Carney Warns Canadians of Tough Days Ahead as Trade War Spirals Again
Prime Minister Mark Carney said he doesn’t believe in escalating the trade war with the US, but argued it was necessary to retaliate against the most recent US tariffs while warning Canadians to brace for turbulent times ahead.
“This won’t be easy, and I won’t pretend otherwise,” the prime minister said in a video posted to social media on Tuesday. “But Canadians have faced difficult stretches before, and what’s carried us through has never ever been just one measure.”
Hours later, US President Donald Trump’s administration announced a new series of moves in the expanding trade fight. The president would direct the government to remove Canadian-origin products from federal contracts unless “Canada restores full and fair reciprocity for American Farmers and Companies.”
The US then announced it would prohibit some Canadian items outright — including many alcoholic beverages, whey products and motorcycles. The scope of the ban covers imports in the low-single-digit billions of dollars, according to an American official.
The moves underscore that tensions are still at a boiling point between two longtime allies that conducted nearly $900 billion of trade last year.
Canadian government officials didn’t immediate respond to requests for comment Tuesday evening.
Trump imposed new 50% tariffs on $20 billion of Canadian goods on Aug. 22 after weeks of talks on a deal to lower trade barriers collapsed. In response, Carney’s government increased the import tax on many US steel items to 50% from 25%, and applied tariffs to a range of consumer goods — motorcycles, cosmetics, cheese and more. Those went into effect at 12:01 a.m. New York time on Tuesday.
Carney said it wasn’t his preference to do so.
“I don’t believe in escalating the conflict, that’s not constructive, but our tariffs are necessary to protect our workers, protect our companies and our communities,” Carney said in the video, one of a series he is doing. “We can’t let American goods into Canada tariff-free while they charge our companies to export.”
The new US Section 338 tariffs, which apply to products regardless of whether they’re shipped under the terms of the US-Mexico-Canada Agreement, are sufficient to virtually halt US imports of those goods, according to an analysis by Bloomberg Economics. That would put roughly 0.8% of Canada’s gross domestic product directly at risk in the short term. The longer-term hit is likely to be smaller, just 0.2% relative to the 2024 baseline, economists Maeva Cousin and Rana Sajedi wrote.
Trump has been increasingly hostile toward Canada since the negotiations ended and Carney vowed to retaliate. He signed an order renaming Lake Ontario as Lake America, threatened to increase tariffs on Canadian cars to 50% next year and suggested Bombardier Inc. should be restricted from selling jets in the US.
Carney said the “harsh reality” of the US tariffs are meant to hurt some Canadians more than others “by design.” The Section 338 tariffs disproportionately affect Ontario, Quebec and British Columbia — the largest provinces that have retaliated against US tariffs by pulling American alcohol from government-run liquor store shelves.
Those US tariffs are already having an impact. Sapporo Breweries Ltd. said it’s shifting some production to the US from Canada due to 50% US tariffs on beer.
A recent Nanos Research Group survey conducted on behalf of Bloomberg News shows Carney enjoys broad support for his approach to the US.
Carney also reinforced that his government plans to fast-track major infrastructure projects in Canada and grow free-trade relationships with other countries. He said over the next six months, Canada will double its tariff-free access to 3 billion consumers.
“There’s always a cost to action. But it doesn’t come close to the cost of standing still,” Carney said.
With assistance from Alicia Diaz and Derek Wallbank.
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