US and Canada raise tariffs but may still avoid full-scale trade war
The United States and Canada have slapped new high tariffs on each other's goods, yet analysts believe a negotiated settlement remains possible.
President Donald Trump announced 50% tariffs on a range of Canadian goods, prompting Prime Minister Mark Carney to retaliate with equivalent duties on roughly $20 billion of American imports such as steel, dairy, appliances and farm equipment. Ontario Premier Doug Ford warned he could further cut off electricity and critical-mineral shipments, while Trump threatened an additional set of auto taxes. Analysts stress that the tariffs cover only about 5% of bilateral trade and are unlikely to cause major economic harm, with Oxford Economics forecasting a modest slowdown in Canadian growth from 1.6% to 1.4%.
The Canadian retaliatory tariffs are scheduled to take effect on Sept. 8, giving negotiators a brief pause. Experts suggest that political will and trusted intermediaries—potentially former negotiators like Wendy Cutler or figures such as Jared Kushner—could revive talks before the January auto tariffs and the November midterm elections heighten pressures.
Why it matters
The dispute threatens the $880 billion U.S.-Canada trade relationship and could affect prices and jobs on both sides.
How this story developed
- Aug 11 Canadian trade minister meets U.S. counterpart again as tariff deadline looms
- Aug 24 Trump posted that a half‑percent tariff on Canadian vehicles, components and steel will begin next year.
- Aug 24 Trump warned he may impose 50% tariffs on Canadian automobiles, trucks, auto parts and steel beginning January 2027.
- Aug 25 Canada announced a domestic loan and benefit package while the United States moved to impose 50% tariffs on Canadian auto goods.
- Aug 25 U.S. Trade Representative Jamieson Greer disclosed that the United States had offered Canada major tariff cuts before the negotiations collapsed.
- Aug 25 Ford suggested a possible 25% surcharge on electricity exports to the United States.
- Aug 25 Canada is preparing a counter‑tariff schedule to be unveiled in early September.
- Aug 25 Canada announced counter-tariffs of up to 50% on roughly $27.6 billion of American goods, raising duties on items such as dairy, cosmetics and steel.
- Aug 25 Canada announced retaliatory tariffs to begin on Sept 8.
- Aug 25 Canada added a C$7.5 billion financing package to help firms and workers cope with the new tariffs.
- Aug 25 Canada announced it will impose counter‑tariffs in early September.
- Aug 25 Ford said Canada could consider using electricity, critical minerals and fuel as leverage.
- Aug 26 White House official said the Trump administration is weighing extra trade sanctions in response to Canada’s counter‑tariffs.
- Aug 26 President Trump posted a proposal to rename Lake Ontario.
In this story
Related stories
30 in this thread