US-Canada trade war: Carney expects new tariffs to hurt some businesses, but Ottawa unlikely to retaliate

Days after Canada’s retaliatory tariffs against the United States took effect, Prime Minister Mark Carney said this week’s US trade measures against Ottawa would hurt some businesses but have a “modest” overall impact. However, he signalled that his government isn’t planning to retaliate.

Carney made these remarks while addressing reporters in Banff, Alberta, where he’s meeting with his cabinet. He said, “We fully recognize that for individual companies and in individual sectors, these are significant.” He added, “I would also recognize that in the context of other things that the US administration has done — other measures the US administration has done — that these are relatively modest measures,” Bloomberg reported.

US escalates trade war with Canada

Carney's remarks came after US President Donald Trump’s administration escalated the trade war with Canada on Tuesday. Hours after Ottawa’s retaliatory tariffs came into effect, Washington announced import bans on a series of goods, including alcoholic beverages, whey proteins and motorcycles. Additionally, the White House said it would limit Canadian companies’ ability to sell to US government contractors and revise the list of Canadian products subject to 50% tariffs, adding some products while removing others.

Asked if Ottawa would respond with retaliatory measures, Carney said the government’s priority should be strengthening the domestic economy and expanding Canada’s trade and economic ties with other countries.

The two historic North American allies tried for weeks to reach an agreement to lower tariffs and ease trade tensions. However, the talks fell through at the last minute on 21 August, after which the Trump administration’s so-called Section 338 tariffs came into effect on 22 August. In response, Carney imposed counter-tariffs that took effect on Tuesday, following which Washington announced its latest move.

Import bans to affect $1 billion worth of goods

While the import bans will affect around $1 billion worth of US goods from Canada, many of those products already face 50% tariffs.

The import bans announced by the Trump administration on Tuesday will take effect in roughly three weeks, potentially leaving room for talks to resume. Bloomberg News reported on Thursday that a senior US official said the two sides had held constructive discussions this week and were expected to hold another round of talks in the coming days to explore a way forward.

Carney speaks with Trump on geopolitical issues

According to the report, Carney confirmed that he recently spoke with Trump over geopolitical issues; however, it remains unclear whether they discussed bilateral trade. He said the Canadian government is “always ready to sit down in a professional way and negotiate.” He added, “We think there is a mutually beneficial deal possible that respects our sovereignty and is in the interests of both countries. So that’s a possibility.”

However, it remains to be seen whether the once-long-standing allies will once again be able to resume trade talks.

(with agency inputs)