Canada is set to announce retaliatory tariffs against the United States on Tuesday after relations deteriorated on Monday with President Donald Trump telling Canadian leaders to “fall in line” or face consequences “far WORSE” than existing tariffs. Meanwhile, Canadian Prime Minister Mark Carney accused Washington of trying to subordinate Canada.
Trump also threatened new 50% tariffs on Canadian vehicles, auto parts and steel. Carney said that U.S. trade demands showed Washington wanted to “destroy our major industries,” including autos, steel and aluminum.
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Canadian Finance Minister François-Philippe Champagne and three other Cabinet ministers are also expected Tuesday morning to share details of support for workers affected by tariffs. Earlier on Monday, Carney said that Canada might need to move away from matching U.S. tariffs dollar for dollar and instead use targeted retaliation to protect Canadian workers and businesses.
“An attitude at the negotiation table that Canada is a subsidiary of the United States” is “not something we’re going to accept,” Carney said.
In French, his words were even more blunt. “We learned during the negotiations that the Americans want to destroy our major industries, including autos, steel and aluminum,” Carney said. “That was one of the main reasons we said no. It was a bad deal.”
This exchange shows how the U.S.-Canada relations have deteriorated since Carney walked away from trade negotiations with the Trump administration late last week on Aug. 21, leading to Trump threatening 50% tariffs the next day on about $20 billion worth of Canadian goods. The U.S. and Canada have had a longstanding trading relationship with deeply integrated supply chains across autos, energy, agriculture and manufacturing. This makes the tensions especially costly for businesses and workers from both countries.
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Carney in a speech following the failed trade talks, acknowledged that the decision to retaliate “will raise costs and reduce choice for Canadians.” The Canadian prime minister has expressed a desire to diversify his country’s economy in order to reduce dependence on the U.S., which he says has “changed” under Trump.
Trump has positioned tariffs as a key part of his agenda in his second term. Earlier this month, a coalition of 25 Democrat-led states sued the Trump administration, saying the president exceeded his authority by imposing sweeping tariffs on goods from 60 trading partners. The complaint was filed in the U.S. Court, challenging tariffs of 10% or 12.5% on most goods imported from the affected economies, which together account for 99.4% of U.S. imports, according to the 25 states.