Trade tensions between the United States and Canada have significantly worsened after the breakdown of negotiations between the two countries.
U.S. President Donald Trump reacted strongly on Sunday to Ottawa’s announcement of new retaliation measures against U.S. imports, while Canadian Prime Minister Mark Carney pledged a “dollar-for-dollar” response.
The new American tariffs, set at 50%, took effect on Saturday. They cover Canadian products worth about 20 billion dollars, i.e., nearly 5.5% of Canada’s exports to the United States.
In response, Ottawa announced new duties on American products, with a fate to take effect on September 8.
Trump tightens his tone against Ottawa
In a post on Truth Social, Donald Trump accused Canada of wanting to benefit from the advantages granted to a U.S. state without being part of it.
He also denounced the tariffs applied for several years, in his view, to American farmers, saying that this situation must end.
The statements by the American president come the day after Mark Carney announced targeted trade retaliation affecting several American sectors.
Ottawa promises a dollar-for-dollar response
The Canadian prime minister announced that his country would respond to the new American duties on a dollar-for-dollar basis.
Mark Carney stated that this strategy aimed to protect workers, farmers, families and Canadian businesses.
Asked about the risk of a trade war, he said Canada was already in a confrontation since it had, in his view, been “attacked” by the American measures.
The forthcoming Canadian duties should notably cover steel, dairy products, household appliances, agricultural equipment, pulp and paper, and electronics, as well as other products already subject to what Ottawa considers unjustified tariffs.
The Canadian government plans to publish in the coming days the details of the measures as well as a support program for affected sectors.
Wine, furniture, cement and clothing targeted on the Canadian side
The new American duties affect several categories of Canadian products.
Among the sectors cited are notably wine, furniture, dairy products, cement, clothing, fishing gear and hockey equipment.
Even if these measures cover only part of Canadian exports to the United States, several trade experts say they could have significant consequences for certain supply chains, notably softwood lumber and wine, with risks of job losses and business closures.
Washington does not anticipate new negotiations
The U.S. Trade Representative, Jamieson Greer, called the failure of the talks an “missed opportunity” for Canada.
He said that no new negotiations with Ottawa were planned at this stage, adding that Washington was now moving ahead with measures to respond to Canadian decisions.
According to him, Canada already enjoyed a particularly favorable deal with the United States and could have obtained further improvements, but would not have wanted to accept the proposed conditions.
Canadian businesses brace for the hit
The chief executive of the Canadian Chamber of Commerce, Candace Laing, warned of the potential consequences of the new trade barriers on businesses and the sectors involved.
She said the Chamber would mobilize its network of companies across regions to limit the effects of the measures and to adapt to the new situation.
In Ontario, the provincial premier Doug Ford, one of the main opponents of the American duties, voiced support for Mark Carney.
He said that the agreement proposed by Washington would have been unfavorable to Ontario, notably for the sectors of the automobile and steel.
The American demands would have derailed talks
According to Mark Carney, negotiations had progressed before the United States introduced in the last days new requirements judged by Ottawa as both non-economic and unfair.
The Canadian prime minister believes these conditions would have reduced the benefits of an agreement for Canada and raised questions about the reliability of a possible compromise.
Among the demands mentioned is notably a limitation on Canada’s ability to sign new trade deals with other partners.
Carney said his government could not accept the proposed conditions and would not yield to the American demands.
Three days of negotiations without an agreement
The United States and Canada failed on Friday to conclude a new agreement after three days of intensive negotiations.
Each side blames the other for the failure of the talks.
This new standoff comes as North American trade relations rest largely on the United States–Mexico–Canada Agreement, whose future could be affected by the rising tensions between Washington and Ottawa.
Canada particularly exposed
The Canadian economy remains highly dependent on the American market: about 70% of Canadian exports go to the United States.
This dependence explains the country’s sensitivity to any rise in American tariffs.
Even if Washington’s new measures affect about 5% of Canadian exports to the United States, their impact could be heavily concentrated on certain industrial and agricultural sectors.
The announcement of a dollar-for-dollar Canadian response now opens a new phase in the trade conflict. The risk is a succession of retaliatory measures that could affect businesses, jobs and trade within one of the world’s most integrated economic spaces.
