US-Canada Trade War Takes Off Following Tariff Talks Collapse
Trump's tariff strategy risks rallying America's northern neighbor against it. The latest escalation in the US-Canada trade war is taking on the shape of a dispute about sovereignty.
Mark Carney has shifted from promising dollar-for-dollar retaliation to backing a more targeted response to US tariffs. Photo: Rich Lam/Getty Images
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After tariff negotiations between Canada and the United States collapsed late last week, US President Donald Trump on Monday announced tariffs on Canadian cars and steel would be increased to 50% from 1 January next year.
The American president indicated that cars, trucks, automotive parts and steel would all be targeted in an effort to force car manufacturers straddling the shared border to shift their operations to the US.
Describing Canada as among “the worst Nations in the World to deal with”, Trump said that his country does not need Canada, but that Canada needs the US.
“Canada will be treated like a State no longer”, Trump wrote in a post on his social media platform Truth Social, referencing his long-running rhetoric portraying Canada as economically dependent on the US and suggesting that it should become America’s 51st state.
Trump Looks Back for Tariff Justification
The tariff threats came after a different set of 50% US tariffs entered into effect on Saturday on a range of Canadian imports. The Trump administration signed off on the measures last month, justifying them with reference to an obscure piece of legislation dating back almost 100 years.
Section 338 of the Tariff Act of 1930 allows the president to place duties on imports from countries deemed to have discriminated against US businesses – a charge leveled by American officials against Canada.
The latest levies are expected to affect approximately $20bn (€17.15bn) worth of Canadian goods, ranging from wine to hockey sticks to cement.
While the Section 338 tariffs apply to all covered goods regardless of whether they come under the US-Mexico-Canada Agreement (USMCA)/Canada-US-Mexico Agreement (CUSMA), they do not apply to energy, potash or other goods such as fish or critical minerals.
The escalation in the trade war wracking relations between the North American allies comes after negotiations to avert the tariffs that took effect at the weekend collapsed. Both parties accused the other side of unreasonable demands.
No date has been set for the resumption of talks, with Canadian officials stating late on Monday that they would set out in the coming days their response to what Prime Minister Mark Carney called an American “attack”.
Sovereignty Takes Center Stage
Carney has positioned the American approach to trade negotiations as one fundamentally at odds with Canada’s understanding of what discussion between national partners should look like.
“Last spring, I warned that America is trying to break us so that they can own us”, Carney said at a press conference called on Saturday to discuss the escalating trade dispute. The Canadian prime minister claimed that the US had proposed new terms that were unfair and undermined the net benefit to be gained by his country in entering into a deal.
“In short, they asked too much and they offered too little. You’re at war when you get attacked. We got attacked”, Carney said.
Despite sharing a large trade partnership, since President Trump took office in January 2025 and implemented a strategy of tariff diplomacy, Canadians have questioned the sustainability of the relationship.
Carney gave voice to that concern when he said that Canada was finding reliable partners everywhere except in the United States and Russia.
Initially promising “dollar for dollar” retaliation, Carney quickly walked back that threat, acknowledging at a separate press event that for the time being targeted responses were more suited to the situation as a result of the scale imbalance between the US and Canadian economies.
Canadian officials, Carney included, have made out that the country's language laws proved another obstacle to reaching a trade agreement with the US.
Canada is officially a bilingual country, with both English and French protected and privileged by the state. The latter is spoken by approximately one fifth of the country’s population – a figure that soars to approximately 95% in the province of Quebec, where French is the sole official language.
As such, Canadian law insists that, among other things, product labels must be displayed in both languages, and streaming platforms must facilitate French Canadian content.
Quebec’s Bill 96, intended to shore up French’s primary position in the province, was noted on the Office of the US Trade Representative’s 2025 list of global trade barriers. It said that American businesses were concerned by the requirements and that the US had encouraged the provincial government to take those concerns into account in its future consideration of the legislation.
During his Saturday press conference, Carney claimed that among the factors that prevented the closure of a deal were “threats to the French language and culture, the Quebec culture and the Canadian culture”.
However, responding to the claim on Tuesday, Trump said that he would “never interfere with Canadians speaking French”, adding that the suggestion that he intended to do so was a “lie” created by Carney in an effort to bolster his support among the people of Quebec in particular.
Trump’s denial came shortly after another Truth Social post that claimed the United States was giving “serious consideration” to changing the name of Lake Ontario, which is shared between the two countries, to “Lake America”. This, the president said, was because he did not anticipate business with Ontario lasting much longer.
Ontario Premier Doug Ford had said in an interview with the Associated Press that cutting off electricity and critical minerals from his province was on the table if the disagreement further deteriorated.
