A last-minute collapse in trade talks has sent U.S.-Canada relations into a deeper spiral, with President Donald Trump’s 50% tariffs on dozens of Canadian products taking effect over the weekend.
The duties, imposed Saturday, cover roughly 5% of Canada’s yearly exports to the United States — about $20 billion worth of goods, from hockey sticks to farm products. Canadian Prime Minister Mark Carney responded by pledging “dollar for dollar” retaliation beginning Sept. 8.
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Additional threats have emerged since then. Ontario Premier Doug Ford told The Associated Press on Monday that “everything is on the table,” saying his province could cut off electricity and critical minerals to the U.S. if the confrontation escalates. Trump, meanwhile, indicated that his administration might raise its tariff on Canadian automobiles next year.
The two countries once maintained one of the world’s most dependable trade partnerships. Now, the latest measures are pushing the North American neighbors further into a rupture that has kept communities and businesses on both sides of the border on edge during Trump’s second term. Higher tariffs increase companies’ costs and generally pass at least some of that burden on to consumers through higher prices.
Here’s what we know.
Which goods are affected?
The new 50% U.S. tariffs apply to approximately $20 billion in Canadian goods.
Canada shipped 72% of its goods exports to the U.S. last year. The Trump administration says the affected products include hockey sticks, wine and cement, among a lengthy list of other items. White House documents identify honey, seeds and agricultural products, along with certain cosmetics, perfumes, clothing, jewelry, furniture, cameras, fabric and more.
Some products that previously received protection under the United States-Mexico-Canada Agreement are also included. The trade pact was negotiated during Trump’s first term. Applying the new levy to goods covered by the agreement represents a departure from earlier tariff actions and raises fresh questions about the future of the USMCA.
How is Trump imposing these tariffs?
Trump is relying on a little-used law dating to the Great Depression: Section 338 of the Tariff Act of 1930.
Congress enacted the law as part of the broader Smoot-Hawley legislation — named for its congressional sponsors — as the U.S. and global economies were collapsing nearly a century ago. Section 338 permits the president to impose import duties of up to 50% on countries deemed to have discriminated against U.S. businesses. Until now, however, it had never been used specifically to increase tariffs.
The provision requires no investigation before the levies are imposed and sets no expiration date for them. Because there is no clear precedent, the measures could also face additional legal challenges.
Trump has accused Canada of unfairly discriminating against U.S. automobile, alcohol and dairy exports. He has also expressed frustration with Canada’s response to his 2025 tariffs, pointing to a decline in Canadian imports of American alcohol and cars that began last spring.
Is Canada retaliating?
Carney pledged Saturday to match the U.S. measures “dollar for dollar” and later said Canada’s counter-tariffs would take effect Sept. 8. The planned targets include U.S. steel, dairy products, appliances, agricultural machinery, pulp and paper, and electronics.
For now, provincial leaders including Ford have stressed that Canadians are prepared to absorb economic pain rather than yield to pressure from Washington.
Trump “underestimates Canada. We’re all in,” Ford said Monday. In addition to raising the possibility of withholding Ontario’s electricity and critical minerals, he urged Canada to consider using oil and potash as negotiating leverage.
Trump issued further warnings on social media, saying tariffs on Canadian cars, trucks, auto parts and steel could rise to 50% on Jan. 1, 2027. Canada, like other countries, is currently subject to a broader 25% tariff on automobiles. A separate 50% sectoral duty on most steel imports is already in place.
“WE DON’T NEED CANADA, THEY NEED US!” Trump wrote Monday.
Carney said the proposals targeting Canada’s auto industry would “gradually dismantle” production in the country. He also questioned the consequences for workers in U.S. states whose livelihoods depend on Canadian demand.
The prime minister said Canada was still prepared to negotiate, but insisted that Washington treat the discussions as a partnership between two sovereign nations. An “attitude at the negotiation table that Canada is a subsidiary of the United States” is “not something we’re going to accept,” he said.
What’s next?
Importers and businesses purchasing foreign goods pay tariffs, which typically reach consumers through higher prices. As the past year has shown, they can also generate uncertainty for employees and industries tied to the affected products.
“Nearly all industries and professions are likely to see downstream effects from this spiraling trade dispute,” Augustine Lo, an international trade adviser at the law firm Dorsey & Whitney, said Saturday.
The new 50% duties come on top of earlier measures, including a 10% tariff Trump imposed on Canada last month, ostensibly because the country had not done enough to stop imports made with forced labor, as well as separate sector-specific tariffs imposed globally.
The expanding dispute highlights Trump’s readiness to put longstanding alliances at risk. Canada’s refusal to accept a deal may also be shaped by its recent dealings with the president.
Trump has repeatedly pressed Canada for concessions and then continued targeting the country. Tolls on the recently opened Gordie Howe Bridge will be divided for 15 years, even though Canadian taxpayers financed the crossing between Detroit and Windsor. Canada also scrapped a digital services tax last year. Trump has nevertheless threatened additional tariffs over issues ranging from an Ontario government television advertisement criticizing his trade policies — which was later withdrawn — to wildfires that sent smoke across North America.
Higher tariffs have already helped drive inflation upward, although researchers at the Federal Reserve Bank of St. Louis said the increases appeared to have moderated in recent months, particularly after the Supreme Court rejected some of Trump’s broadest tariffs in February.
Even so, the weekend’s action against Canada is the latest example of Trump turning to alternative legal authorities to impose trade barriers. Washington’s conflict with Iran has also recently pushed prices higher. With the cost of living a central concern for voters during a midterm election year, the political consequences for the Republican president could grow in the months ahead.
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AP Writers Rob Gillies in Toronto and Paul Wiseman in Washington contributed.
