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He can get angry at the slightest provocation. His erratic personality has me tiptoeing around his presence, and more often than not I鈥檝e found myself distancing myself from a relationship dotted with more risk than consistency.

U.S. President Donald Trump reminds me of that friend, as one week he鈥檒l slap tariffs on a swath of countries, then the next week he鈥檒l pause the fees in order to hopefully negotiate favourable deals. There鈥檚 no method to his trade war madness.

By building a tariff wall around U.S. in support of his America-first agenda, President Trump has eroded the one key trait trade partners require from one another: trust. Without that confidence in the U.S. being a reliable trade partner, why would allies ever shake hands with them again?

Eroding that trust seems to give Trump a particularly salivating glee, judging by his exclamation-mark-heavy social media posts and the unwavering hope in securing deals with countries whose backs must be bleeding from all the stab wounds.

Throwing a tariff tantrum might appease his base who continue to cry out, 鈥渟hort term pain for long term gain!鈥� They see this hard turn away from globalization as long overdue in order to boost America鈥檚 economy 鈥� even though it wasn鈥檛 cratering under President Biden.

But at the helm is that unpredictable friend who sorely needs to head back to university and upgrade his business education. It seems Trump can鈥檛 distinguish between genuinely unfair foreign competition compared to 24/7 tariffs even on island countries largely populated by penguins.

Confidence in U.S. trade policy has been irrevocably bruised, even if Trump scraps all the announced tariffs tomorrow. George Saravelos, the head of foreign exchange research at Deutsche Bank, said earlier this month, 鈥淭he damage has been done. The market is reassessing the structural attractiveness of the dollar as the world鈥檚 global reserve currency and is undergoing a process of rapid de-dollarisation.鈥�

When the world begins to reconsider the power of the U.S. dollar in the long run, the ripple effect will extend to Canada. A slump in the perceived value and stability of the greenback could lead to a depreciation of the Canadian dollar relative to other currencies, as investors may shift away from USD-denominated assets 鈥� including those in closely linked economies like Canada.

Think of how a significant portion of Canadian exports, in sectors like energy, automotive, and timber, are priced and traded in U.S. dollars. Canadian investors hold a substantial amount of U.S. stocks and bonds denominated in USD, and since Canadian businesses issue debt in this currency, the value and servicing cost of this debt are directly influenced by fluctuations in the USD/CAD exchange rate.

When markets swing from relief rally (hurrah, the nonsensical cross-global tariffs are largely lowered to 10 per cent!) to deep slumps (the U.S. central bank isn鈥檛 lowering interest rates), the once unthinkable consideration of the U.S. dollar losing its safe haven status is now on the table.

Could Canada dip into a recession in the coming months? Don鈥檛 count out that depressing outcome. Bank of Canada Governor Tiff Macklem laid out that scenario last week: 鈥淪ome exporters could go bankrupt. That could spill through the economy. Unemployment could rise more. Household spending could retrench more.鈥�

The captain of the trade war ship has a shoddy record of steering boats through stormy waters. Trump鈥檚 business acumen is laughable, considering how he鈥檚 declared bankruptcy six times, mismanaged a casino, reneged on deals.

Sure, he鈥檚 fantastic at marketing, branding, and attracting media attention. But his reputation as a business leader makes him a liability to not just the American electorate but also to allies such as Canada.

And sadly, there鈥檚 little we can do but watch, wait and hope the economic pain threading through this uncharted territory won鈥檛 be as jarring as predicted.