Canada is readying a broad set of tariffs from 15% to 50% on a few hundred U.S. products starting Tuesday, unless there is a late reversal. That includes raising the duty on many American steel items to 50% from 25%, plus fresh charges on a range of consumer goods such as motorcycles, cosmetics and cheese.
Taking effect on Aug. 22, Washington's newest action slapped 50% duties on about $20 billion of Canadian goods. Canada unveiled the details of its counter-tariffs three days later, aimed at a roughly equal dollar amount. The measures will hit U.S. exporters in places like Michigan and Ohio that sell heavily into Canada and are home to closely watched November midterm races.
Prime Minister Mark Carney is betting that pushing back on President Donald Trump now will improve Ottawa's leverage with its biggest trading partner. At 61, Carney said the White House advanced "unacceptable" demands that would have violated Canadian sovereignty and hurt industries like heavy trucks. He also took a swipe at the U.S. approach to trade deals such as the US-Mexico-Canada Agreement: "We recognized that sometimes its signature was written in pencil."
It is a turn for Carney, who a year ago rolled back many of the counter-tariffs Trudeau had used.
Trump administration officials said they would not tolerate retaliation and emphasized that just two nations - Canada and China - have put counter-tariffs in place. They have not said how or when Trump might respond next. U.S. Trade Representative Jamieson Greer has signaled the U.S. could add more tariffs or even block certain Canadian imports, but without a timeline.
A bid to cool tensions fell apart last month. On Aug. 18, Trump said negotiators had a preliminary deal and allowed three days to finalize it. It still collapsed, setting off two weeks of public griping from both governments.
Treasury Secretary Scott Bessent on Fox News compared Canada to a "little yippy dog" barking at a larger one. Trump followed on Sunday with an implied threat, writing on Truth Social: "Canada's (currency) Dollar imbalance with the U.S. is unacceptable," adding, "It has been that way for years - but no longer!" The White House would not explain what he meant.
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The administration has accused Carney of sinking the talks. "They decided for political reasons, domestically, they'd rather fight with Donald Trump, even if it's bad for the economy of Canada," Commerce Secretary Howard Lutnick said on Bloomberg Television. Trump also put his signature on an order directing that U.S. maps label Lake Ontario as "Lake America," and he repeatedly criticized Canada on social media.
By Sunday afternoon, there were no new meetings on the books with the U.S., according to a Canadian official who requested anonymity. In the days leading up to when Canada's latest tariffs were due to kick in, the White House and Greer's office alike declined to offer any comment. Last week, Carney indicated the U.S. was open to extending auto-tariff relief to medium- and heavy-duty vehicles; however, an unnamed U.S. official said that was untrue.
Canada's economy has been uneven: after a pause, growth rebounded in the second quarter. Jobs have risen by an average of 3,400 per month this year, and layoffs are more common in industries tied to U.S. demand, according to Statistics Canada. Oxford Economics' Tony Stillo and Michael Davenport estimate the combined impact of U.S. tariffs, Canada's retaliation and related federal support will trim output by about 0.3% versus their baseline, and that excludes any further escalation.
The immediate bite will be felt where cross-border ties are tight. Manufacturers in Michigan and Ohio are especially exposed to Canadian buyers. On Bloomberg This Weekend, Michigan Representative Haley Stevens, a Democrat, said escalating U.S. duties on Canadian goods are driving up expenses and injecting uncertainty for plants in her district, where the tightly linked auto supply chain is particularly vulnerable. She said she is backing a bill aimed at delivering up to $1,700 to households to defray tariff-related expenses, and she criticized the Trump administration's handling of trade with Canada.
Looking ahead, Trump has said he would raise auto tariffs to 50% from 25% and add a 50% levy on auto parts starting Jan. 1. He has not taken formal steps to implement those moves, and it is unclear whether that would count as his response to Canada's counter-tariffs. House Speaker Mike Johnson urged talks to restart: "I think everybody wants that to happen," he said, adding, "We need Canada to come to the table, and be in good faith, and work through this, because it's very important for both countries." For everyday budgets, that means bracing for higher prices on goods that cross the border and more volatility if this dispute widens.
Carney said last week that his government is pursuing a "durable" agreement. "We're ready to sit down and strike that deal when the Americans are ready," he said, while reiterating he will not sign anything that leaves Canada's automotive, steel and aluminum industries uncompetitive.
