US, Canada head toward trade war after tariff negotiations fail

On Friday, talks aimed at averting new high US tariffs on Canada ended without resolution.

Following the collapse of the negotiations, Canada announced that it would impose retaliatory tariffs on US goods on 8 September.

Both sides are blaming each other and appear to be preparing for a trade war.

Canadian Prime Minister Mark Carney said: “When you are attacked, you are at war. We have been attacked.”

Meanwhile, President Trump said on Truth Social: “Canada wants all the advantages of being a State, without being one!!!”

With no agreement reached, the US followed through on its threat to impose new 50% tariffs on $20 billion worth of Canadian goods.

The annual value of Canadian exports to the US stands at around $382 billion.

Although the new import duties primarily target the forestry, alcoholic beverage, dairy, and textile sectors, the affected products range from hockey sticks to dog collars and fake moustaches.

Canada has not yet released the list of products subject to retaliatory tariffs.

However, Carney pledged to retaliate on a dollar-for-dollar basis with the tariffs imposed by the US.

Carney stated that Canadian tariffs would also target similar sectors.

The US and Canada have a long history as allies and trade partners. However, when Trump imposed sweeping tariffs globally, Canada was one of the few nations to retaliate.

Ottawa adopted a “tough stance” by imposing retaliatory tariffs, while Canadians boycotted US-origin alcoholic beverages and travel.

Trump used an untested legal authority to impose the latest tariffs and has also repeatedly raised the prospect of making Canada the 51st state.

The USMCA (North American Free Trade Agreement), negotiated by Trump with Canada and Mexico during his first presidential term, is due for review, and the current trade dispute indicates that this process will be contentious.