Tariff negotiations between the United States and Canada abruptly broke off on Friday night: the deal announced as “imminent” by Donald Trump fell through and now a real trade war is at risk. The new American tariffs of 50% immediately affect about 20 billion dollars worth of Canadian goods, equal to about 5% of Canadian exports to the US. They apply to building materials, plastics, alcoholic beverages, dairy products, furniture, appliances, clothing, fishing rods, and hockey sticks. They add to measures that have targeted steel, aluminum, lumber, and automobiles for months.
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Canada’s response
The Canadian government under Mark Carney, in response, announced it will introduce new tariffs against products coming from the United States, starting September 8: “Canada,” said the Prime Minister from Ottawa, “will respond to Washington’s new tariffs dollar for dollar, in order to protect Canadian workers, farmers, families, and businesses.” The Canadian tariffs (details of which will be clarified in the coming days) will target imports from the US of steel, dairy products, appliances, agricultural machinery, pulp and paper, electronics.
Trump’s move and Carney’s response initiate a dangerous escalation in the clash between two historic allies, who have highly integrated agricultural, automotive, and energy productions. Last year, they recorded a trade exchange of nearly 900 billion dollars. The renewal of the USMCA, the North American free trade agreement also involving Mexico, is also becoming significantly more complicated.
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The escalation
“I have decided to suspend negotiations with the US and told our negotiators to return,” said Carney. “The last-minute changes to the terms proposed by the United States were unfair, economically disadvantageous, and called into question the reliability of any agreement,” said the Canadian Prime Minister, accusing the US of changing the rules. “In short,” he added, “the United States asked for too much and offered too little.”
Carney is standing up to the United States—as perhaps only China has done—following the mandate received from his government: Canadians, in last year’s elections and recent polls, have expressed opposition to yielding to Trump’s pressures, even if they have to endure economic damage.
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