09:01 AM EDT, 07/16/2025 (MT Newswires) -- A more passive approach from Canada could ensue instead of retaliatory tariffs against the United States ones, said Scotiabank.

One path could entail excluding US firms from Canadian procurement and participation in defense and infrastructure projects when the Canadian government's Fall budget is likely to set up hundreds of billions, if not well over a trillion dollars of such activity, noted the bank. And/or exclude them from access to resources, particularly critical minerals.

Get that additional pipeline built to sell more to Asia rather than the U.S., which needs Canada's heavy crude. The U.S. is risking Canada becoming more open to foreign investment from other nation states with incompatible interests to the U.S., pointed out Scotiabank. The Digital Service Tax may come back just as Europe contemplates applying its secret weapon against U.S. tech. And/or Canada may exclude U.S. firms from sectors that may become more open.

There are lots of tools at Canada's disposal in a more passive set of tactics rather than locking horns over tariffs and that could be more painful to U.S. companies than tariffs over the long haul by excluding them from the market and emergent opportunities, stated the bank. A ticked-off consumer base that continues to substitute toward domestic and non-U.S. foreign options is already a factor.

Or simply wait it all out and let U.S. voters see the mounting harm if President Donald Trump doesn't back down, which his history suggests he may well do, added the bank. Let Trump go into midterms explaining how his massive tariffs against all major trading partners have impacted the economy while risking the Republicans' thin majorities in Congress.

In essence, Canada could adopt the strategy of ghosting the U.S., rather than confronting the Trump administration outright, according to Scotiabank. Trump wants to limit Canada's access to the U.S., then Canada will do likewise through alternative means. Canada has plenty of firms that could serve its infrastructure goals and there are plenty of firms in Europe, Asia and Latin America that are chomping at the bit to have access to emergent opportunities in resources, infrastructure and defense.

Canadians can buy smartphones, vehicles and capital goods from many other companies at home and companies across other countries in Asia and Europe, which represents the risk of lost opportunity for U.S., firms exporting to Canada which is America's largest export destination by country.

The best option is for Canada and the U.S. to remain tightly integrated in a sensible agreement. Failing that, political uncertainty and alternative arrangements are at risk, said the bank.