Canada's trade war with the United States has entered a new phase. Ottawa's latest counter-tariffs, covering C$27.6 billion ($20 billion) of US goods, took effect this week after talks collapsed. The US administration has threatened more measures, including restrictions on Canadian goods and services.

The US president has also revived his idea of making Canada the US' 51st state, called its prime minister a "governor" and even renamed Lake Ontario "Lake America". Tariffs are one thing. Telling a sovereign neighbor that it would be better off without sovereignty is another.

Canada is justified in pushing back. Its tariffs are less an exercise in economic defense than an attempt to establish a simple principle: interdependence is not submission. Canadian Prime Minister Mark Carney has argued that Canada cannot be expected to admit US goods tariff-free while Canadian companies face barriers in the other direction.

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Canada's economy is far more dependent on the US than other major economies, such as the European Union and China. The EU is now trying to broaden its partnership with Canada, discussing trade, security, supply chains, critical minerals and defense. China is also opening its door to Canadian business in many fields. Chinese Vice-Premier He Lifeng met Andre Desmarais, honorary chairman of the Canada China Business Council, on Wednesday, stressing that there are rich opportunities for Canadian companies in China. For Ottawa, such overtures by major economies at the moment are not just diplomatic niceties. They are necessities.

Canada has signed 12 trade and security agreements on four continents in six months. None of these can replace the US. Together, however, they can make US pressure less decisive.

The Carney government is certainly watching financial, economic and political developments inside the US. The US' domestic politics might influence the trade war's trajectory. With the US midterm elections approaching, tariff pain in states such as Michigan and Maine is becoming a political liability. Business lobbies are pressing the White House, though the US president feels little direct pressure and will need another "win" to back down. Ottawa might be timing its leverage for maximum impact — right when Washington's internal costs begin to bite.

And Canada does have leverage. The US depends on Canadian energy, electricity and other resources. But leverage is not invulnerability. The more dependent side usually suffers more when the relationship breaks down. This is why Carney's emerging doctrine is less romantic than it first sounds: diversify, but do not pretend diversification is painless.

Carney's remedy, as he said in Davos, was "value-based realism": build strength at home, find partners abroad and acquire enough options that nobody can "hold us hostage". Middle powers, he argued, must act together, because "if we're not at the table, we're on the menu".

In a Wednesday video address to the Canadian people, he made the economic case more bluntly. Canada's old model of easy integration with a single economic partner is over. The answer, he said, is "development and diversification, not denial". He invoked the US' McKinley tariffs of 1890, which he argued were intended to increase Canada's dependence and eventually force annexation. Canada survived by diversifying instead.

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The history is suggestive, though history rarely repeats itself so obligingly. Canada's challenge today is not to escape the US. It is to make dependence less vulnerable. That argues against both surrender and swagger. Canada should continue negotiating with Washington. In the end, a long fight-and-talk trade war hurts consumers and businesses in both Canada and the US. However, talks work best when the US knows Canada can say "no".

Canada needs to turn its energy wealth, critical minerals, and diplomatic ties into diplomatic leverage — playing the US at its own game. The goal isn't to defeat the US, but to make it clear that Canada won't hesitate to retaliate reciprocally.

By treating Canada less like a partner and more like a possession, the US president may be doing something no Canadian government could have managed so quickly: convincing Canadians that dependence is a strategic liability.

Sovereignty has a price; obedience does too, as the Justin Trudeau government discovered. Now, Canada is finally figuring out which one is cheaper.