After more than two weeks of condescending accusations, threats and name-calling between longtime trading partners, Canada’s latest retaliatory tariffs against the United States will take effect shortly after midnight Eastern Time on Tuesday. Polls show Canadians strongly support Prime Minister Mark Carney’s decision to end trade talks with Washington last month and respond with tariffs on about $20 billion of American goods entering Canada. But there is also concern about what could happen next. President Trump has repeatedly threatened another round of U.S. tariffs if Canada goes ahead with its plan. Some in the Canadian industry say they are inclined to take Trump at his word, at least on this threat. People in the Trump administration “are willing to harm themselves, their own sectors and industries, in pursuit of their goal, as misguided as I think it is,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada. “So, they can escalate. I hope we don’t end up in a tit-for-tat situation. We’re going to be left without a lead.” Carney announced Canada’s new tariffs after pulling Canadian negotiators out of talks in Washington last month, an ultimately unsuccessful attempt to avoid 50 per cent U.S. tariffs on $20 billion in Canadian exports and reduce or eliminate tariffs of up to 50 per cent on Canadian steel, aluminum and automobiles. The Trump administration said the tariffs it imposed last month were partly a response to retaliatory tariffs Canada imposed last year on some U.S. imports, particularly automobiles. U.S. officials have repeatedly noted that only China and Canada have retaliated against the United States since Trump began disrupting global trade. At a press conference after a sharply worded speech announcing the tariffs, Carney declared that Canada had been attacked by the United States and that the two countries were now “at war.” Last week, Scott Bessent, the US Treasury secretary, rejected that framework, arguing that Canada is too small an economic power to fight the United States. “I don’t think you can be in a tit-for-tat with someone who is 13 times bigger than you,” Bessent said on CNBC. On Friday, Trump further escalated his trade rhetoric. He said it could “end all trade with Canada” and other countries that have trade surpluses with the United States. Separately, US Commerce Secretary Howard Lutnick said Carney had closed the talks to gain “political influence” at home, not because of what the US side had offered. As last week progressed, Carney made clear that he was in no rush to return to negotiations and was instead focused on diversifying Canada’s trade and expanding its domestic economy. time, the conversation will happen,” he said. “But the most important thing we can do is not spend all our time waiting by the phone, waiting for a call, refreshing social media to see what’s on.” Many of the U.S. items that will soon face Canadian tariffs of 15, 25 or 50 percent mirror Canadian exports that now face 50 percent U.S. tariffs, particularly clothing and wood products. Canada revised the list to remove dozens of seafood products after the Canadian fishing industry said that tight cross-border integration meant its members would also be hurt. Canadian officials have suggested that many specific items come from states where voters supported Trump, although some political analysts question how much pressure that will actually put on the White House. The list also includes items with little connection to the Canadian economy, including metal bands that hold erasers to pencils, migratory bird identification bands and fish egg incubators Trump has not imposed. tariffs on some of Canada’s largest exports, including oil, gas and many minerals, and has exempted many products with enough North American content to move duty-free under the United States-Mexico-Canada Agreement. Auto parts, for example, are subject to a 25 percent tariff, but generally cross the border without incurring it. As a result, Canada’s overall average tariff rate remains low compared to what most other countries face, and Most of its trade, by dollar value, is still duty-free. After the talks failed, Trump threatened to impose 50 percent tariffs on cars and auto parts in January, apparently without the USMCA exemption, a move that most analysts believe would be devastating for Canada’s auto industry. Trump has taken no formal steps to carry out the threat, although some in Canada speculate that instead he will target new products or raise tariff rates. existing ones, the Trump administration could eliminate the USMCA exemption for many products. Volpe said auto parts manufacturers were undeterred. He said that last year, when the Trump administration proposed imposing tariffs on Canadian auto parts, they “understood that would shut down the auto industry in a week.” But if they don’t, they can.”
