What to know about Canada’s trade war with US as Carney retaliates with tariffs
Canada struck back at US President Donald Trump on Tuesday with tariffs on about 20 billion US dollars worth of American goods, in response to the latest round of tariffs on Canada.
The outcome could resonate far beyond Canada, showing other governments whether a smaller US ally can withstand Mr Trump’s economic pressure.
Canadian Prime Minister Mark Carney says US demands could hollow out key Canadian industries and limit the country’s independence, while Mr Trump’s threats to Canadian sovereignty have rallied the public behind him.
“Carney and Canada have become symbolic of resistance to him,” Canadian historian Robert Bothwell said.
“And what he’ll want to do is make an example of Carney and Canada and theoretically terrify everybody else while in fact showing them that they need to remove themselves even further from the United States.”
The tariffs hit hundreds of American products, including steel, aluminum, cheese, appliances, clothing, cosmetics and farm equipment, at rates of 15%, 25% or 50%.
Canada says its tariffs match Washington’s dollar for dollar and rate for rate.
They took effect on Tuesday under an executive action known as an order in council and cover about 20 billion US dollars in American goods, roughly 6% of the 333.6 billion dollars the United States exported to Canada last year.
RBC Economics, the research arm of the Royal Bank of Canada, said the measures were unlikely to dent US growth overall but could hit some businesses hard.
Canada has already gone beyond tariffs in other ways. Eight of its 10 provinces continue to restrict or ban sales of US alcohol. The Distilled Spirits Council says US spirits exports to Canada fell more than 70% year on year after those restrictions took effect.
Since Canada-US trade talks collapsed on August 21, Mr Trump and his administration have unleashed a barrage of tariffs, threats and personal attacks portraying Canada as weak and dependent.
On Monday, Mr Trump threatened to ban the sale of aircraft from Canada’s Bombardier, unless they manufacture planes in the United States.
“NO MORE SELLING BOMBARDIER IN THE UNITED STATES! Their products aren’t good enough!” Mr Trump posted on Truth Social.
“If they want our market, they must build here, and stop treating America like a ‘piggy bank’.”
Flavio Volpe, president of APMA Canada, a manufacturing trade group, responded on X that Bombardier uses US-made GE and Honeywell jet engines and employs about 3,000 US workers.
Mr Trump previously warned that Canada’s economy could collapse if Mr Carney continued treating him as “the enemy” and threatened consequences “worse than anything that has ever happened to a Canadian politician”.
US trade representative Jamieson Greer has threatened that Washington could ban some Canadian goods outright in response.
But Mr Trump’s trade war and repeated talk of making Canada the 51st state have fuelled anger and rallied support for Mr Carney. Canadians have sharply cut travel to the United States and boycotted US goods.
The current trade war began after Mr Trump returned to office and imposed a series of tariffs on Canadian goods despite having negotiated and repeatedly praised the North American trade agreement during his first term. Many of those tariffs violate the pact.
The rupture is especially striking because the countries have long shared one of the world’s closest relationships, with deeply integrated economies, close defence and security co-operation, vast cultural ties and, before relations deteriorated, about 400,000 people crossing the border each day.
Mr Carney has said talks can resume when the Americans “stop doing memes, stop throwing shade, stop trying to be tough” and become serious.
At the World Economic Forum in Davos in January, Mr Carney warned that great powers are using economic integration to coerce smaller countries. The speech helped establish him as the leading voice among countries looking for ways to resist Mr Trump.
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