US warns Canada trade war would be 'devastating'; tariffs escalate

The United States has issued a stark warning to Canada, stating it would be "insane" for Ottawa to believe it could win a trade war, predicting a "devastating" impact on its northern neighbor. The U.S. imposed new tariffs of 50% on approximately $20 billion worth of Canadian goods, representing 5.5% of Canada's total exports to the U.S., after negotiations failed late Friday.

In response, Canada announced it would match these tariffs with its own levies targeting U.S. steel and dairy industries, scheduled to take effect on September 8. U.S. Transportation Secretary Sean Duffy emphasized the lopsided benefit of trade for Canada, stating on "Fox News Sunday" that Canada benefits far more from trade with the U.S. than vice versa. He predicted Prime Minister Mark Carney would return to negotiations "very, very soon" due to the impending economic damage.

Prime Minister Carney, however, appeared defiant, announcing the retaliatory tariffs on Saturday after withdrawing from what he deemed a "bad deal." He framed Canada's actions as a response to being "attacked." President Donald Trump, in a Sunday morning post on Truth Social, accused Canada of wanting "the benefits of being a state" without actually being one and criticized long-standing Canadian tariffs on U.S. farmers.

The escalating hostility highlights a growing rift between the two allies since Trump began his second term in January 2025. Carney has stated that bilateral relations have permanently changed and that Canada must reduce its reliance on the U.S. Despite the economic repercussions, his firm stance against Washington has garnered domestic political support since he took office.