 30 years been flat or falling. It is now 1.1%. That will rise. Brazil spent $24bn on its armed forces last year, an increase of 13% from 2024. As well as the new frigates, it also has plans to build nuclear-powered submarines, which would be a first for a non-nuclear power. In 2022 the government ordered 19 tactical and refuelling aircraft. In March it unveiled the first supersonic fighter assembled in Brazil, a Gripen jet built in partnership with Sweden’s Saab. Governments all over Latin America are spending more on defence. Peru and Colombia have both placed multi-billion-dollar fighter-jet orders in the past year, for example, Peru for American F-16s and Colombia for Swedish Gripens. It is tempting to conclude that more defence spending, and the desire to build at home, is due to shifting geopolitics in Latin America. In July Brazil’s government said that “there exists a risk of US military force being used against Brazilian territory.” It was referring to recent events such as the capture of the Venezuelan dictator, Nicolás Maduro, in January, and the American bombing campaign against boats allegedly involved in drug- trafficking in the Caribbean and Eastern Pacific. With the United States adopting a more threatening posture, perhaps it is no wonder that countries in its hemisphere want greater means to defend themselves. But Louis Bearne at the International Institute for Strategic Studies, a global think-tank, says Brazil’s spending is “a continuation of a long-term trend”. The expansion, he says, is an overdue modernisation programme, rather than a response to any particular threat, including one from the United States. The programme to build the Tamandaré-class frigates was launched in 2017. Memorandums of understanding for the development of the Gripen with
Saab were first signed in 2013. Both predate today’s tension with the United States. The recent efforts have merely followed a string of failed attempts. Brazil’s success helps to make the case for more domestic defence procurement in future. The government is eager to build more military and naval hardware at home. Its original motive was to boost Brazil’s industry. The question now is whether Brazil can sustain the existing programmes and the extra spending they require. Mr Bearne says success should protect the frigates from cuts. Even if Brazil has a different government after an election in October, a new right-wing one is unlikely to undermine a solid defence- manufacturing base. For the moment, the project seems to be on an even keel. ■ This article was downloaded by zlibrary from https://www.economist.com/the-americas/2026/08/13/brazil-is-at-last-managing-to- build-its-own-warships
A big earthquake reveals two very different Colombias The new president, Abelardo de la Espriella, took office three days before it struck Aug 13th 2026 “They pulled people out alive,” says Alberto, an onlooker, as a digger’s steel teeth smash into a heap of concrete. It is all that remains of a four-storey building in Quibdó, a city in the western state of Chocó that was near the epicentre of a 7.4-magnitude earthquake which struck Colombia on August 10th. Aftershocks brought down more buildings. Around the country, at least 265 people have died. The earthquake was as powerful as the deadly pair that devastated Venezuela in June. But it occurred about ten times deeper in the Earth’s crust, reducing its destructive force. Crucially, too, the Colombian government reacted
much faster than the Venezuelan regime. Abelardo de la Espriella, sworn in as president only three days before the tremors, assumed command of the situation. Yet the earthquake has still highlighted local deprivation. Chocó is Colombia’s poorest state. The hospital in Quibdó is the only place that offers even basic surgery. Bandits extort the poor population, 75% of whom are Afro-Colombian and 13% indigenous. Alberto complains about a lack of machinery: “The municipality is in bad shape,” he says. Rescue teams started work on the morning of the 11th, but the end of a 72-hour window after the quake, reckoned to be the period when lives can be saved, has passed. Of the three people pulled out of the rubble, two have died. The people of Chocó, Alberto says, have been “abandoned by the state”. This contrasts with the rescue efforts in the richer neighbouring region of Valle del Cauca. In Cali, its capital, 88 people have been rescued, with expert teams sent from Bogotá, the country’s capital. Unlike in remote Chocó, it has been possible to bring aid overland to the hard-hit cities of Manizales and Pereira, where more than half of the deaths have been recorded so far (people in Chocó may have benefited from living in traditionally built wooden houses).