USA faces Escalating Trade Tensions with Canada
The United States and Canada, historic allies along an undefended border, fell deeper into a trade war Saturday marked by angry recriminations and new tariffs that are expected to raise prices for products in both countries.
Each side blamed the other for the collapse of negotiations in Washington late Friday, leading the U.S. to impose 50% tariffs on $20 billion worth of Canadian goods and Canada setting Sept. 8 as the start of its retaliatory penalties.
President Donald Trump’s import taxes will hit about 5% of what Canada ships to the United States every year, ranging from hockey sticks to tongue depressors. Prime Minister Carney said Ottawa would respond with targeted tariff protection for industries exposed to the new U.S. duties, including some steel products. He also mentioned the dairy, appliance, agricultural equipment, pulp and paper and electronics sectors.
Carney accused Washington of using “economic integration as a weapon” and said “its signature was written in pencil.” Resorting to the language of battle, he said his country had been “attacked” by the new American tariffs. “You’re at war when you get attacked,” he said, adding that Canada had the reserves, resilience and plan to respond.
But to Trump’s chief trade negotiator, Jamieson Greer, the U.S. was compelled to act after a year of retaliation by its longtime partner.
“We’ve said enough, and so we’ve taken countermeasures. Our interest is in protecting American workers and protecting American supply chains,” the U.S. trade representative told “Fox & Friends Weekend.”
Canada cites ‘unacceptable demands’ as US says it offered favorable terms
Carney said Canada had been willing to drop remaining retaliatory tariffs on steel, aluminum and autos if the U.S. substantially lowered its own, and to encourage provinces to restore U.S. alcohol sales. But he said Washington’s final demands went too far. “They asked too much and offered too little,” Carney said.
Greer said the Republican administration was offering to cut tariffs on steel, autos and lumber, “things that are sensitive for them. And they’ve always had the best deal, and they still would have an even better deal, but they didn’t want that.”As a result, he said, “We’re moving forward with measures that respond to Canadian retaliation.”Carney said the U.S. added last-minute terms that would have reduced tariff relief for Canadian-made vehicles, restricted Canada’s ability to strike trade deals with other countries and weakened protections for language, culture and sovereignty.
He said such demands were “unacceptable.”
The breakdown in negotiations marked a sharp reversal from two days earlier, when officials from the two countries sounded as if they were headed toward a compromise.
Ontario Premier Doug Ford, who leads Canada’s most populous province, praised Carney for rejecting the deal, saying it would have hurt Ontario’s auto, steel and manufacturing sectors. Ford urged Canada to use “every tool in our toolbox” to fight the U.S. tariffs.
The moves also call into question the future of a North American trade agreement covering the United States, Canada and Mexico that is crucial to industry in all three countries.
Carney said the breakdown was “certainly not good news” for the review of that agreement and that the failed negotiations had given Canada “a new perspective” on what Washington wants from the broader economic relationship.
A typically cooperative alliance goes sour
The political impact will likely be even bigger than the economic fallout. The countries sold each other $880 billion worth of goods and services last year.
The tariffs were initially supposed to kick in at 12:01 a.m. Wednesday. Trump extended the deadline for three days to allow talks to continue, but the countries could not reach an agreement in time.
The U.S. and Canada have wrangled for decades over trade, poking each other over sore spots such as Canadian softwood lumber imports and U.S. access to Canada’s protected dairy market.
Somehow, they still managed to remain friends, allies and trading partners. Canadian soldiers fought alongside Americans in Afghanistan after 9/11. The 5,525-mile U.S.-Canada border is undefended, and nearly 330,000 people and $2 billion worth of goods cross it every day; 800,000 Canadians live in the United States.
Trump’s approach to dealing with Canada marks an extraordinary departure from the traditionally cooperative relationship between the two countries. Trump has imposed tariffs on Canadian goods in a push to bring manufacturing back to the United States and made inflammatory comments about turning Canada into America’s 51st state.
Carney said Canada had recognized that “America has changed” and that the two countries would “not return to our old relationship.”
Canadians and Americans are frustrated
The Canadian public is fed up. A petition to expel U.S. Ambassador Pete Hoekstra, a Trump ally, has collected nearly 248,000 signatures since July 21. It accuses the former Republican congressman from Michigan of having “normalized’’ Trump’s talk of annexing Canada, among other things.
The two countries had good reasons to find a compromise.
The fallout from the collapse of trade talks between Canada and the United States is reverberating on both sides of the border, with U.S. President Donald Trump escalating his rhetoric while facing growing opposition to a broader trade war at home.
Trump weighed in on the failed negotiations with Canada for the first time overnight, taking to social media to criticize the Canadian government.
“Canada wants the benefits of being a State, without being one!!!,” the president wrote.
“They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!! President DJT”
The comments came as the trade dispute received prominent coverage on U.S. television networks Sunday, with ABC News framing the dispute as “Canada vs. the United States” and NBC’s Meet the Press asking how much more Americans can afford as trade talks fall apart.
U.S. Transportation Secretary Sean Duffy also took a hard line against Canada.
“To think that they’re going to go to war with Donald Trump and actually win that war with he U.S. I think it’s foolish on their part,” he told Fox News Sunday.
But the president is facing pushback from some Americans, including former vice-president Mike Pence.“I think the last thing we need right now as our economy is getting back on its feet is a trade war with Canada,” Pence told CNN’s State of The Union, on Sunday.American business groups have also been raising concerns about further escalation, warning that tariffs could increase costs for consumers and urging both countries to return to the negotiating table.U.S. political commentator Eric Ham said Trump’s support among the business community could be tested by the escalating dispute.
“Donald Trump cares about the business class. He cares about those billionaires,” Ham said. “They don’t want this and they’re speaking out.”In Canada, Prime Minister Mark Carney has promised retaliatory measures, including dollar-for-dollar tariffs on U.S. goods.Those measures are set to take effect Sept. 8, creating a potential window for negotiations to resume.
Former Liberal MP Ralph Goodale, who sits on the prime minister’s advisory council on Canada-U.S. economic relations, said the pause could give the American side an opportunity to reconsider its approach.
“There may be an opportunity in this pause for the American side to regroup and to become a bit more coherent,” Goodale said.Polling conducted before the latest breakdown in talks suggested Carney has political room to continue pushing back against the Trump administration.“I think we’re in this for a while,” Reid said, adding that a meaningful agreement may require a change in the political calculations south of the border.“I think we’re going to have to see real change on the American side, a weakened political position, a drive and a desire that it’s in their self interest to strike a deal before we get back to the table in any meaningful way,” he added.Carney has yet to release the full list of Canadian goods that would face retaliatory tariffs.“If there was a draft text of any agreement that both governments have seen, please release it. The U.S. administration has seen it. Your government has seen it. Canadians deserve to see it,” Majumdar wrote.In an interview with CTV News Sunday, Majumdar said his party supports the prime minister’s decision to walk away from the deal, but said to “release the deal, let us see the facts for what they are.”“Canadians are sick and tired of being used as a punching bag by President Trump and want to see the certainty of a good deal for this country a tariff free deal for this country, we want to support the government in accomplishing that,” he said.
Nearly 72% of Canada’s goods exports last year went to the United States. The Trump administration might be wary of imposing new tariffs — paid by U.S. importers who try to pass along the cost to consumers via higher prices — before the November midterm elections. American voters are already frustrated with the high cost of living.
“Both sides will be under immense pressure in the coming days to still find an off-ramp,” said Ryan Majerus, a partner at King & Spalding and a former U.S. trade official.
Joshua Bolten, CEO of the Business Roundtable, which represents leaders of major U.S. companies, warned the tariffs and retaliation risk “raising costs for American businesses and families” and disrupting vital supply chains, and urged both governments to resume negotiations.
Trump has turned to Depression-era trade penalties
Trump has made tariffs the centerpiece of his second-term economic agenda. Last year, he imposed double-digit import taxes on almost every country, justifying them by declaring the long-standing U.S. trade deficit a national emergency. The Supreme Court in February ruled that he had overstepped his authority. The justices struck down the trade penalties and set the stage for the federal government to pay refunds to importers.
So Trump has looked for other legal authority to justify tariffs.
After the Supreme Court struck down much of Trump’s earlier tariff program in February, the administration turned to other legal authorities. For Canada, Trump invoked Section 338 of the Tariff Act of 1930, a rarely used Depression-era provision allowing tariffs of up to 50% against countries deemed to discriminate against U.S. businesses.
The provision is part of the Smoot-Hawley tariff law, widely blamed by economists and historians for worsening the Great Depression by restricting global trade. Section 338 has never previously been used to impose tariffs.
The rift comes as the United States, Mexico and Canada are trying to renew a trade agreement that Trump negotiated in his first term and once praised as a triumph. The United States has begun formal talks with Mexico over revamping the US-Mexico-Canada Agreement, known as USMCA. But talks with Canada have not begun and escalating trade conflict casts doubt on whether they will.
TORONTO—After weeks of marathon talks between U.S. and Canadian trade officials, an agreement was almost in sight.
Late Tuesday, less than two hours before a slate of punishing new U.S. levies on Canadian goods were going to go into effect, President Trump announced a “DEAL” on social media and a three-day delay to give officials time to finalize the details.
Donald Trump has hit back at Canada after a breakdown in negotiations plunged the two countries into a trade war.
In his first public comments since negotiations collapsed on Friday in Washington, the US president wrote on social media: “Canada wants the benefits of being a State, without being one!!!”
“They have also charged our great farmers, for many years, massive amounts of tariffs,” he added. “No more!!!”
His comments came after the US imposed 50% tariffs on $20bn (£14.6bn) worth of Canadian goods, while Mark Carney, the country’s prime minister, has vowed to match them “dollar for dollar”.
The US tariffs came into force on Saturday, ranging from hockey sticks to tongue depressors. Trade experts have predicted that the tariffs could result in some job losses, but the biggest impact is expected to be political, triggering fresh tension between the neighbours.
Both sides blamed the other for the breakdown in talks on Friday. Carney told Canadian journalists that the country was “at war” over trade with the US, after Trump “miscalculated” by escalating his tariff attack.
“You’re at war when you’re attacked, and we got attacked,” the Canadian prime minister told reporters in Ottawa. “We cannot accept what they’ve offered and we will not give what they’ve asked.Jamieson Greer, the US trade representative, has said the US was compelled to act after a year of retaliatory measures by Canada. He told Fox & Friends Weekend: “We’ve said enough and so we’ve taken countermeasures. Our interest is in protecting American workers and protecting American supply chains.”Dan Kelly, president of the Canadian Federation of Independent Business, estimated that 40% of small Canadian exporters will be directly hit by the US tariffs, and that nearly one-third expect their revenues will drop by 50% or more as a result.The escalation was also met with anger by Democrat lawmakers and governors from US states that border Canada including Minnesota, New York and Washington.
New York governor Kathy Hochul posted on X: “Needlessly picking fights with our allies and raising prices here at home. That’s Trump’s economic policy in a nutshell.”
Minnesota senator Amy Klobuchar, said the new tariffs meant “higher costs for small businesses, farmers, and all Minnesota families.”
She wrote on X: “Canada is Minnesota’s #1 trading partner. Minnesotans are paying for Trump’s chaos.”
Posted on 2026/08/24 09:12 AM