US-Canada tariff war intensifies after talks break down

On Friday, Canadian Prime Minister Mark Carney called off trade negotiations with the US, triggering Trump’s threatened 50% US tariffs on about $20 billion worth of Canadian goods. These goods, including dairy and agricultural products, paper products, alcoholic beverages, building materials, account for about 5% of Canada’s exports to the US. The tariffs are set to go into effect on September 8. Today, Trump threatened further 50% tariffs on Canadian goods including steel, aluminum and automotives. Canada said they will announce targeted retaliatory tariffs on Tuesday.

This trade war is sure to have serious effects on industries and consumers in countries. Canada is the United States’ second-largest trading partner after Mexico and our biggest export market. Moreover, several major US industries, including the auto industry, are deeply interconnected with manufacturers across the border. Components for a single vehicle may crisscross the border several times before final assembly.

Canada views Trump’s trade demands as an attempt to hollow out several of Canada’s key industries and force them to move south to the US. Furthermore, one of Trump’s demands included barring Canada from signing any trade deals with other countries without US approval, which Carney says impinged on Canada’s sovereignty.