The Trump administration has warned that Canada would suffer a “devastating” economic impact if the escalating tariff dispute between both countries develops into a full-scale trade war.
The warning came after negotiations between Washington and Ottawa broke down late Friday, triggering new 50 per cent US tariffs on about $20 billion worth of Canadian goods.
The affected products represent roughly 5.5 per cent of Canada’s exports to the United States.
Canada has responded with plans to match the US tariffs, including new levies targeting American steel and dairy products, which are scheduled to take effect on September 8.
US Transportation Secretary Sean Duffy said Canada would be worse off if it chose to confront President Donald Trump in a trade war.
“We’re great trading partners, right? But Canada gets the benefit of trading with the US way more than the US gets the benefit of trading with Canada,” Duffy said during an appearance on Fox News Sunday.
“To think that they’re going to go to war with Donald Trump and actually win that war with the US, I think it’s foolish on their part.”
The United States currently accounts for about 70 per cent of Canada’s exports.
Duffy predicted that Canadian Prime Minister Mark Carney would return to the negotiating table “very, very quickly” because of the economic consequences of the dispute.
But Carney remained defiant on Saturday, announcing retaliatory tariffs after rejecting what he described as a “bad deal” from Washington.
“You’re at war when you get attacked. We got attacked,” Carney said.
He said the US had made last-minute demands that would restrict Canada’s ability to negotiate trade agreements with other countries. He also cited what he described as unacceptable threats to the French language and Quebec culture.
Trump responded on Sunday, saying Canada wanted “the benefits of being a State” without becoming one.
“They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!” Trump added in a post on Truth Social.
The latest confrontation has further strained relations between the two long-standing allies since Trump returned to the White House in January 2025.
Trump has repeatedly threatened to make Canada the 51st US state, while Carney has said the relationship between the two countries has been permanently changed.
The Canadian Prime Minister has also called for his country to reduce its economic dependence on the United States.
Despite concerns over the potential economic fallout, Carney has received political backing in Canada for taking a tougher position against Washington since becoming prime minister two months after Trump returned to office.
The dispute has also sparked public anger in Canada.
“We have a bully in Washington,” Stuart Edwards, a retired teacher, told AFP in Fort Erie, Ontario, near the Peace Bridge, a major trade route between Canada and the United States.
“We’re not going to put up with it; Canada isn’t. We’ll fight back,” he said.
During recent negotiations in Washington, Canada sought exemptions from US tariffs on automobiles, steel and aluminium, measures that have already affected the Canadian economy, contributed to job losses and strained the two countries’ traditionally close trade relationship.
The White House has accused Canada of discriminatory treatment of US alcohol, automobile and dairy products through its own trade measures.
US Trade Representative Jamieson Greer told The New York Times on Saturday that Washington had offered to reduce tariffs on Canadian steel, aluminium and automobiles, while also removing a recently imposed tariff on Canadian lumber.
According to the report, Greer said the proposed measures would have given Canada “the most preferential treatment of any trading partner.”
He added that no fresh negotiations with Canadian officials had been scheduled.
